Propel Morning Briefing Mast HeadAccess Banner  
Propel Morning Briefing Mast Head Propel's LinkedIn LinkPaul's Twitter Link Paul's X Link

Krombacher Headline Banner
Morning Briefing for pub, restaurant and food wervice operators

Fri 22nd Dec 2023 - Update: JW Lees results, Spaghetti House, Bunsik, SSP Group et al
JW Lees MD – government needs to start to think differently about how it invests in sector, reports record turnover of £88m: William Lees-Jones, managing director of Manchester brewer and retailer JW Lees, has said the government “needs to start to think differently about how it invests in the sector” as the business reported record turnover. Lees-Jones told Propel that retail sales in the current financial year are up 11.2% and wholesale sales are up 12.5%. He said: “Christmas is looking very good so far – last week up 19.6% and this week so far up 7.9%. It feels like we’re doing well but cost pressures remain. We’ve got some mega openings planned for 2024 and feeling positive about our prospects.” It comes as the business reported revenue increased 16% to £88m for the year ending 31 March 2023. Profit was down 56% to £3.5m “for a number of reasons” including the cost of energy, significantly reduced government support and increased levels of investment in the business. The company said it chose to invest heavily in its 134-strong estate during the year spending £8.9m on refurbishing its properties. JW Lees said it is now back on track for future growth following the period of lockdowns and a self-imposed freeze on capital expenditure, with the estate now back on a five-year rolling refurbishment programme. The company’s 47-strong managed house division is now operating 346 bedrooms, with bedroom sales now representing 20% of the company’s managed house turnover. No new pubs were acquired during the year, although The Pointing Dog in Cheadle was bought from Marston’s in June 2023. Two pubs were sold – The Railway & Linnet in Oldham and The Holland Arms in Anglesey, generating £332,000 book profit. JW Lees had year-end cash balances of £10m and a revolving bank credit facility of £15m from NatWest, which means that the company has £25m at its immediate disposal to invest, with the funds marked for new pub acquisitions. JW Lees said it faced some challenging headwinds during the year, in particular significant rises in energy, food and property costs, with its long-term energy supply contracts coming to an end in September 2022. The company was loss-making for the second half of the year, largely owing to a rise of electricity costs of 148% and a rise in gas prices of 275%. The company moved on to flexible energy contracts from March 2023 and has now hedged its energy costs going forwards until 2026. JW Lees has also taken a series of measures to reduce its carbon footprint which, in terms of emissions intensity of carbon dioxide per million turnover, has fallen by 15% since 2020. The business said performance in the 87-strong pub partner estate and free trade was “resilient”. Lees-Jones said: “It feels like we’ve been on a roller-coaster since 20 March 2020 when Boris Johnson ordered all UK pubs to close – sadly some pubs have never recovered but we are now seeing steady growth in all three parts of the JW Lees business. The government says that it recognises how important the hospitality sector is but needs to start to think differently about how it invests in the sector. There are so many simple things that government could do, including the long-promised root and branch review of business rates and fairer rates of both alcohol duty and VAT, which are among the highest in the world. The current year’s challenges include continued high energy costs and inflation; we are also starting to see the impact of the alcohol duty review, which came into effect in August. While we remain keen to acquire more pubs, inns and hotels, there have been limited opportunities for us to acquire the right sites at the right price and so we are about to embark on a major investment programme in our brewery, as we approach our 200-year anniversary in 2028 as well as adding a number of new bedroom blocks to our existing pub estate. We are proud that our overall guest satisfaction score is now 9.1 out of ten and we remain committed to delivering an exceptional guest experience at all times in our pubs, inns and hotels.” The business also paid tribute to Paul Wood, former JW Lees brewhouse manager, who died 12 months ago shortly after completing 50 years’ service, saying he was “the spirit of JW Lees – proud but modest – someone who lived for his job and his work”. The Paul Wood Award has been launched with the first accolade going to Dave Moran, head of pub partners and now JW Lees’ new head brewer, for giving exceptional service to the company. JW Lees features in the Propel Turnover & Profits Blue Book. Its turnover of £88m is the 106th 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 kai.kirkman@propelinfo.com to upgrade your subscription.

Spaghetti House reports trading being impacted by ongoing rail and tube strike disruption, secures Earl’s Court site: London restaurant company Spaghetti House has said trading is being impacted by the ongoing rail and tube strike disruption as it revealed it has secured a new site in Earl’s Court. It comes as the group reported turnover increased to £9,800,997 for the year ending 26 March 2023 compared with £5,313,753 the previous year. Prior to the pandemic, the company was turning over £10,450,984 but had ten sites. The business, which surrendered one of its leases during the period to leave it with eight restaurants, made a pre-tax profit of £334,681 compared with a loss of £368,329 the year before. (2019: loss of £700,744). In their report accompanying the accounts, the directors stated: “The company has been facing new challenges in the last 18 months, due to inflation and staff recruitment. Sales have also been impacted by the ongoing rail and tube strikes. While the gross profit margin has slipped slightly from 77% for 2022 to 75% for the current period, this is still within the targeted margin. The operating profit for the period amounted to £351,471 compared with the operating loss for the previous period of £364,833. This was due to the increase in sales as well as income from the surrender of a lease and life insurance policy payout, the latter two items amounted to £998,135. Since the period end, the company has signed a lease for a new site at Earl’s Court. Also, the company's website has been relaunched and further investments have been made in marketing and social media content. A programme of refurbishment works has commenced to refresh the company's restaurants and the directors actively review the market place for further new sites and opportunities to grow and expand the business. Finally, the company is in discussions with suppliers to reduce the number of deliveries to their restaurants, which are all based in central London, in order to reduce its carbon footprint.” The business received government grants of £2,209 (2022: £467,109). No dividend was paid (2022: nil).

Former Wear Inns business had deficiency of £8.1m when it went into administration: The old Wear Inns business had a deficiency of £8.1m when it was placed into administration earlier this month, new documents have shown. Propel revealed last month that Milton Portfolio Op Co 3, which operates 25 sites across the north east and North Yorkshire and owned by investment firm Aprirose, had appointed Ryan Grant and Howard Smith, of Interpath Advisory, as joint administrators. The documents show more than £3m was owed to lender Metro Bank and almost £900,000 owned to regional creditors, among which there are small brewers. Most recent accounts for the business, for the year to April 2022, show it owed more than £6m within a year, as bosses described the lingering impacts of the pandemic and “uncertainty about the journey back to normality”. In recent weeks, agents Avison Young and Watling Real Estate have been appointed to market the 25 pubs, which continue to trade, and include Black Bull, East Boldon; Black Bull, Morpeth; Dirty Habit, Wickham; Dirty Habit, Whitley Bay; Lambton Arms, Chester Le Street; Old Courthouse, Barnsley; The Priory, York; The Victoria, Whitley Bay; and the Whistle Stop, Beeston. When appointed, administrators said the venues had been strong performers prior to the collapse – an observation supported by the firm’s accounts, which talk of historic profitability and cash generation. All 264 staff across the pubs, which had been managed by Aprirose subsidiary Blackrose Pubs, have been kept on by the administrators as they work to find a buyer for the portfolio, which includes 21 freeholds and four long leaseholds. The documents show Milton Portfolio Op Co 3 had property assets of £4.2m subject to a fixed charge, as well as £1.4m of assets subject to a floating charge. The administrators expect to realise about £385,644 for preferential creditors. Aprirose acquired the former Wear Inns business five years ago in a £22.4m deal backed by the Business Growth Fund and NVM Private Equity.

Real Fun Group aiming to become ‘prominent player’ in UK’s independent bingo sector after buying eight Majestic clubs out of administration: Real Fun Group is aiming to become a “prominent player” in the UK's independent bingo sector following the acquisition of eight bingo clubs and their freeholds from Majestic Bingo out of administration. The deal expands Real Fun Group’s portfolio to a total of ten such clubs throughout England and Wales, while safeguarding the employment of more than 140 individuals. Majestic Bingo entered administration on 7 July 2023, overseen by Tim Bateson and Chris Pole, of Interpath Advisory, as joint administrators. Kevin McGinnigle, chief executive of Real Fun Group, added: “I'm incredibly excited by this opportunity. This was a well-run business that was hit with devastating luck over the last few years, and I can't wait to work with the team. To sit here today, knowing we’re able to keep so many people in work is an unbelievable feeling.” He noted there was “undoubtedly” a lot of work ahead, adding that he was “confident we've got the right people within the business to make this a huge success for everyone concerned”. “Coming from a family of bingo players, I’m aware of the role that local bingo clubs play in their community and to get the opportunity to keep these historic clubs open for our customers is just fantastic,” he said.

Bunsik launches food court model for fifth site with Westfield Stratford City opening: Korean street food concept Bunsik, part of Maguro Group, has opened a fourth London site, at Westfield Stratford City as it tries a new food court model. The outlet is based in the food court on the lower ground level. Bunsik’s is the first and only Korean restaurant within the shopping centre. Bunsik has introduced a range of vegetarian options to its menu, including the debut of its first veggie burger, and continues to offer its signature Korean street food classics along with a variety of bubble tea. The opening is a fifth venue for Bunsik following the concept’s first venture out of London, in Manchester this summer, which has “surpassed all expectations”. In September, Maguro Group director Jae Cho told Propel it is set to make Bunsik its first franchise, with an aim of 20 sites by 2026. Of the Westfield Stratford site, Cho said: “Westfield Stratford is an exciting one as we are try a new food court model. We do so with great confidence; having this fantastic opportunity to partner with a global brand as well renowned as Westfield.” Maguro Group also operates the Maguro Sushi, Gogi, Bullgogi, Itaewon Burger & Chicken and Pochawa Grill concepts.

Eight community pubs among projects to benefit from £25m government funding: Museums, pubs, parks and cinemas across the country will benefit from a £25m government package of funding. A total of 70 successful bidders will be given a share of the Community Ownership Fund – a funding pot “rescuing community places that form the beating heart of a local community”. The latest round will support 26 community centres and village halls; 14 creative buildings including museums, cinemas, music venues and art galleries; 12 sports and leisure clubs; eight community pubs; four parks and green spaces; and three commercial buildings for “vital” community shops. Three theatres are also benefiting from the funds. Just over £2m will go to the historic Wolverhampton Grand Theatre so it can buy a neighbouring 1800s building and turn it into an adjoining venue. This will allow the theatre – which just turned 129 years old – more space to host creative and performing arts activities. Another £2m will help secure the long-term future of the King’s Theatre in Edinburgh. The building will be extended to improve its disability access. A new community hub will also allow the theatre to host more activities. Meanwhile, more than £1m will restore the historic Jacobs Wells Baths building in Bristol, to bring its live dance and theatre performances to life again. Scottish projects in this round will be supported with £8m of funding, with a further £1.4m for Northern Ireland and almost £440,000 for Wales. British Beer & Pub Association chief executive Emma McClarkin said: “With pubs in the news again this Christmas, highlighting once again the vital role they play in bringing communities together and particularly those on their own at this time of year, the funding announcements for eight community pubs through the Levelling Up fund is very welcome. This will enable these pubs to continue to remain at the heart of their communities. We would also urge government to provide further funding support to Pub Is The Hub, an incredible organisation, which provides funding for local pubs to enable then to diversify and offer additional community services and amenities.”

Fast-growing Kent bakery closes crowdfunding campaign to support expansion after raising more than £325,000: Fast-growing Kent bakery Cheran’s Bakery has closed its campaign on crowdfunding platform Seedrs after raising more than £325,000. The company, founded in March 2022 by Cheran Friedman, launched the campaign with Seedrs last month, initially aiming to raise £225,000 to help fund opening more stores and launch a pop-up events business. Cheran’s was offering equity of 7.02%, giving it a pre-money valuation of £3m. The campaign has now closed having raised £325,482 from 193 investors. The business has stores in Sittingbourne, Canterbury, Rochester, Faversham and Maidstone, with a sixth on its way, in Tunbridge Wells, another two in the pipeline, one of which is in Greenwich, south east London. The business has generated £900,000 in revenue in 2023 alone, and £1.2m since launch, and seen a more than 500% increase in like-for-like revenue from the second quarter of 2022 to the same period in 2023. Mum-of-two Friedman said she started the business after her home-baking proved to be a hit with friends and family. “The start-up was literally one text message from my uncle to myself, and a few months later, the concept was formed and first shop opened in complete secrecy from our family,” Friedman added. “The business was initially funded by my uncle who is a serial entrepreneur – he invested more than £200,000. The shops following on from this were mainly funded with our cash flow from the business.”

North east gym business aiming to open up to five sites a year as it plots UK expansion: North east gym business, OneGym, is aiming to open up to five sites a year as it plots UK expansion. The business, co-founded by brothers David and Paul Pearson, launched its first site in Bishop Auckland and has since expanded to nine sites. Last year, Middleton Enterprises, which provides growth capital to established and profitable small and medium-sized enterprises, backed OneGym to support its ambitions. Since then, managing director Paul Pearson told Insider Media the company has been “extremely busy” having opened gyms in Peterlee, Sunderland and Darlington. Longer term, OneGym is open to growing its footprint across the UK, Pearson said, adding that it is a “natural growth progression that would involve big changes in business personnel”. Despite this, the company is focused on the north east in the short term, with a gym in Wallsend set to open soon. The overall aim is to open four or five gyms a year, Pearson said, at a price point that is “more appealing, open and accessible to a lot more people”. Despite the wider economic headwinds, Pearson said the business would not be slowing down its expansion, adding: “I think Middleton feels exactly the same. We have this philosophy in the business where we just do the simple things and do them brilliantly. It's about the right location, free car parking, keeping the gyms clean, having really good kit and classes and employing knowledgeable, professional and friendly staff.”

SSP Group partners with Australian chefs as it opens two new outlets at Melbourne airport: SSP Group, the operator of food and beverage outlets in travel locations worldwide, has opened two new outlets in the Qantas Terminal 1 of Melbourne airport. Mobo Moga is an Asian fusion restaurant created in partnership with Australian chef Gary Mehigan with dishes including Vietnamese classic bahn mi, the Bombay Sandwich and Gary’s Fried Noodles. Mehigan said: “When great food and service is part of your DNA, creativity and innovation are contagious. The future looks bright for great travel and food experiences, so why shouldn’t these start before you fly? My partnership with SSP Australia brings a world of endless flavour to Australian airports creating unique spaces and experiences, so passengers can relax and enjoy their travel almost as much as their destination.” The Grace Wine Bar & Eatery has been created in partnership with Australian chef Ray Capaldi, offering food and drink parings in a “sophisticated” environment. Capaldi said The Grace will offer passengers something different, while giving them the classics, with signature dishes presented with a unique twist. Dominic Cain, general manager of SSP Australia, said: “These new ventures are a testament to SSP Australia's ambition to set new standards in the travel food sector. We're not just raising the bar; we're creating a whole new benchmark for quality and innovation in airport dining.” 

Return to Archive Click Here to Return to the Archive Listing
 
Punch Taverns Link
Return to Archive Click Here to Return to the Archive Listing
Propel Premium
 
Pepper Banner
 
Butcombe Banner
 
Contract Furniture Group Banner
 
UCC Coffee Banner
 
Heinz Banner
 
Alcumus Banner
 
St Austell Brewery Banner
 
Small Beer Banner
 
Kronenberg Banner
 
Cruzcampo Banner
 
Adnams Banner
 
Meaningful Vision Banner
 
Mccain Banner
 
Heineken SmartDispense Banner
 
Propel Banner
 
Christie & Co Banner
 
Sideways Banner
 
Kurve Banner
 
CACI Banner
 
Airship – Toggle Banner
 
Wireless Social Banner
 
Payments Managed Banner
 
Deliverect Banner
 
Zonal Banner
 
HGEM Banner
 
Zonal Banner
 
Access Banner
 
Propel Banner
 
Pepper Banner