Story of the day:
Novus reports £25m war-chest to buy new sites: London bar and restaurant operator Novus has reported that it has a fund of £25m to buy new sites. The fund has sanctioned by its new owners LGV Capital and Hutton Collins, who acquired the business for an enterprise value of £100m in July this year. The company’s secured bank debt reduced to £37.5m from the previous £79.9m with a new facility provided by Haymarket Financial. In Companies Housing filings, the company said: “This facility provides significantly more covenant headroom, cash interest payments are lower and there are no scheduled debt repayments in the first three years, which dramatically increases the level of free cash available to invest back in the business and fund future acquisitions. The new investors have also sanctioned a committed fund of £25m for the business to acquire additional assets.” Returns on refurbishments in the last four years have delivered an average payback of 2.1 years. The company reported that it incurred costs of £1,963,000 in relation to advisory fees related to its sale in July. Group Ebitda rose 50.9 per cent to £16.7m. Gross margin decreased by 0.8 per cent to 78.6 per cent, the majority of which was due to the full year impact of the Balls Brothers acquisition, which has a much higher food mix but generates a lower Gross Profit.
ALMR National Restaurant Show Study Tour in Chicago open for bookings: The Association of Licensed Multiple Retailers (ALMR) has opened its study tour to the National Restaurant Association Show in Chicago in May 2013 for bookings. Next year’s visit takes place between Thursday 16 May and Monday 20 May. The ALMR launched its first study tour trip to the NRA show this year, with the trip led by Propel Morning Briefing managing director Paul Charity. The NRA draws 58,000-plus industry professionals from all 50 states and 100 countries, all seeking the newest innovations and up-to-the-minute information about trends and issues. The ALMR trip provides: insights from industry experts on the rise in fast-casual dining, social media, new and emerging brands, menu development, staff management and a host of other issues – with 70 free education sessions; involves a tour of Chicago’s hottest concepts and a market overview briefing sessions from US experts. ALMR chief executive Nick Bish said: “Our first trip in May this year was a tremendous success with our attendees reporting they had benefited enormously from the visit to the Show and the chance to study the key trends in the innovative US market.” Paul Charity, managing director of Propel Info, said: “The NRA show is a fantastic opportunity to find fresh inspiration and understand the emerging trends shaping the fast-changing US market.” To book a place, e-mail Jo Charity on
jo.charity@propelinfo.com or call her on (01444) 810304. Places are limited.
Industry news:
Starbucks – drive-thrus are proving more profitable: Starbucks chief executive Kris Engskov has reported that the company is finding more profitable ways to trade in the UK. In a speech to the London Chamber of Commerce, he said: “Given we tend to locate in places with the highest footfall, usually on high streets and in prime locations, our rents have traditionally been very high, and we have in the past made decisions during a period of rapid expansion that continue to prove challenging. In the early days of our development here, the lion’s-share of our business was in London, where rents were particularly high. It’s why we’re now focusing on the way we grow our business – for example with drive-thru locations, a concept still in its infancy here in the UK and a vital part of our strategy to achieve greater profitability as we grow across different parts of the country. This is just one of many ways we are looking to grow, and to become more profitable over time. We know, given how our recent store openings and drive-thrus are performing, that we are making the right decisions.” (See bottom of e-mail for Engskov’s comments on why Starbucks will start to pay £10m a year in corporation tax)
Hospitality Guild picks up £300,000 sponsorship: The Hospitality Guild has raised sponsorship and industry funding worth nearly £300,000 towards the development and fit out of a state of the art industry training and meeting centre, Hospitality House. The sponsorship agreements follow last week’s announcement that the Guild and the National Skills Academy for Retail have been successful in securing £500,000 investment from the Skills Funding Agency for the development of the building. Suzy Jackson, executive director for the Hospitality Guild, said that Hospitality House will act as an iconic symbol of the industry’s belief and support of its people. She added: “Hospitality House will be a state of the art training and meeting hub, providing a practical facility and a sign of unity for the hospitality industry. The fact that a number of suppliers have committed products and services to help develop and fit out Hospitality House shows the broad appeal of the initiative.” The new sponsorship deals will see refrigeration company, Gram Commercial, provide more than £40,000 worth of fridges, plus installation and training, for Hospitality House, with Electrolux adding to its existing contribution of kitchen equipment. This is in addition to sponsorship already agreed with Hilton Worldwide, Compass Group UK and Ireland, Conti Espresso UK, Claremont Group Interiors and Heineken.
Technomic – world buffet concepts set to seek greater differentiation: Foodservice insights firm Technomic has forecast that companies in the emerging world buffet concept market will seek to offer greater differentiation. UK business development director David Wilkinson said: “(I) anticipate that multi-cuisine world buffets will work harder to differentiate their brands by getting more interactive with cooking stations, becoming even more innovative in terms of the global cuisines they offer, and revamping their service format to meet consumers’ need for convenience. For example, Red Hot World Buffet has introduced a smaller-footprint site as an express model, and Chinese buffet concept Real China has launched a Real Express model. Expect others to follow suit.”
Petition to wind up Gordon Ramsay Holdings dismissed: A petition to wind up Gordon Ramsay Holdings has been dismissed by The High Court. The petition from Chris Hutcheson, Ramsay’s father-in-law, alleged an unpaid debt and has been dismissed on the undertaking that money owed to Hutcheson, believed to be circa £2m, is paid in full.
Company news:
New Luminar owner set to pay £6m instalment at the end of this month: The new owner of nightclub company Luminar is set to pay the final large instalment of £6m at the end of this month, administrator Ernst & Young has stated in a newly filed report. The company was sold for £33.9m in December 2011 with £15.9m paid on completion a year ago. It was agreed that £14.2m was to be paid on a deferred basis with £2.2m being paid in monthly instalments of circa £240,000 per month ending in September this year – and £6.9m of deferred payment during 2012, adding up to a total of £8.2m. Ernst & Young stated: “The balance of £6m is payable on 30 December 2012.” A further £3.7m of the sale price is contingent on the successful assignment of 46 leasehold premises. The administrator reports that 15 assignments have been agreed, which has crystallised circa £1.2m of the contingent consideration. It added: “A further 24 are still being negotiated. We are in regular dialogue with the purchaser and understand that they are making good progress in their negotiations with the majority of the new landlords. The uncollectable provision of £822,000 relates to seven sites where it has not been possible for the purchaser to obtain an assignment and four sites which are proving problematic to assign.” Ernst & Young expects a further £1.7m to be realised from the assignment of leases. The administrator reported that 144 personal injury claims worth £2.2m are outstanding from the period prior to administration – a further 19 were received during the seven-week period that the company traded in administration. Ernst & Young has charged £4,468,817 for its work so far.
Greene King reports Net Promotor Score of 52.8 per cent for Hungry Horse: Greene King has reported that its Hungry Horse brand is achieving a Net Promoter Score of 52.8 per cent with the remainder of its managed division hitting 50.7 per cent, a 160 basis points improvement on the year before. Every seven per cent of Net Promoter Score is worth one per cent like-for-like sales growth. A chart produced for City analysts showed that unnamed “Portuguese, burger, Japanese and high street sandwich” concepts are achieving higher Net Promoter Scores.
Bath Ales to open flagship Graze Bar, Chophouse and Brewery next Monday: Independent brewer and pub operator, Bath Ales, is set to open the doors to its new flagship venue, Graze Bar, Brewery & Chophouse, in Bath’s Vaults , next Monday (10 December). It will be the third Graze bar and restaurant that the south west brewer has opened, with outlets already in Bristol and Cirencester, and at just over 5,000 sq ft, it is the largest outlet yet for Bath Ales. Bringing something completely new to the city, Graze Bath also signals the first time the brewer has included a micro-brewery in one of its outlets. It will be the only micro-brewery bar in the city. Taking up the entire first floor of the new food quarter, just south of the city’s shopping area, next to Bath Spa train station, the new venue also boasts two large terraces for al fresco drinking and dining. Bath Ales retail director, Robin Couling, said: “This is a very exciting development for Bath Ales. Graze will be our biggest venue to date and the third outlet in the Graze series, which has already proven popular in Bristol and Cirencester. We’ve taken inspiration from the great bars and chophouses in London and New York to give this bar its own unique character. It will deliver what we are best at - a great pint of cask beer and the best quality dining under one roof.” The Graze concept was first launched in Bristol in 2009, the second venue opened in Cirencester in May of this year. Bath Ales also operates the award-winning Hop Pole and The Salamander in Bath. The new site takes Bath Ales tally of managed sites to ten. Other openings at The Vaults include the Bartinet Bakery Café and Gourmet Burger Kitchen. Nandos and Prezzo will open in the New Year.
Thwaites to invest £2m to make Wainwright Top Ten ale: Leading northern brewer Thwaites is on track to make Wainwright a Top Ten ale in the UK over the next three years beginning with a £2m investment in the brand across the on and off trade. The 4.1 per cent ABV golden ale, which Thwaites named after Alfred Wainwright, author of the famous walking guidebooks is now the fastest growing UK top 25 cask ale and a Top 20 Premium Bottled Ale in the off trade. Steve Magnall, managing director of Thwaites Beer Co, said: “This is an exciting time for Thwaites and the Wainwright brand. We’re very proud of Wainwright and the great success it has achieved in a relatively short lifespan. At 4.1 per cent ABV and with golden ales driving the cask ale category, Wainwright is perfectly placed and we are ready to support the brand and grow the category. We are investing heavily in promoting Wainwright because we firmly believe it can establish itself as a Top Ten cask ale within the next three to four years. We’re keen to encourage drinkers who want something new and refreshing to give it a try. Through our targeted investment in the brand and with innovations such as the Wainwright Pub Walking app, we believe that we’re on the right path offering consumers a modern beer and brand they are telling us they are looking for.”
Wetherspoon gets Wells go-ahead; locals voice support for Wetherspoon pub in Alnwick: JD Wetherspoon has won planning consent to convert the former Emporium building in Well’s Priory Road to a pub – Wells has a population of 10,406. Meanwhile, residents have responded angrily to opposition to a JD Wetherspoon’s £1.3million plan to convert the Corn Exchange in Alnwick to a pub. Alnwick Chamber of Trade has said it will fight the plans, voicing concerns that it will have a major impact on the town centre. But its views have sparked a huge response a Facebook page, “Yes or No to Wetherspoon’s in Alnwick?”, attracting more than 300 likes as well as a large number of comments. A poll on the page is gauging opinion on whether the community wants Wetherspoon to come to Alnwick with 615 votes so far with more than 500 in favour of the managed operator.
Collyer issues hold recommendation on Whitbread shares: Deutsche Bank analyst Geof Collyer has issued a hold note on Whitbread shares ahead of its third quarter results announcement next Tuesday (11 December). He said: “We expect the company to report more muted like-for-like growth for its third quarter versus the first half of its financial year as the UK market settles post Olympics, and with the UK hotel industry RevPAR growth still resting in the negative zone. The shares have outperformed the international hotels peer group by 9-19 per cent over the past quarter, with the shares consolidating around the 2,400p level. In rating terms, this is around a ten per cent discount to IHG (hold; 1,655p), which we see as fair. The market may wait until the Q4 IMS before moving the shares on to the next level.”
PizzaExpress submits plan for new site in Alderley Edge, Cheshire: PizzaExpress has submitted a planning application to convert a site formerly occupied by Wine Rack, which closed three years ago, a bookmakers and offices. In May, Cheshire East Council refused a first application by PizzaExpress to grant a change of use on the grounds that would have a negative impact on the vitality of the shopping area and was unneighbourly.
Bill’s in double opening next Monday: Bill’s Produce & Grocery store, the company owned by Richard Caring, will open two sites on the same day next Monday. Bill’s Horsham, in The Old Town Hall, Market Square, and Bill’s in Angel Gate, Guildford will both open Monday 10 December to take total estate size to 15.
Cotswold pub’s new owners plan cider bar: Leisure sector veterans Martin Thomas and John Bagshaw plan to open a cider bar offering 50 varieties having acquired the grade two-listed Five Mile House in the village of Duntisbourne Abbots, near Cirencester. Thomas said: “We’re serving up traditional pub grub like pies, steak, fish and ploughmans, but with a twist. More than 80 per cent of our produce for the food and bar comes from the local area.”
Britvic to retain former chief executive as a consultant: Britvic chief executive Paul Moody will be retained as a consultant on a fee of £58,300 for six months after the company merges with AG Barr early in 2013. Moody will also receive his £2.9m pension pot five years early. Chairman Gerald Corbett said: “New chief executive Roger White has got a huge amount to pick up with putting the two businesses together and generating the cost savings so it makes sense to have Paul available.”
McDonald’s director of operations buys two franchised sites: McDonald’s director of operations Paul Preston, who won the President’s Award in 2006, the company’s top accolade, has extended his 28-year-career with the company by becoming a franchisee. Preston has bought the franchises for the two Bath McDonald’s restaurants in SouthGate and Weston Lock Retail Park. He said: “I have bought a 20-year franchise for the two Bath restaurants. Short term, people will not notice a change, but the long term plan is to invest and improve. The franchising business is all about local ownership. Bath is a tremendous city to work in and from day one I’m here to invest and work in building Bath. I want to add value to Bath and add value to the business.”
Chinese restaurant opens thanks to government for Lending scheme: A new Chinese restaurant has opened in Newcastle thanks to finance from the government’s Funding for Lending scheme. Sky Chinese Cuisine, based in Newcastle’s Chinatown area, has opened with 200 covers. Restaurateur Steve Chan, who has over 20 years experience in other successful restaurants in the north east, received a two per cent cash-back lump sum from Barclays through the Funding for Lending scheme. Martin Griggs, relationship manager at business banking at Barclays said: “By participating in the government-backed Funding for Lending scheme, Barclays is able to pass on the whole benefit we derive to our customers and we are optimistic that people will take advantage of this cheap time to borrow, and make the investment decisions that they have been putting off.”
KFC wins go-ahead for restaurant on magistrates’ court site: Kentucky Fried Chicken has won planning consent to build a drive-through restaurant on the site of the former magistrates’ court in Gainsborough, Lincolnshire. The site that has been empty since the court closed in 2008 and KFC will demolish the existing building to make way for the drive-through restaurant and car parking, with a target of opening in mid-2013.
New Pizza Hut owner shifts communications brief to Lexis: The new owner of Pizza Hut UK, private equity form Rutland Partners, has shifted its UK corporate communications work from Freud Communications to Lexis. The agency has been given a six-figure brief around Pizza Hut UK’s restaurant and delivery businesses after winning its retained consumer work earlier this year. Lexis will now handle the corporate communications press office, previously looked after by Freud, as well as handling proactive corporate work for the dine-in and delivery side of the business. The brief, will also cover crisis and issues management.
Loungers opens biggest Cosy Club to date: Loungers, the Bristol-based café bar and restaurant group headed by Alex Reilley, has opened its largest Cosy Club site so far – and its 28th site in total. The £800,000 venue, located in the St. David’s 2 shopping scheme, occupies a 7,300 square foot site. Reilley said: “It was a great challenge taking on such a big, and fairly sterile, space and giving it the Cosy Club makeover and we’re absolutely delighted with the result. The site has great views over The Hayes and of the historic building facades opposite which are a perfect foil for the electric, eccentric Cosy Club character that we’ve rammed the remainder of the space with.” Reilley also confirmed that work on a sixth Cosy Club site, in a Grade II*-listed former hospital in Exeter, is due to start in late-January next year. He added: “We’re finally over the line in terms of getting on site in Exeter following two years of waiting whilst the landlord was securing funding for the development. Cosy Club Exeter will occupy the ground floor of an old hospital wing, which forms part of a massive redevelopment of the former Dean Clarke House Hospital on Southernhay.” Loungers are also due to open their 29th site later this month in the Marine Point development in New Brighton, The Wirral. The 3,000 square foot venue, which will be the group’s 24th Lounge site and ninth opening of 2012, will be called Marino Lounge.
Starbucks UK chief executive promises to pay £10m a year corporation tax to re-build trust: Starbucks UK boss Kris Engskov has committed to paying around £10m extra in tax per year to maintain trust with its UK customers. In a speech to the London Chamber of Commerce, he said: “We’ve learned it is vital to listen closely to our customers – and that acting responsibly makes good business sense. We’re experiencing one of the most difficult macro-economic periods in many years, and our customers are under a great deal of financial pressure. With the backdrop of these difficult times, in the area of tax, our customers clearly expect us to do more. It’s why I am standing before you today - not justifying the status quo, but to tell you that we are going to take action and do something about it. Today, I am announcing changes which will result in Starbucks paying higher corporation tax in the UK - above what is currently required by law. Specifically, in 2013 and 2014 Starbucks will not claim tax deductions for royalties or payments related to our intercompany charges. In addition, we are making a commitment that we will propose to pay a significant amount of corporation tax during 2013 and 2014 regardless of whether our company is profitable during these years. We are still working through some of the calculations, but we believe we could pay or prepay somewhere in the range of £10m in each of the next two years in addition to the variety of taxes we already pay. This is an unprecedented commitment. It hasn’t been done before. So there is no procedural guideline for how to do it. As such, I want to clarify something that has been the subject of inaccurate reports this past week: despite the fact that we have a consistent and ongoing dialogue with the tax authorities over our business affairs here in the UK, we have not yet shared this particular proposal with HMRC. Looking ahead, if we are not able to generate substantial profits in the years ahead (meaning beyond 2013 and 2014), we will consider extending this commitment until we are paying corporation tax at a material rate. I’d like to highlight a few details behind these commitments. To be clear, Starbucks UK will not claim deductions: for the royalties it pays; for the coffee it purchases; for interest paid on intercompany loans; for capital allowance deductions nor our carry-forward losses for two years or until we make a profit. I am confident these actions, when taken together, will position us as a company to make a larger contribution to the Exchequer and most importantly to the communities we serve while we make the moves necessary to achieve a sustainable level of profitability. These decisions are the right things for us to do. We’ve heard that loud and clear from our customers. And, today, we’re taking the actions necessary to pay more corporation tax in the UK. Over and above these commitments we’re making today, we will continue investing in the UK in a number of other ways – growing our store portfolio in many places across the country, and creating jobs in the communities we serve – especially for young people. And we will do even more. We announced last year that we plan to open 300 new stores and create another 5,000 new jobs in this country over the course of five years, and we remain on track to meet that commitment. We are one of the most active companies in this country in regards to offering young people apprenticeships. Back in September, we committed to employ 1,000 apprentices over the next two years, with 700 of those offered in London stores alone. This will give young people a chance to get a foot on the ladder of a promising retail career at a time when they most need it. I have never been more optimistic about the opportunities we have in the UK. But I know that trust is not something that is earned back overnight. Delivering on the actions we have announced today is fundamental to reassuring the millions of customers who pass through our doors every year and the thousands of partners who rely upon Starbucks that their faith in our company is justified.”
