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Morning Briefing for pub, restaurant and food wervice operators

Thu 4th Apr 2013 - Domino’s UK, Fuller’s and Hall & Woodhouse

Story of the day:

Domino’s UK reports 6.6% rise in like-for-likes in first quarter: Domino’s UK has reported like-for-like sales rose 6.6% in its first quarter to 31 March thanks to sales of new products such as the Domino’s Hot Dog Stuffed Crust, a successful short-term price led promotion and some weaker comparative figures due to warmer weather last year. In addition, like-for-like sales in the Republic of Ireland rose by 8.1% (2012: 1.5%). A total of 61.9% of all UK delivered sales (2012: 49.8% of UK delivered sales) came via the internet. During the period, seven new stores (2012: six) were opened - five in the UK and two in Germany - the company aims to open 60 new stores in the UK and 18 in Germany this year. The company stated: “The expansion in Germany continues to progress well and the company is already seeing some very successful stores, especially among our fledgling franchised community. Like-for-like sales, in Euros, in the six mature stores (2012: two mature stores) are showing encouraging progress from a low base and are up 40.3% in the period (2012: 3.7%). High performing UK franchisees are continuing to lead the way in the German expansion, with the first German franchisee about to come on board. The Swiss market is also undergoing radical change. An intense programme of staff retraining, improved menu development and the new marketing initiatives are already paying off with the stores showing good growth over recent months. Like-for-like sales, in Swiss Francs, in the ten mature stores are up 9.3% for the period.” Chief executive Lance Batchelor said: “Domino’s continues to show that there are still significant opportunities in our core UK and Republic of Ireland markets as well as the new territories of Germany and Switzerland, and we are in a great position to seize those opportunities. New product launches, a relentless focus on service, industry leading digital and online technology, an ever growing marketing budget, and a healthy pipeline of new sites are just some of the ways we continue to drive this terrific business forward.” Numis Securities analyst Douglas Jack said: “Trading is ahead of expectations like-for-like sales rose 12.4% in the UK and 17.2% in the Republic of Ireland over the last six weeks, by our estimates. Over the last 13 weeks, like-for-like sales rose 40.3% in Germany and 9.3% in Switzerland. Three months into the year, we believe it is too soon to upgrade forecasts, but the risk to numbers is clearly on the upside.”

Industry news:

Simon Emeny set to become Fuller’s chief executive: Simon Emeny, currently group managing director, will become Fuller’s chief executive with effect from 1 July this year. Emeny, 47, joined Fuller’s in 1996. With an initial brief to run the company’s managed pubs, he joined the main board in 1998 and was then promoted to managing director of Fuller’s Inns in 2006. He subsequently became group managing director in 2010. He was previously at Bass PLC, joining as a graduate trainee in 1987. Current chief executive Michael Turner will continue as chairman of the group in a non-executive capacity. Turner said: “Simon’s record of success has been outstanding. He has delivered a first class performance during his time with Fuller’s and I know he is the right person to lead the company on to the next step in its long-term development as a leader in its field.” Emeny said: “I feel proud to be appointed chief executive of a company based on strong values, quality, and long term vision. I would like to thank Michael for his inspirational leadership and I look forward to continuing to work closely with him in the future.”

Tim Martin and Mike Tye call for tax parity with supermarkets: JD Wetherspoon chairman and Spirit Pub Company chief executive Mike Tye have renewed calls for tax parity in The Financial Times this morning. “It is certain to happen at some point,” Martin told the newspaper. “Pubs employ so many more people per pint or meal than a supermarket. The economics will drive a chancellor and a government towards the job-creating option.” Tye said: “We are disadvantaged on food versus supermarkets, where there’s no VAT on ready meals. It penalises people who don’t have a lot of money and want to have a treat.”

Investor – heavily geared companies like Spirit now offer value: An investment manager has argued that heavily geared companies, hit hard in the financial crisis of 2008 and out of favour ever since, now look attractive on a valuation basis. Philip Matthews, manager of the Jupiter Growth & Income fund, has claimed investors are now missing out by avoiding companies with debt. Matthews said that companies with gearing are now cheap on a valuation basis and he has been upping his exposure to these names as a result. “One area we are finding opportunities is in companies that have gearing on their balance sheet,” he said. “Having gone into 2008/2009 with lots of investors not really understanding the negative impact of gearing when things go wrong, over the last three years investors have been praising companies with cash on the balance sheets, and that has gone too far. Whilst we are sensitive to the negative impact of gearing when things go wrong, it can work in your favour in up-markets.” Matthews has built a stake in Spirit Pub Company.

Luke Johnson – I’m searching for the next Giraffe: Investor Luke Johnson has reported that he will be fortunate to find an investment as strong as Giraffe, the company acquired by Tesco three weeks ago. In his Financial Times column, he wrote: “Part of me didn’t really want to depart but I realised the offer price was attractive and that it was the right step in the evolution of the business. The company has been bought by Tesco, the huge UK-based retailer. I hope it treats its acquisition well and preserves the culture. It must try to retain the hundreds of decent employees who make it innovative and exciting. Luckily, the founders are staying on board. Meanwhile, I am going back to the drawing board, resuming an endless search for the next big thing. If I find another opportunity like Giraffe, I shall be fortunate indeed.”

Company news:

Frankie & Benny’s set for Hemel Hempstead: The Restaurant Group’s Frankie and Benny’s brand is set to move into the formerly dilapidated Leisure World in Hemel Hempstead. A spokesman for the company said it will employ 30 to 40 new staff and the Jarman Park venue is expected to open just before Christmas or shortly afterwards. Leisure World’s Lava and Ignite clubs, owned by Luminar were closed in 2011 because the venues were losing money, while party bar JJs and Hotshots bowling alley also shut. Early last year, Dacorum Borough Council agreed £4 million plans for eight new restaurants at the venue under revamp plans that also included a new frontage, cinema, bowling alley, ice rink, play area and gym.

Better burger chain Five Guys secures first UK site: Better burger concept Five Guys is understood to have taken the Long Acre bar in Covent Garden from Novus Leisure for its first UK opening. The company, which operates over 1,000 sites in the US, has paid a significant premium for the venue and now plans to open later this Spring. The Long Acre site closed earlier this week and Five Guys is expected to be on site next week. Five Guys has stated its intention to operate five units within Greater London in the next 12 months.

Bagel Nash plans eight openings in the next year: Bagel Nash, which opened a flagship site in Nottingham last week, plans eight new sites in the next year to add to its existing 15. The next site will launch in Manchester, where it currently operates two branches, with an opening planned for October. Bagel Nash has also secured a new manufacturing site, which is 13,000 sq ft larger in size than its existing base, and will help the business to cope with a series of new wholesale contracts it has recently secured.

Orchid moves away from printed manuals: Orchid Group has created division-specific electronic documents to help its pub teams get the information they need quickly and easily, helping them run their pubs effectively. The pub company has led the way with its comprehensive yet straightforward guidance for staff, but now it is also embracing technology to ensure that information is easy to access. Orchid’s menu specifications have been edited into PDFs which can be viewed from smart phones and tablets. The new versions will help pubs save money, time and paper. “The new e-manuals represent a step on from paper-based spec books and allow us to make the most of the now common technology of smart phones and tablets,” says Amey Fairbrother, development executive for Orchid’s Food Team. “Rather than printing out the manuals, which run to many pages, for each member of the team, managers can simply email them the PDF so they have the information at the fingertips whenever they need it.”

KFC introduces mobile wallet app: Kentucky Fried Chicken has followed McDonald’s and Starbucks introducing a “mobile wallet” to allow customers to order and pay for food before they arrive at an outlet. “When you have a very comfortable ordering environment, like a smartphone, you just order more,” said Jeremie Leroyer, chief executive of Airtag, which built the app for KFC. He said mobile ordering for fast food restaurants would count for about 5% of transactions in the next year, but expected that to “grow drastically” in the next two to three years. KFC introduced the technology at ten locations in the UK yesterday and will roll it out across its estate.

Mitchells & Butlers franchise Harvester to Moto for motorway service station opening: Mitchells & Butlers Harvester brand has been franchised to motorway service operator Moto Hospitality for an opening at Moto’s Donington Park Services on the M1 next month. Gary John, group property director at M&B, said: “We are pleased to be partnering Moto to open a pilot Harvester franchise at Donington. Motorway services present a new market for us and we are keen to explore the opportunities for growth in this sector.” Tim Moss, chief executive at Moto, said: “We are delighted to welcome the Harvester brand to Donington Park Services. Harvester offers something for everyone giving customers the opportunity to relax with freshly cooked food renowned for its quality and value.”

Gray of Chelmsford reports stable turnover and profit: Gray & Sons of Chelmsford, which runs an estate of 50 tenanted pubs and wholesales beer, has reported turnover of £3,945,470 in the year to 30 September 2012 compared to £3,959,526 the year before. Pre-tax profit was £968,615 compared to £993,680 the year before. The company also farms lands and reported trading activities had been “satisfactory”.

Clive Watson – ‘we are lucky to have acquired The Phene Arms in Chelsea’: City Pub Company boss Clive Watson has thanked the Bourne family for selling The Phene Arms to an independent company – City is due to complete on the sale later this month. At a public inquiry in November last year, owner Robert Bourne lost an appeal after again seeking a change of use for the pub to a family home. Watson said: “An opportunity such as this only comes up once in a generation and we regretted not buying it in 2002. The Phene is a very special pub and we intend to keep it as such. We’ll be keeping all the staff and I can’t foresee any major changes being made as it is pretty good as it is. The Bourne family have been fantastic throughout and a credit to them that they made sure that The Phene went to a relatively small independent company such as ourselves, instead of putting it on the open market to be swallowed up by the ‘big boys’. We intend to keep this pub for the local residents and we want to make it more accessible. Especially the function rooms upstairs. We very much intend to listen to what the local people want.”

Yeo Group to open boutique hotel and restaurant in Felixstowe: Yeo Group, headed by Tim and Julie Yeo, is to open The Fludyer Arms Hotel, with 14 letting bedrooms, kitchen, bar and restaurant, this Spring. The Yeos already run Café Bencotto and The Alex in Felixstowe, in a joint venture partnership with a local development company. The couple have a reputation for upmarket restaurants.

Vardigans joins Fat Duck Group as chief executive: Former Barracuda Group finance director Simon Vardigans has joined Heston Blumenthal’s Fat Duck Group as chief executive. Vardigans took up his position at the start of this year. He spent one year with Barracuda and prior to that spent just over four years as finance director at Coffee Nation. The Fat Duck Group includes The Fat Duck, The Hinds Head and The Crown at Bray as well as London restaurant Dinner by Heston Blumenthal.

Lucky Beach makes list of UK’s top burgers: Lucky Beach, the beach-side café opened by industry consultant and former Mitchells & Butlers executive Mike Palmer just before Easter, has been included on a list of the UK six best burger restaurant by redonline.co.uk. Its review stated: “This brand new retro-style cafe between the piers on Brighton beach is destined to be rammed come the summer. Burgers are made from 100% 35-day aged Sussex Longhorn beef. Try the Hot Chick – a chicken burger of buttermilk fried breast, fennel seed crust, smoked mayo and kale in a poppy seed bun or the smokey bacon which comes in a brioche.”

Llandudno’s Royal Hotel goes into administration: The Royal Hotel in Llandudno has gone into administration – and been closed by administrator Begbies Traynor. Administrator John Kelly said: “Like many hotels, The Royal has struggled during the longest recession period in living memory and has sought to survive by subscribing to a variety of ‘voucher schemes’. As a result, from an administration perspective, it made sense to close the hotel as future residents using vouchers would not pay for their accommodation and as a result there would be no funds to cover the costs of trading. Everyone who has booked is being advised of the closure and anyone who has paid for vouchers should approach the voucher company they have used direct.”

Diageo unveils major investments to increase whisky production in Scotland: Diageo has announced that Teaninich near Alness in the Highlands is the location for its plans to build a new malt whisky distillery. The new distillery will be next to the company’s existing Teaninich distillery but will have its own name and identity. It involves an investment in the region of £50 million and will have the capacity to produce around 13 million litres of spirit per annum. An on-site bio-energy plant will also be constructed to convert co-products into green energy to power the distillery. Diageo will also invest £12 million in expanding the existing Teaninich distillery to almost double its capacity. Full planning applications will be submitted to Highland Council and the company hopes to be in a position to begin work on the new distillery in 2014. Diageo also unveiled plans to invest around £30 million in new production facilities in Speyside, including a project to substantially increase the capacity of the Mortlach distillery at Dufftown. This will involve the building of a new stillhouse, which will replicate the unusual partial-triple distillation process that makes Mortlach unique.

Slug & Lettuce launches new website with function to send 21 million e-mails a year: Stonegate Pub Company’s Slug & Lettuce brand has re-launched its website http://www.slugandlettuce.co.uk with a fresh new look and added features. In addition to standard features such as finding your local bar, looking up menus and checking out the latest in-bar promotions, other features include a click-through to each bar’s own pages where readers can get up-to-date information on what’s on in each location, contact details and photos from recent events at the bar. A new email campaign manager system enables the bar group to communicate with its 450,000 strong user base. Combined with booking emails, the system will be used to send out an estimated 21,000,000 emails per year. Richard Bruce, Stonegate marketing director, said: “With the improved functionality of the booking system in place for Slug & Lettuce we are now in a position to roll it out across our other brand segments including Yates’s and our late night bars and nightclub division, Bars & Venues.”

Michelin-starred chef plans Birmingham opening: A Michelin-starred chef is set to open a restaurant in Birmingham. Adam Stokes, who earned a Michelin star and 4AA Rosettes in 2011, will open Adam’s on 12 April. The restaurant is a 24-seat venue located on Bennett’s Hill. It will serve a menu of modern British food with dishes such as pig’s trotter, bacon jam and smoked eel. Stokes will run for an initial two years with a move to a larger property in the city centre planned for the future.

Masterchef winner takes Hall & Woodhouse pub: Masterchef winner Mat Follas - he took the title in 2009 - is to take over a Hall & Woodhouse pub, The Talbot in Iwerne Minster, North Dorset. He will close his existing restaurant, The Wild Garlic in Beaminster in May. Follas said: “We’ve loved being in our home town of Beaminster, but it’s time to grow the business and The Talbot in Iwerne Minster ticks all the boxes for what we are looking for. It has five great rooms that we can let and will have a seven-day bar and grill offering great pub and bistro food, as well as a separate space for running our increasingly popular courses in the daytime and an evening restaurant. Our customers have asked for more rooms, a more casual, family menu and I’ll still be able to provide higher end food in our evening restaurant for more intimate and quieter dining. The big challenge is to provide all of these with the same, or better, quality and standards we’ve achieved to date.”

Spirit’s Wacky Warehouse seeks “director of play”: Spirit Pub Company Wacky Warehouse playhouse brand is looking to recruit a ‘Director of Play’. The chain is seeking a playful boy or girl, up to the age of 12, willing to try out every element of the soft play centre, which includes giant ball pits, cargo nets, astro slides and aerial runs.The selected ‘Director of Play’ may also be called upon to provide a consultation service on all children’s activities taking place over the next year. The successful applicant will receive a one-off pocket money payment of £100 in return for officially opening a new centre in Cardiff on 18 April. The best candidate will also be given the opportunity to bring up to ten of their friends to play and eat for free on opening day. An additional perk of the job includes a Wacky VIP Gold Card, which entitles them to unlimited access to the play centre for 12 months.

Shepherd Neame offers new flagship tenanted pub branding flexibility: The iconic Kings Head pub in Wye near Ashford, run now by Scott Richardson, who was previously manager of Atomic Kitten singer Liz McClarnon, has become the first Shepherd Neame pub where the landlord has chosen his own external branding as part of a dramatic move upmarket at the tenanted pub. The pub has re-opened as a stylish and contemporary inn offering “Kent food with world flavours” – it will offer five bedrooms shortly. The pub has sought to individuate itself from stepping away from traditional Shepherd Neame branding. Richardson told Kent News: “There are a lot of Shepherd Neame pubs around here. So we wanted to make it different and the concept that we came up with they just loved. It’s a total different feel but still has some original features with more forward thinking.” The new look Kings Head is also be free to choose which beers to stock aside from the traditional Shepherd Neame beer range. Richardson added: “I think it was about what we could do for them. We are signed with them for six years, so we are giving them a much better pub and hopefully selling more beer.” Liz McClarnon, who won celebrity Master Chef, has also become the pub’s food ambassador – her deconstructed beef Wellington is on the menu. Shepherd Neame also believes that this could provide a new option for landlords in the future with the Castle Inn at Bodiam also offering an entrepreneurial re-branding. A Shepherd Neame spokesman said: “Our joint investment with the licensees at The King’s Head is one of the many ways in which a Shepherd Neame tenancy can suit entrepreneurs who are looking to run their own business. We welcome applicants who have a strong vision of the type of pub they wish to run, whether they’re looking to build trade based on food, beer, wine or entertainment and events. Where appropriate, we can provide additional expertise in these areas or consider improvements to the site. In this instance, we’re confident our partnership with the licensees will be great for the pub and the village of Wye as we’ve worked together to offer the village something unique.” The most recent TripAdvisor review of the refurbished Kings Head states: “Buzzy, stylish and a lot of thought and love has clearly gone into it. Definitely recommended. Didn’t stay the night but I understand the rooms are being completely refurbished too. If they are anything like the bar and restaurant they will be excellent.” 

Hakkasan closes Chrysan restaurant six months after opening: Hakkasan has closed its Japanese food Chrysan site six months after it opened in September 2012. Hakkasan, which is owned by Tasameem, the property arm of Abu Dhabi Investment Authority, partnered chef Yoshihiro Murata, whose three restaurants in Kyoto and Tokyo have seven Michelin stars between them, at the site. Last year, Niall Howard, then chief executive of Hakkasan Group, told Square Meal. “I’d been a bit concerned with the supply of Chinese chefs, for visa reasons and for skill reasons. We thought it would be wise to diversify so we decided to build a Japanese family concept similar to the Hakkasan family concept. That’s why we bought Sake No Hana. We want to develop a series of Japanese restaurants at different levels – from fine-dining to casual – and we hope to evolve Chrysan along the lines of Hakkasan. Chrysan will become the brand centre for our Japanese arm, like Hakkasan is for our Chinese family. Chrysan will offer bespoke dining, with a smaller number of covers, and the kitchen will try to push the boundaries of Japanese food. We already have Sake No Hana, which is pitched a bit above smart-casual dining – it’s probably at Yauatcha’s level. And later we hope to spin something out of Chrysan which will be more a mid-level concept.” Hakkasan reported turnover up 35% to £20.93m from £15.54m in the year to 28 May 2011. It reported an operating loss of £634,111 in the year compared to a profit of £1,190,389 the year before, but booked a profit before tax of £58,355 after shareholders waived exceptional interest of their loans to the company.

Luminar reports 14% uplift in sales over Easter: Nightclub operator Luminar Group has reported a 14% like-for-likes uplift in sales over the Easter weekend. Since its buy out in December 2011 by a management team including chief executive Peter Marks, the company now operates 56 nightclubs nationwide – its major brands are Oceana, Lava & Ignite and Liquid. This continued trading momentum builds on a successful Christmas, which delivered a 15.5% annual growth. Finance director Russell Margerrison said: “These results are extremely encouraging as we continue the positive momentum seen in the second half of last year. Easter fell well coinciding with pay day and thankfully the weather was also in our favour. A 14% improvement in like for like sales shows that our clubs are our customers’ venue of choice on big occasions and, despite negative perceptions, there is still real upside in the nightclub sector. Where we’ve invested in our estate, we’ve been completely focused to make sure that money is spent wisely and that we have the right offers in place for the local market. Our investment programme will continue as we refurbish and modernise the estate by using available cash to improve the underlying business, with our next project due to start in Romford later this month.”

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