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Morning Briefing for pub, restaurant and food wervice operators

Tue 9th Apr 2013 - Hall & Woodhouse, Mitchells & Butlers and Spirit

Story of the day:

CGA – Sunday is the key day for food (and drink) sales in pubs: Sunday has become the key day for food and drink sales in pubs, insights firm CGA has reported. Sunday is the most popular day for food sales with 22% of all weekly sales coming on this day, with 67% of all pub sales on a Sunday coming from a food offering. The roast dinner, worth £867 million to UK Pubs, is the nation’s favourite dish and it is on a Sunday when the majority of sales occur. Finding itself on 94% of all food pub menus, 40% of all roast sales happen on Sunday. However, the Sabbath is also a critical day for wet sales. A mixture of satellite sport and low-key drinking occasions leads to 33% of all wet-led sales coming on a Sunday. CGA Strategy’s Tom Lynch said: “Sunday lunch is a cultural mainstay that meets the needs of multiple consumer groups, from value-led students out for cheap eats to extended family groups that don’t want the rigmarole associated with large scale home cooking. While food is obviously a critical component of Sunday trading for most pub retailers, there’s an equally profitable opportunity within the drinks proposition. For those showing football, the increasingly dramatised ‘Super Sundays’ provide an obvious cross selling opportunity from drink to food, which would be significantly enhanced by increased prevalence of table service. Similarly, bartender recommendations on simple-serve cocktails and after dinner drink options can help to increase dwell time and maximise spend per head.” The CGA Pub Food Report, has been developed by food and drink consultancy firm CGA Strategy as a precursor to the launch of a new suite of food insight services.

Industry news:

Propel teams up with City University’s Professor Chris Edger to offer a discount on Multi-Unit Leadership textbook: Propel has partnered the UK’s leading authority on multi-site management, Professor Chris Edger, to offer a discount on his latest book. “Effective Multi-Unit Leadership” is offered to Propel readers for £42.25 compared to the usual price of £65.00. Of the book, Rank Group chief executive Ian Burke said: “This book provides an in-depth assessment of the pressures, challenges and changes facing those of us in multi-unit leadership, together with a framework for making sense of, and developing, our practical experience. Multi-unit leaders, working in constant tension between units and the centre, should read this book and then look again, as I did, at how they lead their teams to deliver results for customers and investors.” The book can be ordered online at www.gowerpublishing.com, with the discount available by quoting the code G12GUo35. 

Dirty linen is top hotel bugbear: A survey of 2,000 adults by The Direct Line insurance company has found dirty bed linen and bath towels are the main bugbears of hotel guests. The next biggest complaint was drunk or noisy next-room guests, followed by building work going on close to the hotel. Guests also complained about poor quality food at their hotel and being hassled by travel reps to go on excursions while abroad.

Horizons – menu prices climb by 6.4% in a year: The Menurama survey, by insights firm Horizons, which tracks changes across 116 chain hotels, pubs, restaurants and quickservice outlets, found that the average price of a dish had gone up 6.4% in a year to £6.69 as operators struggle to cope with food inflation. It’s the biggest rise since 2006. The past six months have seen an even more pronounced spike with a 5.7% rise. Retail Price Index inflation is 2.7%. The average cost of a starter is now £5.59 (up 5.6% in the past six months), a main course is £10.62 (up 7%) and a dessert averages at £4.20 (up 4.2%). The survey also found a rise in food provenance statements, with ‘local’ becoming one of the top five terms used on menus. Others were “homemade”, “free range”, “organic” and “sustainable”. Horizons’ director of services Nicola Knight said: “This survey was undertaken before the recent horsemeat scandal emerged, but because of renewed concerns over food sourcing, particularly meat, we would expect our next survey to show even more effort being made by operators to reassure consumers with details of provenance.” The Menurama survey also shows an increasing ‘premiumisation’ of dishes on menus, such as All Bar One’s handmade beef and coriander burger, Best Western’s sausage and caramelised red onion bap, Ember Inns’ fish goujonettes, and Frankie & Benny’s salt and pepper scampi. “Operators are adding twists to old favourites to make them stand out on the menu – they are getting better at describing dishes too, so what was once listed as an ‘apple pie’ is now a ‘Cox’s apple pie’, and nachos are ‘home fried nachos’,” added Knight.

Use of email direct marketing channel on the up: The use of email as a direct marketing channel is on the up - Experian Marketing Services found email volumes increased 5.4% year-on-year in 2012. Separate research by Marketing Week’s sister title econsultancy found that of the 1,300 marketers it polled earlier this year, 66% rated return on investment as “good” or “excellent”.

Sainsbury’s launches world street food range: Sainsbury’s is to launch a new grab-and-go range on 29 April influenced by street food from around the world. The new range of three salads, four wraps and three flatbreads carry flavours from countries such as India, Morocco and Thailand – and are contained in pink packaging. Paul Morgan, sandwiches and sushi buyer at Sainsbury’s, said: “The new street food range offers all the vibrant flavours you’d expect.” 

Company news:

Spirit opens first ‘premium’ pub in Belsize Park: Spirit re-opened The George in Belsize Park as its first ‘premium’ pub yesterday The George, formerly a Taylor Walker site, is located close to Hampstead Heath and Hampstead High Street. Chief executive Mike Tye has reported that its new premium offer will be upmarket from Taylor Walker and Chef & Brewer. Spirit states: “Located in affluent areas, our pubs will attract a discerning guest that has high expectations. They will put as much emphasis on the atmosphere and service as they do on the quality of the food and drink and we will deliver all four elements in total synergy, with passion and flair. These pubs will look and feel like independent locals, offering a social haven for every occasion. The food offer will be fresh and seasonal. Craft beers, alongside a carefully selected wine list and fresh food, with a daily changing menu, will be at the heart of the offer. There is potential for a turnover in excess of £1 million with a 40% split of food sales.”

Marston’s reveals name of latest Revere Pub Company site: Midlands based Marston’s will re-open the former Hedgehog pub in Copthorne, West Sussex as an unbranded premium Revere Pub Company site called The Curious Pig in the Parlour on Friday 31 May. Meanwhile, The White Hart, Ford, Chippenham re-opens as a Revere site on Thursday 25 April. The Angel and Blue Pig in Lymington, Hampshire re-opened last month as the first Revere site to offer bedrooms – nine out of ten reviews on TripAdvisor since it re-opened have given it the maximum five stars. One reviewer states: “The modern refurbishment has been carried out stylishly and sensitively to the building, resulting in an amazing relaxed atmosphere. The place could even be described as “cool”, which is shocking in a town dominated by chintz. The rooms are comfortable, the staff are friendly, the food is delicious (and surprisingly affordable for Lymington).”

Rockpool Investments raises £1m towards Chicago Rib Shack expansion: Rockpool Investments, headed by Nicola Horlick, has raised £1m towards an Enterprise Investment Scheme target of £1.7m to fund the expansion of Chicago Rib Shack, according to The Times. Cash generated will help fund Chicago Rib Shack’s plan to open a further nine restaurants in UK shopping centres over the next three years. Gary Robins, partner at Rockpool Investments, said last year: “It is very unusual for a restaurant business to be profitable from its first day of trading, which shows just how successful Chicago Rib Shack’s relaunch as a food court restaurant has been. Low set up costs, and a scalable operating model that is easy to replicate at other sites, mean strong growth is expected. Being a profitable business with excellent growth prospects makes Chicago Rib Shack just the kind of private equity investment that interests our investors.” The Chicago Rib Shack management team is led by Christian Arden.

Brazen wins Mitchells & Butlers Browns and Miller & Carter account: Brazen PR has been appointed to promote Browns Bar and Brasserie and Miller & Carter Steakhouse, both operated by Mitchells & Butlers. Browns Bar and Brasserie is celebrating its 40th birthday in 2013, and Brazen will be running a high-profile anniversary campaign including various events around the UK. Brazen’s remit also includes raising the regional profile of each of Browns’ 26 venues. The agency has also been appointed by Miller & Carter to celebrate its ‘Love Of Steak’ campaign, with a series of national events which will filter down to the regional sites. The agency will also be supporting Miller & Carter’s new opening and refurbishment programme throughout the UK in 2013. Brazen founder, Nina Webb, said: “Browns has been part of British dining out culture for 40 years and it’s a great honour to be working with such an iconic brand. Both the Browns and Miller & Carter PR teams in place at Brazen will be implementing integrated campaigns that will deliver meaningful results that more than match the client’s objectives.” Simon Cope, spokesperson for Mitchells & Butlers, added: “The Brazen team have a proven track record in the leisure sector and were the natural choice to work with us on the two brands. They have a strong understanding of our sectors, target audiences and a great creative flair. We’re really looking forward to working with the team to deliver two original campaigns.”

Hall & Woodhouse takes on first female family member: Dorset brewer and retailer Hall & Woodhouse has taken on its first female member of the Woodhouse family. Anthony’ Woodhouse’s cousin Lucinda, a member of the eighth generation, has become a regional manager at the company. Meanwhile Anthony Woodhouse has told The Financial Times that economic downturns do not scare the company. “I know it sounds a bit glib, but this is our 17th recession. Many of the things we did in the 1930s we are doing this time around. Tenants were having a tough time, but we supported them with rent reductions funded by salary freezes at the brewery – and that’s what we did this time round too.” In its latest financial results, the company, situated in Blandford St Mary, Dorset, reported a 4% increase in turnover to £94.1m for the year to January 30, 2012. That compared with £90.5m in the previous year. Pre-tax profit increased by 2.3% from £5.6m in 2011 to £5.7m. Hall & Woodhouse pays about £35m a year in taxes – 20 times more than the shareholders take out in dividends and 50% more than what is paid out in staff salaries in a year.

David Bruce – I’m flattered to be joining West Berkshire Brewery: Veteran pub entrepreneur David Bruce has reported that he is flatered to have been invited to join West Berkshire Brewery as its chairman. He said: “I am flattered to have been invited to join the brilliant team at West Berkshire Brewery who consistently win awards for their excellent beers. These are challenging times in an increasingly competitive market but with its enviable heritage, reputation and well-established beer brands the brewery is poised now for its next stage of development which may well include investment opportunities for its many loyal supporters to own shares in this brewing success story.” The West Berkshire Brewery was founded in 1995 by Dave and Helen Maggs who started brewing in a tiny shed behind the Pot Kiln pub at Frilsham, near Newbury. The Maggs were joined as shareholders in 1998 by property expert Professor Andrew Baum and his wife, Karen. The two couples grew the business rapidly until market demand for their beers resulted in a new 50-barrel plant having to be built in The Old Flour Barn, near Yattendon. The brewery has received over 40 awards recently for its beers including Champion Strong Beer of Britain, a Gold Medal for its Mild Ale and innumerable awards for its best-selling brand ‘Good Old Boy’.

Wetherspoon boss Tim Martin criticises Greene King: Wetherspoon chairman Tim Martin has criticised brewer and pub company Greene King for its decision to seek a judicial review against a planned Wetherspoon pub in Stirling, Scotland. The judicial review, set for later this year, relates to a disused retail shop in the town centre, which Wetherspoon is aiming to develop into one of its pubs. Greene King is bringing the judicial review in order to challenge the pub licence, recently granted by the Stirling Licensing Board. Martin said: “I do not feel it is right for competitors to try and prevent Wetherspoon from opening a new pub. It is a throwback to the 1980s when the major brewers tried to stop Wetherspoon and other companies opening up close to their pubs. These attempts to stifle competition were important factors in the investigation of the industry by the Monopolies Commission more than 20 years ago. It seems to me that Greene King is frightened of competition and are seeking to preserve a local monopoly in Stirling.The strange thing is that Wetherspoon is Greene King’s biggest customer and we have traded with them for more than 30 years, so we are more than a little surprised by their actions.” Wetherspoon aims to invest more than £1.5 million on the planned pub in Spittal Street and create 50 full and part-time jobs.

Douglas Jack – we are a hold on Prezzo shares having lost round operationally to the Restaurant Group: Numis Securities analyst Douglas Jack has issued a hold note on Prezzo shares ahead of tomorrow’s full year results. He said: “We estimate the number of outlets increased by 13% (in 2012), whereas average sales were flat in H1 and are forecast to be flat in H2. Prezzo 2012’s performance represents a slowdown from the positive average sales and flat margins that were achieved over the previous three years, during which trading benefited from estate investment, improving product range and better online marketing. Prezzo remains innovative (for example, it has started to trial online ordering in central London), yet it appears to have lost ground operationally to The Restaurant Group, for which like-for-like sales rose 4.5% and EBITDA margins fell 49bps last year. These results will provide the company with an opportunity to explain what more it can do to reverse this trend. We expect gross expansion to remain at 25 new sites per annum, with Chimichanga (mostly targeting leisure parks) accounting for 40% of new sites.”

Douglas Jack – a fightback has begun: Numis Securities analyst Douglas Jack has argued that sector like-for-likes sales face easy comparables in the coming months. He said: “Some commentators have become downbeat due to the weather, but poor weather alone would be a bad reason to sell pub shares, in our view. Overall, pubs have performed resiliently over a cold/wet 12 months, such that forecast downgrades, if any, should be minimal and dividend decisions should be unaffected, particularly as a year of easy comparatives has started well in April. Favourable conditions continued into last weekend as well, whereas April 2012 was very wet. We expect any weather-related changes in forecast to be minimal and inconsequential. For the pub operators, poor weather may have removed forecast margin of safety (created by LFL sales, cost savings and high returns on capex). However, with the exception of Fuller Smith & Turner and Greene King, they have time to make up for any trading shortfall over the spring/summer. The last time it reported, Fuller Smith &Turner was trading ahead of expectations anyway. The majority of pub sector profits are generated over the summer half-year, so poor weather conditions in January-March (the quietest quarter) are much less relevant than they will be in April-September, when comparatives will be easy. Thus, we would use recent weakness as a buying opportunity.”

Kimchi Cult starts six month pop-up in Camden pub: Korean street food specialist Kimchi Cult has started a six-month pop-up at Black Heart pub in Camden. The menu includes kimchi burgers, bulgogi fries and twice-fried chicken wings, LA-inspired Korean tacos and various banchan (Korean side dishes). Kimchi Cult operates at the Black Heart Pub at 2 Greenland Place in Camden from 5pm – 9pm Tuesday to Thursday, and from 12 noon to 9pm on Fridays and Saturdays.

Scottish celebrity chef opens restaurant and motel with kitchen garden: Scottish celebrity chef Tom Lewis has opened a new restaurant and motel Mhor 84, on the iconic A84 between Callander and Crianlarich. The new venue offers ‘properly sourced, hearty foods’ including Scotch rarebit, proper burgers, shellfish, whole roasted fish and braised dishes. It includes a tearoom, bar, shop, games room, event space and kitchen garden. Lewis, who appeared on BBC2’s Great British Menu in 2006, said: “We’ve lit fires which have remained unlit for forty years and have revealed the beauty of a building which was built 300 years ago. It’s laid-back vibe, lively music, down-to-earth cooking and amazing location is going to be a hit with everyone from couples to fans of the great outdoors. We’ve really strived to make sure the prices are accessible for everyone. It’s a recession-proof alternative for lovers of boutique hotels.”

Warwick couple double up with Punch pub: Warwick couple Dilia and Michael Scott are to double up by taking on The Tilted Wig in Warwick. Dilia and Michael Scott run the historic Roebuck pub in Warwick – and will re-open The Titled Wig later in the year after a £150,000 refurbishment. Dilia said: “Michael and I will run The Tilted Wig as a joint enterprise with my name over the door here while he will continue to run The Roebuck in Smith Street.”

Taste Inn Wales group to take over site it sold five year ago: Welsh restaurant company the Taste Inn Wales group is partnering the Glanusk Estate to take over the Nantyffin Cider Mill near Crickhowell, which it sold a half decade years ago. The company operates three other restaurants in the Brecon Beacons area in South Wales - The Castle at Llandovery, The Manor at Crickhowell, and Peterstone Court at Brecon. It sold The Cider Mill in 2007 after running it for 17 years, putting seasonal local produce on the map. Taste Inn Wales co-owner Sean Gerrard said: “Our part in The Cider Mill story started over 20 years ago and it was a huge part of our life, until we sold our interest in 2007. So when the Glanusk estate recently approached us to tell us that it was going back on the market, we felt that it was opportunity not to be missed.”

Vapiano to host olive festival: Vapiano will be hosting a 15-day olive festival at its two restaurants in London. The festival, ‘Viva Oliva’, will focus on a range of meals and dishes featuring olives. It will run from Sunday 21 April 21 to Sunday 5 May inclusive at its restaurants in the West End and City. Olives will feature in a number of specials, including pizza, pasta, salad and bruschetta. The restaurants will also feature a tasting bar offering a range of olive oil creations as well as olive oil dip spice and olive oil salt. There will also be olive ciabatta. On each of the three Sundays during the festival, diners will be able to enjoy a new creation served in a glass. They are; olives and cucumber (21 April), olives and bell pepper (28 April) and olives and feta (5 May). Vapiano managing director Phil Sermon said: “Both of our restaurants have an olive tree in the dining area and it is an important aspect of Vapiano. The olive festival is a fun way of offering a range of new dishes with olives as a central feature.”

Antic London to open Colliers Wood pub next month: Antic London, headed by Anthony Thomas, is to re-open The Prince pub, Colliers Wood as Provenance in May. The pub will have a “much more intimate, quirky with an independent soul.”

Prezzo signs for Letchworth: Prezzo has signed a 25-year lease to open a new restaurant in Letchworth as part of plans to develop a new cultural and leisure quarter in the town. Prezzo will occupy a site on the corner of Arena Parade and Eastcheap. The restaurant will have pavement tables, a first floor roof garden, and seating for more than 100 diners. Letchworth Garden City Heritage Foundation secured the deal as part of its town centre rejuvenation strategy. The Heritage Foundation is also developing plans for a new arts centre nearby, which will complement the Broadway cinema and transform the area into a cultural and leisure hub. Jonathan Kaye, Prezzo chief executive, said: “We are looking forward to opening our new restaurant in Letchworth Garden City and believe that it will prove popular with people of all ages, as well as being a great asset to the town’s social scene.”

Freehold Chelsea pub on the market: A freehold pub in Chelsea is on the market again through Davis Coffer Lyons after aborted negotiations. The Cross Keys on Lawrence, Chelsea is priced at £4.5m. It is described as a substantial premises with a midnight licence and the potential for redevelopment subject to planning. 

Travelodge offloads 38 sites: Budget hotel chain Travelodge has found new operators or new franchisees for 38 of the 49 hotels it agreed to shed under the terms of its CVA and financial restructuring. The company said that 18 of the hotels would transfer to new operators, including Best Western, Ibis, and Metro Inns. Four of those 18 will become new businesses entirely. The Chester and Coventry Travelodge will be converted into student accommodation, the Stevenage Travelodge is being converted into a conference centre and the Uttoxeter Travelodge is being converted into staff accommodation for JCB. Travelodge said it was attempting to redeploy 15 staff members affected by the change of use of the four hotels. Meanwhile the hotel chain has signed a new franchise agreement for seven hotels with Moto, the motorway service station company, and 13 other contracts with individual operators. Travelodge announced in August last year that it would shed 49 hotels that it no longer considered viable as it entered a Company Voluntary Arrangement (CVA).

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