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Morning Briefing for pub, restaurant and food wervice operators

Tue 3rd Oct 2023 - Exclusive: Revolution Bars Group makes first addition to Peach Pubs business, plus Tortilla and Greggs results
Exclusive – Revolution Bars Group makes first addition to Peach Pubs business: Revolution Bars Group, which operates the Revolution and Revolucion de Cuba brands, has secured the first new site for its Peach Pubs business since it acquired the company last October, Propel has learned. The Three Horseshoes in Letchmore Heath, Radlett, takes the number of Peach Pubs to 22. The company said the historic pub and restaurant “will complement our existing Peach Pubs brand perfectly, serving delicious food and drink with great, friendly service to match”. It said: “Peach is an established and familiar name in Hertfordshire, with both The White Horse in Harpenden and Brookmans in Brookmans Park, trading at the heart of their communities.” Chris Stagg, brand operations director at Peach Pubs, said: “The Three Horseshoes is an absolutely gorgeous pub that occupies a special place in the village and is enjoyed by guests from across the county, and we are thrilled to say it is now one of ours. Peach is known as being a collection of individual pubs, in market towns and villages in the heart of England which serve high quality, fresh, tasty food and drink in relaxed, friendly surroundings. We’ve been doing this successfully for over 22 years, winning a slew of awards for our food and drink, how we look after our people and take care of the environment. The Three Horseshoes shares many characteristics and the ethos that has made it successful and will continue to do so under our ownership. It is quite simply a natural fit in terms of quality and approach. Recently extensively and sympathetically restored, it delivers a warm, inviting atmosphere with friendly faces serving great quality seasonal food and drink in the bar, eatery and garden.” Last October, Revolution Bars Group acquired the then 21-strong Peach business for a cash consideration of £16.5m. Revolution Bars Group features in the Propel Turnover & Profits Blue Book. Its turnover of £140,821,000 in the year to 2 July 2022 is the 59th highest in the database. The Blue Book ranks companies by turnover, profit and profit conversion, listing directors’ earnings for the past five years. 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 to upgrade your subscription.

Growing coffee shop businesses among new editions in The New Openings Database, features 894 site openings: Premium subscribers will receive the next The New Openings Database on Friday (6 October), at midday. The database features Greek coffee shop chain Coffee Island, which has opened a second UK site in north London, as it looks to expand its overseas presence. Coffi Lab, the dog-friendly coffee shop concept, has further increased its presence in Cardiff after opening a site in the Welsh capital. Meanwhile, Starbucks franchisee Cobra Coffee, which operates 66 stores, has opened a site in Lewes, East Sussex, and Starbucks’ first and largest UK franchisee, 23.5 Degrees, has reached the 100-store landmark with an opening at Tame Leisure Park in Tamworth, Staffordshire. The database will show the details of 894 site openings, including which company has opened a site or its plans to open one in the future. It will have details on what type of site it is and its location, and there will also be a website link to the businesses. The database is published on a monthly basis and Premium subscribers will also receive a 44,000-word report on the new additions to the database. Premium subscribers also receive access to five other databases: the Propel Multi-Site Database, produced in association with Virgate; the Propel Turnover & Profits Blue Book; the UK Food and Beverage Franchisor Database; the Who’s Who of UK Food and Beverage; and the UK Food and Beverage Franchisee Database. 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 to upgrade your subscription. Premium subscribers are also being given exclusive access to the recording and slides to Propel Multi-Club Conferences. They 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.

Tortilla delivers lfl growth during ‘unsurprisingly quiet’ summer, new sites trading well with three more openings follow in second half, new initiatives starting to drive Ebitda growth: Tortilla, the UK’s largest fast-casual Mexican restaurant brand, has said it delivered like-for-like growth during an “unsurprisingly quiet” summer and that is starting to see new initiatives drive Ebitda growth. In its trading update for the first half of the financial year, it also said its new sites opening since the period end are trading well, with three more openings to follow in second half, as the business remains ahead of its openings target. “The summer was unsurprisingly quiet, as seen in the wider market, with an increased demand for overseas holidays, ongoing industrial strike-action on the train network and uninspiring weather,” the business said. “Nonetheless, the group delivered like-for-like growth for this period. Since the period end, we have opened a further two sites: Belfast and Bracknell in July and August respectively and both are trading well, with Belfast doubling the opening revenue expectations. A further three sites are expected to open in the second half of FY23, taking the total to eight new sites in the year as we continue to deliver our stated roll-out plans. We are seeing the benefit of self-help management initiatives, particularly in supply chain, energy and productivity. The benefit of these initiatives fell towards the end of the period, and as such, will collectively drive a further 1.3 percentage point improvement in adjusted Ebitda margin in the second half of FY23 (compared to the first half). We have worked hard to look for ways to drive customer footfall through targeted events and promotions, most notably through the launch of Tortilla Sunsets in September to enhance our evening offer through a great value dine-in experience. Considering the secured upside from our cost hedging, the exciting initiatives launched to drive evening trade and the resilient trading performance of the group, we remain confident of being broadly in line with our targeted adjusted Ebitda for FY23 and we expect to see the full year benefit of these initiatives next year.” It comes as the business reported revenue growth of 22% to £32.7m (H1 FY22: £26.9m) for the period and like-for-like revenue growth of +5.0%, ahead of the industry CGA Peach Coffer Tracker benchmark average of 4.6%. Adjusted Ebitda (pre-IFRS 16) of £1.8m (H1 FY22: £2.5m) saw trading in-line with market expected financial performance, with the prior year amount benefitting from £1.1m of government support. It reported a pre-tax loss of £600,000 (H1 FY22: pre-tax profit of £300,000) but has a strong balance sheet, with net debt of £1.6m (H1 FY22: £3.2m net cash) and a further £7m of liquidity available from existing debt facilities. Three new openings in the period included its first site in Northern Ireland, as the business remains ahead of its IPO aim of 45 new sites in five years. It saw the successful integration of its Chilango business and record profits from franchisees, and is currently assessing a number of European opportunities through franchising or strategic acquisitions. It said cost pressures are easing, along with favourable contracts negotiated with key suppliers, and it has successfully implemented two major technology projects – with Tortilla’s first kiosk-only site delivering positive early results, and a nationwide roll out of delivery order-aggregation software. Richard Morris, chief executive of Tortilla, said: “Despite the challenging economic backdrop, during the first half, Tortilla demonstrated its resilience and showed consistent progress, with revenue growth of more than 20%. We continued to expand our store estate and have successfully embedded the Chilango acquisition. We have also enhanced our food offer and secured significant improvement in our costs structure while making technology upgrades which will improve and quicken customer service at peak trading times. We are very excited by the launch of our Tortilla Sunsets initiative earlier this month, which has had a very positive customer response so far. We believe there is a significant opportunity to enhance our evening sales by offering a great-value, dine-in experience including beers and margarita cocktails for just £2.50, as well as a number of delicious new menu additions. With our outstanding food offer, excellent value for money and great service, alongside our adaptable and resilient business model, we remain well placed to continue expanding our UK network while taking the brand into new markets, particularly in Europe.”
Greggs reports company-managed like-for-like sales up 14.2%, expects record number of new openings in 2023: Food-to-go operator Greggs has reported company-managed shop like-for-like sales are up 14.2% for the 13 weeks to 30 September 2023 compared with last year, with total sales up 20.8%. The company has opened 82 net new shops year-to-date (144 openings less 62 closures) giving a total of 2,410 shops trading at 30 September 2023 (comprising 1,928 company-managed shops and 482 franchised units). The group expects between 135 and 145 net shop openings in 2023 and circa 40 relocations, which would be a record year for the absolute number of new shops opened. Evening trade represented 8.8% of company-managed shop sales for the 13 weeks to 30 September 2023, up from 8.3% in the first half of 2023. It said Greggs app participation continues to grow, with 13.1% of company-managed shop transactions scanned in the 13 weeks to 30 September 2023 (first half of 2023: 10.6%). Its delivery service is being rolled out with a second delivery partner, Uber Eats, following a successful trial. Greggs expects to have around 500 shops live by the end of October 2023, with further expansion to come in 2024. The business said it has noticed some easing in cost inflation as expected and the full-year outcome is “expected to be in line with our previous expectations”. The company stated: “Greggs continued to enjoy a strong trading performance over the third quarter of 2023. This strong like-for-like performance, founded on increased customer visits, reflects ongoing development of evening trading and of our digital channels and loyalty programme through the Greggs app. Market insight data confirms that Greggs continues to grow its share of the food-to-go market and has maintained its leadership positions in customer satisfaction and value-for-money ratings (source: Circana, August 2023). Our autumn menu is now available, featuring the Spicy Chicken and Veg Bhaji Baguette, served hot. New vegetarian options include the Cheese and Honey Mustard Toastie, the Veg Bhaji Flatbread and the Mozzarella and Cheddar Bites, offering customers a new hot-to-go snacking option. We’ve also introduced the Spicy Veg Pizza, available to customers on click and collect and via delivery.  Additions to the hot drink menu include the return of the popular Pumpkin Spice Latte and the new Hazelnut Mocha and Hazelnut Hot Chocolate. In the year to date we have opened 144 new shops and closed 62 shops. We expect 2023 to be a record year for the absolute number of new shops opened as we expand into new locations and relocate shops to better premises within existing catchments. We see a strong pipeline ahead for 2024.  Our shop openings are giving customers more convenient access to Greggs, while our relocation activity increases our capacity in existing successful catchments. Investment in our supply chain is progressing well, supporting our ambitious growth plans. A fourth production line will be commissioned at Balliol Park in Newcastle upon Tyne in the coming weeks, adding further manufacturing capacity for our iconic savoury rolls and bakes. Work is progressing well to expand the logistics capacity of our Birmingham and Amesbury distribution centres, both of which are due to come on stream in 2024. Across the business we continue to expect capital expenditure in 2023 to be around £200m, supported by our strong balance sheet. As we had expected, the rate of cost inflation has eased as we annualise on the significant commodity-led increases experienced in 2022.  At a time when customers are looking to make their money go further Greggs continues to offer exceptional value and grow market share. We have strong product and promotional plans for the fourth quarter and the extension of our delivery service will make Greggs accessible to more customers on more occasions. While acknowledging the uncertainty in the economy as a whole and the very strong comparative performance of the business in the fourth quarter of 2022, the board expects the full year outcome to be in line with its previous expectations.”

Foodservice price inflation falls for a third consecutive month but pressures continue: Inflation as measured by the CGA Prestige Foodservice Price Index decreased for a third consecutive month in August but remains above 20% year-on-year. Price increases have slowed in both foodservice and supermarkets in recent months. However, the rate of easing has been faster in retail, as month-on-month inflation in supermarkets as measured by the Consumer Prices Index stood at just 0.3% in August, compared to 0.8% in the Foodservice Price Index. All 11 categories of the Index from CGA and Prestige remained in double-digit inflation, although some saw prices drop month-on-month, including fish, fruit and sugars. Meat prices increased again, by 1.7%, and the vegetables category recorded the highest year-on-year inflation of any category at 33.5%. Inflation is being fuelled by the high cost of transport and packaging after crude oil prices rose 30% above the levels seen in June. Import costs remain an issue after sterling fell marginally against the dollar and Euro in August, while wage inflation of 8% has driven up costs further. Inflationary challenges outweighed a 2.1% drop in the price of key food commodities in August that was recorded by the UN FAO Food Commodity Index. Shaun Allen, chief executive of Prestige Purchasing, said: “The outlook for kitchen-door food prices is becoming more positive because inflation will continue to ease, but we expect this slowing of inflation to take effect more slowly than in retail. A fall in prices (deflation) on the full basket of food and drink is unlikely until at least early 2025.” James Ashurst, client director at CGA by NIQ, added: “Drops in inflation over the summer have been welcome, but they have been modest and foodservice prices remain under huge pressure, especially by comparison to slower rates in retail. Frustratingly, meaningful relief is still some way off, and price will continue to be a major factor in trading conditions in hospitality as we move into the final quarter of 2023.”

Burger King still open in Russia despite pledge to exit: Burger King remains open as usual in Russia despite the brand’s owner pledging to leave more than a year ago. Restaurant Brands International (RBI), which owns 15% of the fast-food’s franchise business in Russia, told the BBC it had “no new updates to share at this time” on its exit. The firm said in March 2022 that it had started the process to leave Russia. RBI, one of the world's largest fast-food restaurant companies, has cited its complicated franchise agreement for its difficulty in trying to exit the country. David Shear, RBI’s president, said in March 2022 that Burger King’s main operator in Russia had “refused” to shut the outlets following the first attacks on Ukraine. But he added that the company had “started the process” to dispose of its 15% ownership stake and that it would take “some time”. Asked by the BBC about the progress made 18 months on from the pledge, a spokesperson for the company said the firm had no updates. They said company was refusing new investment and supply chain support and had not made any profits from Burger King in Russia since early 2022. Steven Tian, part of a team of researchers at Yale University who track what companies have done in response to the Ukraine war,  argued using franchise agreements as an “excuse” was a “convenient smokescreen” and pointed out that the likes of Starbucks had managed to terminate its deal and in the country and exit. But David Bond, partner at law firm Fieldfisher, said RBI’s 15% stake meant it could not simply “dictate terms” to its fellow shareholders to require them to close Burger King branches. He also suggested companies that franchise out their brands would be reluctant to simply walk away from deals as it could lead to “dire consequences”, including being sued for breach of contract, as well as reputational damage. But he said consequences aside, there was nothing stopping RBI from terminating the franchise arrangement if it was adamant it wanted to do so, though added it might not result in the Burger King brand ceasing to exist in Russia. He said the majority of “de-brands” in the country, such as McDonald’s, had been achieved through agreed sales with local businesspeople “willing to de-brand in return for the discounted purchase price”.
Celebrity chef forced to close award-winning restaurant after former employee steals £150,000 from him: Celebrity chef Stephen has been forced to shut his award-winning restaurant after a former employee stole £150,000 from him. Terry, who represented Wales on the Great British Menu, has announced the closure of The Hardwick, in Abergavenny, Monmouthshire, after 18 years. His financial administrator Nicola Nightingale stole the money from the restaurant while transferring another £46,000 into her husband’s bank account. Terry posted a photo online captioned: “The final Family last breakfast supper. Thank you to all our staff and customers from the last 18 years. It’s been emotional. Onwards and upwards.” Terry trained under Marco Pierre White at Harveys and became best friends with Gordon Ramsey when they worked together. His restaurant has won multiple awards, including a Bib Gourmand in the Michelin Guide, and was named the best restaurant in Wales in consecutive years. He ran the restaurant with his wife Joanne after her family helped fund the purchase and they added plush rooms. Cardiff Crown Court heard he trusted Nightingale to run the finances, but the alarm was raised when Terry saw money was missing and discovered two £40,000 loans had been taken out in his name, along with a £10,000 shortfall in the pension pot. Prosecutor Tom Roberts said Nightingale “generated fake invoices from fictitious suppliers” after she was employed at the country inn. Nightingale pleaded guilty to fraud by abuse of position while her husband was found guilty of acquiring criminal property after a trial earlier this year. The couple were handed two-year sentences suspended and handed £1 confiscation orders after an examination of their finances revealed no releasable assets. A source close to Terry told The Daily Mail the amount of money lost to the business through the swindle was partly to blame for The Hardwick’s demise. The source said: “It’s been a tough time to run a restaurant, and there are numerous issues affecting the business, but without losing so much money it could have just about scraped by.”
Tom Kerridge urges Brits to eat and drink and their local at least twice a week: Chef Tom Kerridge has urged Brits to eat and drink at their local pub at least twice a week in a bid to “save the industry” The Michelin-starred chef said it was no longer enough to only visit pubs for Sunday lunch at the end of a weekend walk. Writing in Delicious magazine, he said: “We all want to go for a walk at the weekend, find a pub with a log fire and have a pint and sausage and mash. But doing that once a week is not going to save the pub industry. You might think it’s okay because the pub around the corner is still there – but that pub is up against it. You have to use it for more than just a Sunday lunch – give it value. It’s somebody’s business – and part of a much bigger picture.” He added: “Pubs are part of the fabric of society. They might serve food and have Michelin stars, but they’ve always been social spaces, and that’s why they’re vital. They’re places where people can evade loneliness or stay warm. In the pandemic, they became community shops, they’re a hub. And not necessarily a place for drinking – non-drinking and quality over quantity have become paramount.”
Landlord hails success of dry pub to help those battling mental health issues, loneliness and addiction: A landlord has hailed the success of his dry pub to help those battling mental health issues, loneliness and addiction. Sam Watson launched the Dry Dock in Weymouth in August, having come up with the idea for the booze-free pub when he realised as a recovering alcoholic, there was nowhere to go in the evenings where alcohol was not being served. As a result, he created his own alcohol-free pub in a former optician and has hailed the venture a “success”. He told the BBC: “The welcome we have had in our community has been absolutely phenomenal. The amount of people coming through the door and the positive feedback we’ve had has been amazing.” He said the tavern has been “very successful” and has been able to open its doors to the public every day. Watson said the pub is “for the community” and will continue to run as long as he is able to cover their expenses and pay staff wages. He is also looking ahead to the run up to Christmas, where he has planned a range of events which he hopes this will contribute to the pub’s ongoing success. Customers have responded positively on social media, with one posting on X: “Absolutely love this idea of an alcohol-free pub as I can’t stand booze and its effects on people’s physical and mental health.” Another added: “Finally, a place someone in recovery like myself can enjoy socialising without temptation.” It comes after the launch of an alcohol-free bar at Dublin airport earlier this month.

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