James Grimes – London pubs market seeing boom conditions; tied leases selling for more than £500,000: James Grimes, whose company AG&G has sold more than 110 pubs in London for in excess of £1m in the past three years, has reported boom conditions prevail in the London pub market as demand exceeds supply in the warm afterglow of the Olympics. Even tied leases within the Circle line in central London are selling for more than £500,000 on assignment. Writing in today’s Propel Friday Opinion, he said: “During the heady days of the last economic boom, pubs were fairly regularly coming to the market individually or in small groups with many sold off for alternative use. In the main these pubs were sold by large pub companies and deemed surplus to requirements especially in comparison with their alternative use value. But whilst such pubs still offer development opportunities, the returns they are making for their current owners are high also. The result is that fewer and fewer of the large companies wish to sell their central London stock, further pushing up prices. The ripple effect that this increased freehold demand and reduced supply has had on leasehold values is noticeable also. Whereas the market for leasehold pubs throughout the majority of the rest of the country has been exceptionally poor, prices exceeding £500,000 have recently been achieved for tied leases within the area bordered by the Circle tube line. This not only reflects the secure business in the capital but also the shortage of availability and the requirement to pay a significant premium to achieve a sought after site in Central London. A few trends in recent months are worthy of note. Strong bidding for pubs we are openly marketing has led to boom type situations arising such as gazumping, prices exceeding asking prices and incredibly speedy legal conveyancing following acceptance of offers. I sold two London freehold pubs this year where it took a matter of a few hours from legal packs being sent out by vendor’s solicitors to contracts being exchanged. In both cases the asking prices were vastly exceeded. We do not believe we initially priced these pubs too low, but there is nothing better than extreme levels of interest to competitively drive up prices paid, not dissimilar to the principal auction theory. Those operators, particularly the small guys, less able to match the central London pub prices are being forced to look to pastures new. One current hot-spot is the East End. This area once saw pubs on virtually every street corner. But changing social and economic trends in the area, over the latter part of the last century, led to many of these pubs being sold off and converted or developed. It could be argued that there is now a real shortage in supply of pubs in the area. This in turn has led to a few former pubs being converted back into their original use – unheard of in most of the rest of the UK.” (See separate Propel Friday Opinion e-mail for the full article)

Richards pays tribute to Nick Bish: ALMR chairman Steve Richard has paid tribute to out-going chief executive Nick Bish who has overseen the development of the ALMR into the leading trade body for multi-site pub and restaurant operators with 160 members employing 325,000 people. The last couple of years have seen particular momentum with a host of big name recruits including Mitchells & Butlers, JD Wetherspoon, Spirit Pub Company, Stonegate Pub Company, TGI Friday’s, La Tasca and LT Pub Management. The ALMR has also strengthened its membership among emerging companies with Loungers, Lovely Pub Company, Grand Union Group, Chameleon Pub and Dining, New Pub Company, Intertain and Absolute Pubs among the many that have joined in the past year. ALMR chairman Steve Richards has told members: “Last year was a watershed for the ALMR as it celebrated its 20th anniversary; growing from a very small committee set up by a group of entrepreneurs to the substantial trade body it is today serving its 160 member companies. The ALMR is in rather rude health and continues to grow membership substantially as well as its political and industry influence - long may this continue! Nick Bish has been at the centre of this journey from day one and has successfully steered the ALMR through the many challenges that have occurred over these last two decades and I think it fair to say he has done it in a dedicated, professional and always friendly manner. Nick obviously has a wealth of knowledge, contacts and experience and fortunately that won’t all be lost to the ALMR as Nick has agreed to stay on in a part time capacity (couple of days a month) in order to help the transition but also to concentrate on identified strategic projects that need delivering.” Bish will be replaced by David McHattie. Richards said: “David joins us at an important stage in the ALMR’s history. David has the breadth of experience and drive necessary to ensure that ALMR works in dynamic partnership with its members to show the vital contribution our sector makes in delivering jobs and growth across the country.”

McDonald’s concerned that smiling service is breaking down: McDonald’s in the US has placed an emphasis on persuading franchisees to improve staffing and service quality amid mounting complaints about rude employees. McDonald’s has told franchisees that one in five customer complaints are related to friendliness issues and the trend is on the increase. The company reports that its top complaint is “rude or unprofessional employees.” It reported that complaints about speed of service “have increased significantly over the past six months” and that customers find service “chaotic”. To help deal with the problem, the company created a new position of “runner.” That person will “hand out cups and sauce packets, and fetch juice boxes for Happy Meals”.

Pizza Hut ignores health trends to provide (a lot more) cheese: Pizza Hut in the US is ignoring healthy eating trends to provide customers with the indulgence of a lot more cheese. It has rolled out a new type of pizza with a crust made up of small, cheese-filled cups. The new “Crazy Cheesy Crust” is a pizza surrounded by a five-cheese blend melted into 16 tiny bread bowls. “The main thing our customers tell us they want is more cheese,” said Sarah Beddoe, senior manager of brand marketing at Pizza Hut. “Crust has always been bread-first, but with this, you taste the cheese first.”

Greene King lines up two more Realpubs conversions: Greene King is to convert two more pubs to the Realpubs trading template. The company will re-open The Grove in Ealing as a Realpubs site on 26 April and will follow this with a conversion of The Grove in Surbiton on 17 May, its 23rd. Realpubs operated 14 sites when it was bought by Greene King for £53.1m in April 2011. The end of this month will see the culmination of founders Nick Pring and Malcolm Heap’s two-year integration period with the pair set to follow the lead of Cloverleaf founders John Winder and Gary Douglas in standing down.

BridgePoint Investors plans chain of boutique hostels: Property investor BridgePoint Ventures is planning a chain of boutique hostels. It will work with Starboard Hotels to open the first Hoax hostel in Liverpool in July in a converted tea warehouse near the Cavern club. Paul Callingham, managing director of Starboard Hotels, said the group expected to spend more than £100m opening in cities such as London, Bristol and Glasgow, and across Europe. He told The Financial Times: “It is a lifestyle choice to stay in a hostel. Travellers want to meet others and maybe join up with them for the next leg of their journey. Liverpool has a lot of sporting and culture events. A group of guys going to watch the football can share a room cheaper than going to a hotel.” Prices would average about £18 per bed, he said, and the design would be “edgy” but with the convenience of hot showers. Eric Jafari, chief executive of BridgePoint, said: “During downturns, history has demonstrated that the demand for budget accommodation either strengthens or stays the same. We like the hostel sector because it is still in its infancy and has a lot of room for growth.”

Balthazar boss Keith McNally attacks London food critics: Restaurateur Keith McNally, who has opened Balthazar in Covent Garden with Richard Caring, has launched a scathing attack on UK restaurant critics. He told The Independent: “My pet hate is the London food and restaurant community which, with two notable exceptions, is a petty, self-regarding, back-stabbing bunch of narcissists who should be put through a meat grinder and dumped into the Indian Ocean.” He said that his comments were “just an observation from someone new to the food scene here”. McNally reported that mixed reviews of Balthazar have not put off diners, pointing out that the restaurant has been packed every night and was “turning down 300 reservation requests a day”.

Loungers to open sixth Cosy Club this Monday: Loungers, the café bar brand headed by Alex Reilley and Jake Bishop, will open its sixth Cosy Club site this coming Monday (15 April). The venue will be located in the ground floor of the Halford Wing of Dean Clarke House, Southernay Gardens. The new Cosy Club will be accessed through the old chapel entrance the Grade II listed former hospital. Inside there will be a large, dual-aspect, open-plan space complete with high ceilings and quirky, original features, with an overall capacity for around 250 guests. Off the dining area will be a private dining room called The Snug, and to the rear of the property, a large 60-seater south-facing terrace will be added. Other Cosy Club sites are located in Taunton, Bath, Stamford, Salisbury and Cardiff.

Industry veteran Peter Borg-Neal short-listed for award: Industry veteran Peter Borg-Neal, whose Oakman Inns and Restaurants business opens his latest site today in Beaconsfield, a pub and restaurant hybrid called Beech House, has been short-listed for an award. Borg-Neal is a finalist in the Entrepreneur of the Year category in the Inspiring Hertfordshire Awards.

Papa John’s trial new format in Tunbridge Wells: Papa John’s pizza is testing a new format at a store in Tunbridge Wells Shopping Centre. “Papa John’s has helped with investment to allow us trial this new shop format where customers order in-store and eat in the communal food-court seating area,” said Danny Saadany, franchisee for Papa John’s. “We are now employing three staff on weekdays and five at the weekends and our hours match those of the centre opening times - so shoppers can now enjoy Papa John’s pizza and get their retail therapy at the same time!” Prior to joining Papa John’s in 2002 Danny Saadany ran his own chauffer company. “However, I was looking for the type of business which would grow through investment,” he said. “I now run three Papa John’s pizza stores and we are serving up around 2,500 pizzas a week.”

Lewes brewer and retailer Harvey’s reports marginal decline in turnover and profit: Lewes-based Harvey’s has reported a marginal decline in turnover and profit. Turnover in 2012 dropped to £18,400,055 from £19,316,471 the year before. Pre-tax profit was £2,195,840, down 8% compared to £2,389,133 the year before. The company stated: “Beer volumes have once again declined in comparison with the previous year and as a result operating profits have gone down by 3.7%. The directors have sought to control staff numbers and other cost to mitigate the effects of the decline in trade. In spite of the reduce profit the directors feel the dividends to shareholders (£594,400) can be maintained due to the healthy cash balances even after the investment in freehold properties of £1.65m during 2012.” The company bought two pubs in the year, the Cat’s Back in Wandsworth, London and Lincoln’s Bar in Lewes. The company has described Progressive Beer Duty, which favours smaller brewers, its “biggest single problem”. Since the year end, Harveys has agreed to sell its depot site in Pinwell Road to a Charitable Trust that plans to create a permanent four-screen cinema. 

Hakkasan to open Las Vegas nightlife evolution: Hakkasan nightclub and restaurant, a five-level culinary and nightlife offer, is set to open its doors this month at MGM Grand Hotel and Casino. Hakkasan Nightclub will open on Thursday 18 April with the restaurant debut scheduled for Friday 3 May. The venue is an evolution of the global restaurant brand into a nightlife experience. The nightclub and restaurant will showcase ‘dramatic design, modern Cantonese cuisine and exclusive collaborations with in-demand artists across numerous genres’.

Restaurateurs move to England because of its buoyant economy: Restaurateurs Roger Bougein and Stockholm chef Lotta Blombergsson have moved to Exmouth after deciding the UK economy is buoyant in European terms. They have opened a new Mediterranean-style restaurant called El Olivo. They moved to Exmouth after living on the Greek Island of Naxos for 25 years, where they ran an Asian restaurant. El Olivo is a meze and tapas restaurant, offering Spanish and Greek-style dishes. Bourgein said: “We looked at other European countries and felt that the economy in England was quite buoyant and there were opportunities.”

Robert Cain Brewery plans £50m brewery village: Liverpool’s Robert Cain Brewery, which is facing a strike off notice at Companies House, has unveiled plans to develop a £50m tourism, leisure and retail destination on its current seven-acre site. The owners want to develop the brewery into a national visitor destination and increase the amount of traditional Cains ales brewed at the site. The scheme, called Brewery Village, involves the restoration of the grade 2-listed building to house a traditional Cains craft brewery and tour with a sky bar in the roof offering views over the city and the River Mersey. The building would also house a 100-room boutique hotel, digital work studios and a large open plan delicatessen-style food market and restaurant for independent artisan producers to make and sell their produce on site. The plans include a spa, gym and function rooms. The existing Brewery Tap pub would be restored and retained. The Brewery Village scheme would transform one of the city’s most important sites and create a new tourist destination capable of holding food, craft and cultural events which would complement the city’s existing retail and leisure offer. A market appraisal of the site predicts it would attract about 500,000 visitors a year once complete. Cains plans to submit a planning application and application for listed building consent by the end of July. If consent is granted, work on the site would start next spring. Under the proposals, Cains’ volume lager production of other brands under license for supermarkets would cease. Sudarghara Dusanj, managing director of Cains, said: “We want to create a major new tourism and leisure asset for the city which would secure the future of the Cains beer brand for decades to come. Cities like Manchester and Newcastle have been unable to save their traditional breweries but we know this scheme will ensure Liverpool has a thriving and traditional brewery for future generations. We anticipate increasing production of traditional ales by as much as 300% as a result of the scheme. We will create a vibrant, independent and varied destination for people to live, work and enjoy which complements the rest of the city’s assets and dramatically improves the appearance of one of the city’s most important arterial routes. Our proposals would also make a significant contribution to the city’s ambitions to regenerate the entire Baltic Triangle.” Liverpool Mayor Joe Anderson said: “Proposals such as these are complex but are an indication of confidence in the city and its prospects. There is much work to be done to bring the scheme to fruition but we are fully behind the plans and extremely excited about the positive impact it will have on a key city site. We understand the challenges businesses such as Cains face and believe this scheme is the right way forward for both the Cains brand and the city as a whole.” Louise Ellman, Labour MP for Liverpool Riverside, said: “This is an exciting and creative scheme which will see the restoration of one of the city’s key heritage assets and the creation of a new visitor attraction for an important part of Liverpool. The proposals enable a proud brewing tradition in the city to become the focus of regeneration. I back these proposals.”

Sudarghara Dusanj tells Propel – we’ve taken inspiration from around the world: Cains managing director Sudaghara Dusanj told Propel that the loss of major contract last September made the business re-assess its future – and think about a way forward. He said: “We will be filing our accounts shortly but we lost a big contract last September and that was a wake-up call. A brewery like this needs full production at all times – and we feel the brewery useful working life as probably come to an end. We’ve taken inspiration from around the world for this development. We want to do something really unusual, creating a village within the city but Brewdog is a great example of the new world in brewing and the development of this scheme will give us confidence to develop a small brewery on site – we want to take the profitable part of the business and develop it. The scheme will be similar to the one that Everards is planning in Leicestershire.”