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Morning Briefing for pub, restaurant and food wervice operators

Tue 19th Sep 2023 - Update: Big Mamma Group, Heartwood Collection, Starbucks, C&C Group
Big Mamma Group – new investment will allow us to become a global brand in affordable, experiential luxury dining: Victor Lugger, co-founder of the Big Mamma Group, which has secured new backing from McWin, has said that the new investment will allow the business to become a “global brand in affordable, experiential luxury dining”. Propel revealed yesterday that McWin, the investment firm of food industry entrepreneurs Henry McGovern and Steven Winegar which backs the likes of Vapiano and Gail’s, had acquired a majority stake in the Big Mamma Group, the operator behind London restaurants including Gloria, Ave Mario, Circolo Popolare and Jacuzzi, Propel understands. The long-term investment made out of the McWin Restaurant Fund saw the company valued at €270m. Big Mamma Group currently operates circa 23 restaurants across France, England, Germany and Spain. Its co-founders Lugger and Tigrane Seydoux will continue to run the business and retain a minority stake. Lugger, who along with his partner Seydoux have netted millions of euros from offloading some of their personal shareholdings as part of the deal, told the FT that the investment would help Big Mamma “go big...and build a global brand in affordable, experiential luxury dining”. “If you want to build a global brand, if you want to always go bigger in terms of design, authenticity, HR, recruitment, food, and if you want to do it beyond your frontiers…it takes a strong backbone and it takes partners that can help you,” said Lugger. But Lugger, who also runs restaurant payment app Sunday, said he was aware of the risks for restaurant brands of taking on a private equity partner given their chequered history in the sector. “It’s questionable the impact that some private equity had on quite a number of brands…in this country,” said Lugger. “It’s like when you get married – if you don’t look at the fact that 50% of marriages end up in divorce you’re stupid…all you need to do is just walk the high streets in the UK.” Big Mamma is set to launch its fourth new site this year in Milan over the winter, with a third restaurant in Spain also planned for next year. Lugger estimated it would take at least two years to launch Big Mamma’s first US venture, saying that he was considering locations in Chicago, Miami and Atlanta. In recognition of the brand’s ambition, he added that it was “probable” he would move to the US within the next two years.

Established fast food franchises among 56 new businesses joining updated Premium Database of Multi-Site Companies: A number of established fast food franchises are among the 56 new multi-site companies being added to the next edition of the Propel Premium Database of Multi-Site Companies, which will be released on Friday, 29 September, at midday. The updated Propel Multi-Site Database, which is produced in association with Virgate, features Pizza GoGo, the franchise that has grown to more than 100 UK sites, predominantly in the south east of England, which is aiming to open new branches across the UK. Milkshake bar company Shakeaway, founded in Bournemouth in 1999, which has more than 50 stores in the UK and abroad – including Jordan, Poland and Timor – will also be featured. Also added is Dixy Chicken, the fast food chain that specialises in halal chicken, which was created in 1986 and has 80 outlets, plus the chicken and ribs brand Favorite Chicken, which started out in 1986 and operates approximately 80 outlets. Premium subscribers will also receive a 4,000-word report on the new additions to the database. The comprehensive database is updated monthly and provides company names, the people in charge, how many sites each firm operates, its trading name and its registered name at Companies House if different. The database now features 2,983 companies. Premium subscribers are also to receive access to all the videos from this month's Propel Multi-Club Conference and summer party. They will be sent 12 videos on Friday, 29 September at 9am. Premium subscribers also receive access to five other databases: the New Openings Database; the Propel Turnover & Profits Blue Book; the UK Food and Beverage Franchisor Database; the UK Food and Beverage Franchisee Database; and the Who's Who of UK Food and Beverage. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email jo.charity@propelinfo.com to upgrade your subscription. Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before; regular video content and regular exclusive columns from Propel group editor Mark Wingett.

Heartwood Collection confirms addition of two freehold pubs: Heartwood Collection, formerly Brasserie Bar Co, has confirmed the acquisition of two new freehold pub sites as part of its ongoing plan to grow its Heartwood Inns business. As previously revealed by Propel, the 34-strong Heartwood Collection, which is on track to grow to over 60 inns and brasseries by 2027, has acquired the Plough & Harrow, Long Ditton – opening late November 2023, and The Crown, Lichfield – opening late January 2024. The Plough and Harrow (formerly known as the George Evelyn) is located in Long Ditton, South West London and will undergo an extensive refurbishment. The pub will have 139 internal dining seats aided by an extension to the rear. Outside, the large garden will be landscaped to create a further 100 dining seats including 38 in a newly-constructed garden room. The Crown, located in the heart of the cathedral city of Lichfield, will be extensively refurbished to create a “spacious and relaxed bar area with lounge seating around a traditional fireplace”. To the rear of the inn, there will be 128 dining seats including a semi private dining space for up to 14 guests, and a garden room for up to 50 guests. A sheltered, tiered courtyard will create a further 74 seats designed for year-round dining with a heated pergola. The acquisition of the two inns follows the announcement two weeks ago by Heartwood Inns that it had acquired its first pub with rooms, The White Horse in Dorking, Surrey which will feature 56 bedrooms and is due to open early in 2024. Heartwood Inns also recently opened the Black Swan in Henley in Arden, Warwickshire. Richard Ferrier, managing director of the Heartwood Collection, said: “The acquisition of two new freehold pubs marks a hugely exciting period in the growth of Heartwood Inns. We are delighted that two iconic pubs in Long Ditton and Lichfield will be joining the group. We are firmly committed to investing in both of the pubs for the long term. We cannot wait to see them re-open as Heartwood Inns.”

Starbucks to face lawsuit claiming its fruit drinks are missing fruit: Starbucks has been ordered by a federal judge to face a lawsuit claiming that several of its Refresher fruit beverages lacked a key ingredient: fruit. Reuters reports that US District Judge John Cronan in Manhattan rejected Starbucks’ request to dismiss nine of the 11 claims in the proposed class action, saying “a significant portion of reasonable consumers” would expect their drinks to contain fruit mentioned in their names. Consumers complained that Starbucks’ Mango Dragonfruit, Mango Dragonfruit Lemonade, Pineapple Passionfruit, Pineapple Passionfruit Lemonade, Strawberry Açai and Strawberry Açai Lemonade Refreshers contained none of the advertised mango, passion fruit or açai. The plaintiffs Joan Kominis, of Astoria, New York, and Jason McAllister, of Fairfield, California, said the main ingredients were water, grape juice concentrate and sugar, and that Starbucks’ misleading names caused them to be overcharged. They said this violated their states’ consumer protection laws. In seeking a dismissal, Seattle-based Starbucks said the product names described the drinks’ flavours as opposed to their ingredients, and its menu boards accurately advertised those flavours. It also said no reasonable consumers would have been confused, and its baristas could have “sufficiently dispelled” any confusion if consumers had questions. But the judge said that unlike the term “vanilla”, the subject of many lawsuits, “nothing before the court indicates that ‘mango,’ ‘passionfruit,’ and ‘açaí’ are terms that typically are understood to represent a flavour without also representing that ingredient”. Cronan also said confusion might be understandable because other Starbucks products contain ingredients in their names – for example, Ice Matcha Tea Latte contains matcha and Honey Citrus Mint Tea contains honey and mint. The judge dismissed a fraud claim, finding no proof Starbucks intended to defraud consumers, and an unjust enrichment claim. Starbucks in a statement called the allegations in the lawsuit “inaccurate and without merit”, and said it looked forward to defending itself.

C&C Group – H1 operating profit expected to be in the range of €29m to €31m; service levels restored: C&C Group has reported it expects to deliver net revenue of circa €870m in the six months 31 August 2023, which is down circa 1% on the comparable prior year period. It said operating profit for H1 is expected to be in the range of €29-€31m and includes the significant majority of the one-off profit impact associated with Enterprise Resource Planning (ERP) system implementation disruption in the group’s GB distribution business, previously communicated on 19 May 2023. It said: “Good progress has been made in resolving the ERP system implementation issues in the group’s GB distribution business in line with internal expectations. On Time in Full (OTIF) delivery metrics have returned to pre-ERP implementation levels.” In May, C&C Group said it had encountered “significant challenges”, in terms of time, cost and customer service, in the implementation of a complex ERP system upgrade in its Matthew Clark and Bibendum (MCB) businesses in Great Britain. It said at the time, it expected a one-off impact of circa €25m associated with ERP system disruption in FY2024, reflecting the cost associated with restoring service levels and lost revenue. The company said: “Trading in H1 for our own brands in Ireland and Scotland was encouraging, with Net Sales Revenue for our branded business up circa 6% for the period. Trading at the start of H1 benefited from good weather, particularly in June, however poor weather in July and August combined with cost-of-living pressures, particularly in GB, resulted in a slowdown in the latter months of the period. The group’s process to recruit a new group chief financial officer is ongoing, in conjunction with an independent executive search firm, and an update will be provided in due course.” C&C will announce H1 results on 26 October 2023. Patrick McMahon, group chief executive, said: “Set against a difficult market backdrop, we are pleased with the strength of the performance of our branded businesses in Ireland and Scotland in the period. We are particularly pleased with the progress we have made in restoring customer service levels following the ERP system implementation issues in our GB distribution business within our planned timeframe. Delivering outstanding service, winning back customers, continued business simplification and improved operating efficiency remain our top priorities and focus for the second half.”

Food lobbyists’ plea as supermarkets leave them ‘on their knees’: Farming and food lobbyists have sent an open letter to the biggest supermarkets urging them to treat suppliers more fairly, claiming that agriculture is “on its knees”. The Times reports that the letter, written to chief executives of Tesco, Sainsbury’s, Asda, Morrisons, Aldi and Lidl, claims that the supermarkets’ buying practices are “all too often imbalanced, short-term and wasteful” leaving farmers “struggling to survive”. The letter is backed by more than 100 signatories including the industry bodies Sustain and The Soil Association, the chefs Rick Stein and Hugh Fearnley-Whittingstall, the nature programme maker Ray Mears and the presenters Julia Bradbury and Jimmy Doherty. It forms part of the Get Fair About Farming campaign, launched by the Riverford Organic vegetable box firm, which is calling for reform of the grocery supply code of practice to better protect farmers and ensure “sustainable trading relationships”. Kath Dalmeny, chief executive of Sustain, the alliance for better food and farming, said: “Farmers and food suppliers need far better protection from unfair and sometimes abusive practices by the big supermarkets.” Andrew Opie, the British Retail Consortium’s director of food and sustainability, said that food retailers worked hard to pay a sustainable price to farmers but also had to absorb rising costs. “As a result, operating profit margins have fallen to less than 2p in every pound of sales,” he said.

Italian restaurant co-owned by Rio Ferdinand closes down for good: An Italian restaurant co-owned by Rio Ferdinand has “closed its doors for good” after a final service last weekend. Rosso, which is the Italian word for red, was first opened in Manchester by the former United and England footballer, in 2009. The Mirror reports a worker is said to have arrived at the venue Monday morning and was told the restaurant was now permanently closed. The restaurant has reportedly said it will not be continuing its lease on the King Street property. Rosso was located in 42 Spring Gardens, which is part of a portfolio run by Wilmslow-based Dean Property Group. The signage at the entrance also appears to have been removed. Ferdinand, along with investors, opened the restaurant in the Grade-II listed former bank building at the top of Manchester’s King Street.

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