Story of the day:
Luke Johnson – ‘we did the right thing waiting another 15 months to sell Giraffe’: Sector investor Luke Johnson has reported that he and the other owners of Giraffe had been tempted to sell the company 15 months before it was bought by Tesco for £50 million. He told the Association of Licensed Multiple Retailers (ALMR) conference that he had sold businesses too early in the past – and the eventual Giraffe sale, nine years after he invested in the business, had produced an 8x return on his original investment. He told delegates: “You want to run your winners. I’ve made mistakes in selling too early. Wait until (a buyer) comes knocking and you’ll probably get a better price.” Johnson revealed that he never discussed exit strategy when he invested in a business because it is ‘insulting’ to the current owner - the fundamental question is around the quality of the business. On an eventual sale, he said: “If it is working, you will be spoilt for (buyer) choice.” Johnson said the foodservice market is a good investment area because it “is still fragmented, it’s experiential, fun, dynamic and full of interesting characters”. “What’s not to like?” he added. Johnson said his strong preference is for operators who are as “committed as possible”. “I want people to make huge sacrifices,” he added. Johnson said Patisserie Valerie, which will open its 105th site next week, was benefitting from expansion in the provinces. “It’s much easier to find sites, the rents are lower and we’re a big deal out there. It’s ferocious in London. It’s nice that others are focusing on London because it leaves the rest of the country to us.” Meanwhile in his Financial Times column yesterday, he criticised the timidity of the banks. He wrote: “British industry cannot expand if its prime lending institutions are afraid of their own shadows, terrified of criticism and so busy navel-gazing that customers come second.”
Industry news:
Jason Katz to present at the Propel Multi Club Conference on Thursday 20 June at the Oxford Belfry: Jason Katz, founder of private equity firm Kings Park Capital, which has live investments in healthy food chain Abokado and juice and smoothie operator Fuel Juice Bars, looks at the investment potential of the sector – and its investment criteria. Operators can book up to two free places by e-mailing
jo.charity@propelinfo.com
Sector duo join People 1st board: People 1st, the sector skills council for hospitality, passenger transport, travel and tourism, has announced that it has appointed two new members to its board of trustees. Sara Edwards, group human resources director at Tragus Group and Geoffrey Harrison, chairman of Harrison Catering, have each been appointed to the board.
Steve Richards pays tribute to out-going ALMR chief executive Nick Bish: Chairman of the Association of Licensed Multiple Retailers and chief executive of Novus, Steve Richards, has paid tribute to out-going chief executive Nick Bish at the trade body’s conference yesterday. Richards said that Bish had taken the ALMR from its initial ten members two decades ago to its current position, representing 160 companies across pubs, bars, nightclubs and casual dining, employing 400,000 people. He praised Bish’s ‘calmness, balance and leadership skills’. He added: “You are leaving a hard act to follow. Your legacy will be the (the creation) of one voice for the sector.”
Bully Banks – ‘first offers of swap mis-selling redress have gone out’: Bully Banks, the organisation that is campaigning for redress to small and medium sized business that were mis-sold interest rate swaps, has reported that the first offers of redress are being received by companies. It wrote to members to say: “We can confirm that the first offers of redress have been received by a small number of SME customers who participated in their banks’ pilot studies. The news that a small number of members had received encouraging proposals of redress was simply tremendous. We do need to know exactly what is happening and would ask members receiving offers of redress or decisions about the fact of mis-sale to communicate with us.”
Technomic founder – here’s how the big restaurant chains keep growing: Technomic founder Ron Paul has given his views on how the big restaurant chains in the US keep growing. The company’s Top 500 Chain Restaurant Report shows that the largest chains increased domestic sales 4.9% to an estimated $254 billion in 2012; limited-service restaurants were up 5.6%, full-service restaurants up 2.9%. The Top 500 collectively tallied the biggest growth rate since 2007. Two-thirds of the chains grew at least nominally. He argued that the growth companies offered the following attributes: a sweet spot of price and quality; a memorable differentiator; a menu with broad appeal; a family-friendly, adult-friendly environment; and constant reinvention and reinvestment.
Company news:
TGI Friday’s boss reveals financial benefits of people policy: TGI Friday chief executive Karen Forrester has revealed that a major overhaul in the culture of the business had paid dividends. The most recent 12 openings had paid back investment in 18 months and staff turnover had dropped from 150% to 35%, she told the Association of Licensed Multiple Retailers conference. The focus had been on making emotional connections, treating colleagues as family and guests as friends. There had been an emphasis on training and recognition of achievement. In January, 360 staff flew out to the company conference in Orlando. She said: “We spend double on staff what we spend on advertising our brand. We work hard and play really hard.” Forrester said this year she had borrowed from Ken Blanchard’s “The Simple Truths of Service” to set a new goal around “One Memorable Guest”. Staff had been encouraged to create their own signature piece of service. At the end of this year, the company will produce its own version of the book highlighting all the service innovations. “We had ten million guests last year but we can still make it personal,” said Forrester. TGI Friday’s ranked third out of 896 companies in The Sunday Times ‘Best Places to Work’ list this year.
Spirit managed sales up 1.4%; March cold weather hit sales: Spirit Pub Company has reported like-for-likes up 1.4% in the 28 weeks to 2 March. Drink sales were down 0.8% on a like-for-like basis and food sales rose 2.3%. 86% of the estate has now received investment with 50 schemes were undertaken in January and February. In March, like-for-like sales were down 4.1% because of the cold weather, which means like-for-like are up by 0.6% in the financial year to date. In its leased division like-for-like net income was down 2.9%. A total of 20 leased pubs have been sold for an average of £230,000 per pub. Spirit chief executive Mike Tye said: “It has been a challenging first half of the year as we have traded into the dual headwinds of a tough consumer environment and the worst of the British weather. Despite these pressures, we continue to improve the business and strengthen the foundations for long-term sustainable growth. We are well placed to perform strongly during our key summer trading period and we remain confident of delivering our full year expectations. In our managed pubs we continue to invest in our people, brands, estate and infrastructure to improve the experience for our guests whilst also operating more efficiently. The leased estate is stabilising and the focus will remain on improving the quality and innovation of the business.” Profit before tax in the first half was up 3% to £20m.
Harvester launch “hall of flame” on new menu: Mitchells & Butlers Harvester brand has launched 11 dishes in a “hall of flame” section on its new menu after a successful trial. The 11 menu items are “classic Harvester ingredients given exciting new sauces, a touch of something extra and a cheeky twist here and there”. Prices range from £7.49 for a triple flavour chicken burger to £14.99 for the ultimate surf ‘n’ turf.
YO! Sushi applies to open in Chester: YO! Sushi has applied for a change-of-use on a site previously occupied by Field and Trek shop in Chester. A document accompanying the plans said: “YO! Sushi experiences an extremely quick turnover of customers, especially at lunchtime. The majority of customers who eat in the restaurant usually remain on the premises for approximately 20-30 minutes. There is also the option for customers to takeaway a wide range of cold food, known as the ‘Yo! To Go’ option.”
Plan for 58-bedroom hotel above Wetherspoon pub set for approval: A scheme to build a 58-bedroom hotel above Wetherspoon’s Walnut Tree pub in Leytonstone have been recommended for approval. Redway Investment Ltd has applied to build an extension to the second floor of the High Road building, along with an additional third floor and a three-storey side extension. It is understood that the pub would remain open if the hotel plans were granted permission.
Ron Shaich to become sole chief executive of Panera Bread: Ron Shaich will again become sole chief executive of bakery-café chain Panera Bread as Bill Moreton, currently co-CEO and president, becomes executive vice chairman on 1 August. Shaich and Moreton, who have been co-chief executive since March 2012, said the transition was being made so Moreton, who will remain involved in management, would have more time to attend to ‘a family matter’. Said Moreton: “As a result of this family matter, I have found myself unable to travel and am now clear I will be challenged to fully execute my responsibilities.”
Marston’s lines up new-build pubs in Southend and Haverfordwest: Midlands-based brewer and retailer Marston’s has applied for planning consent to open a new-build a 180-seat pub on the site of the recently demolished Toomey Renault car showroom in Priory Crescent, Southend. A spokeswoman for Marston’s said: “Marston’s would be pleased to add this prominent, centrally located site in Southend to its portfolio of new-build pub restaurants.” Subject to planning permission, the venue is due to open in summer 2014 and will employ 50 to 60 local people. Meanwhile, Marston has applied for planning permission for a 59-bedroom budget hotel and 180 cover family pub and restaurant on Fishguard Road, off what is known locally as Days’ roundabout in Haverfordwest. The development would create around 80 full and part time hospitality jobs. Plans also include 115 car parking spaces and provision for cycle storage on the 2.4 acre site at Glanafon Manor Farm.
Tropeiro to open sixth site in Carlisle: Brazilian restaurant concept Tropeiro will open its sixth site in Carlisle tonight. It is based on the Brazilian concept of Rodizio, with 20 different cuts of meat cooked barbecue style and carved at the table. A spokesman for Tropeiro said: “This restaurant is an ideal destination for cinema goers, shoppers, and visitors to the city. We are looking forward to customers tasting the delights of Brazilian-style cooking.” The company already has sites in Sheffield, Nottingham, Chester, Glasgow and Aberdeen.
First Restaurant Group assigns lease to new restaurant company for second site: First Restaurant Group has assigned the lease on the World’s End pub in Kings Road, London to Markets Group, a new restaurant company co-founded by managing director Sergey Men and Anatoly Parkhomchu – it will open in the summer as the World’s End Market and is paying a rent of £100,000 per annum. The company is currently converting the Noodle Time Chinese restaurant in Crystal Palace to The Crystal Palace Market, set to open in a few weeks’ time.
Crispin Twedell – we backed Loungers because it is unique: Crispin Twedell, of Piper Private Equity, has reported that his private equity firm backed café bar business Loungers because it thought that Loungers was “a unique business and going places”. He told the Association of Licensed Multiple Retailers conference: “There is oodles of dosh around looking for really brilliant people (to back). (But) a few people are winners – (investment) is a winner and losers issue.” Referring to the Loungers expansion plan being confined to the provinces, he said: “We think of London as another planet – it’s going nothing to do with the rest of the country.”
Quantock Brewery takes crowd-funding route: Award-winning Quantock Brewery, based in Wellington, Somerset and founded in 2007 by Rob Rainey, is taking the crowd-funding route through Crowdcube to raise £100,000 in return for 30% of its equity. The company has raised £23,920 through 41 investors so far. It is holding an open day at its brewery on Saturday 4 May between 10am and 3pm. In March, Quantock Brewery was awarded Supreme Champion of Great Britain for Wills Neck 4.3% at the Society of Independent Brewers Association (SIBA) Beer X award ceremony.
Douglas Jack – Greene King expected to hit targets in trading update on Monday despite tough environment: Numis Securities leisure analyst Douglas Jack has forecast that Greene King will hit its consensus profit forecasts on Monday (profit before tax £162.2m; consensus £161.4m) “despite reasonably tough Quarter Four trading conditions”. He said: “We believe the shares are fairly valued, but our stance is Add to reflect circa 8% earnings growth, a 4% dividend yield and a positive trading backdrop for food-led residential pubs in 2013. Managed like-for-like sales were up 3.7% after 36 weeks (as 6 January), against our full year assumption of 3.9%, with an easy comparative of 0.6% to look forward to in January-April. Poor weather is likely to have undermined January-March, but LFL trading should be very strong in April (for which the last two weeks’ comparative is circa -20%). Given this, it is unfortunate that the last two weeks of April are usually excluded from the full year trading update.”
New food-to-go concept selects IBS ahead of roll-out: Scoffs, a brand new food-to-go concept, has commissioned Intelligent Business Systems (IBS) to provide an EPOS solution in anticipation of a roll out across the south in the next two years. Co-founded by Chris and Adam Hutcheson, Scoffs’ first retail store opened in Victoria, South London, last November. Once the brand concept and operational aspects have been fine-tuned, the duo, according to Adam, will roll out additional outlets as they compete for the lucrative lunchtime market with “an array of ‘British’ tastes as an alternative to sandwiches”. IBS was chosen because of the EPOS specialist’s credentials in the food-to-go market with existing clients like EAT, POD, Spudulike and Vital Ingredient. Equally important was the solution’s ability to easily accommodate multiple sites as the brand expands.
Pussy advert banned: An advert for the Pussy stimulant drink been banned for making derogatory references to women after a campaign attracted 156 complaints. The Advertising Standards Authority ruled the advert stating: “The drink’s pure, it’s your mind that’s the problem” was offensive because it consciously referred to the slang meaning of the word pussy. Complaints that the advert might be seen by children were also upheld because older children would infer the dual meaning referenced in the ad was sexually explicit or offensive.
Enterprise leaseholder secures £50,000 investment through crowd-funding: An Entrerprise leaseholder has secured a £50,000 investment through peer lending website rebuildingsociety.com. The unnamed leaseholder wanted the money to buy out a sleeping partner and invest in the business. He secured the money in 17 days from 30 investors. The leaseholder was advised by Acorn Finance, led by Paul Thomspon – he told Propel that Acorn would launch its own version of the crowd-funding website in May for the sector.
Former WaverleyTBS trading director secures new job: Shaun Goode, who was trading director at WaverleyTBS prior to its collapse last year, has become commercial director of IWS, a division of C&C Group. He has overall responsibility for sales, marketing and operations in the UK and Ireland.
JD Wetherspoon pulls plug on Shepton Mallet opening; agent writes to Tim Martin to request a review of the decision: JD Wetherspoon has abandoned a plan to open a flagship site in Shepton Mallet (population: 9,700) after winning consents to open in nearby Wells (population: 10,406), which is 5.6 miles away. The company had been in negotiations for more than two years to open in Shepton Mallet’s Academy building. Academy owner Kevin Newton’s agent Paul Knight said: “Kevin’s team and I have worked diligently to deliver to JD Wetherspoon’s satisfaction everything they attached to the deal. We had no reason to doubt that they would not sign the deal if we fulfilled our part of the bargain.” Newton has now written to Wetherspoon chairman Tim Martin asking for an opportunity to present their case to him and the pub chain’s board in a last ditch effort to change their minds. “We want to be given the chance to stress to them all the positive elements of them coming to Shepton Mallet – it would make such a massive difference to the whole town centre’s regeneration.” Spokesman for JD Wetherspoon Eddie Gershon said: “We can confirm that Wetherspoon has decided not to go ahead with this site in Shepton Mallet. Wetherspoon looks closely at all sites and it was decided that this was one they did not wish to proceed with.”
Heineken to develop real-time marketing initiatives: Brewer Heineken is deploying insights gleaned from its global tie-ups with Google and Facebook to develop real-time marketing initiatives around mobile devices. The business is building the initiative around creating second-screen experiences. It is to serve targeted content to fans in real-time based on whether they are watching a sponsored event such as the Champions League or the Ultra Music Festival in addition to using Facebook apps for its brands. Heineken said it wants to move away from just developing apps that support global campaigns to creating platforms fans can share use anytime.
Star Pubs & Bars invests £200,000 in Essex pub: Star Pubs & Bars, the tenanted arm of Heineken, is investing £200,000 in The Wildfowler pub in Gaywood, Essex. Peter and Nicola Strong are taking over the pub, which is expected to open in early May. The couple currently run The Dolphin Pub, near Diss, Norfolk. Star Pubs & Bars spokesman Lucy Hall said: “We are investing £200,000 in restoring The Wildfowler to its former glory. The pub will be completely refurbished inside and out to create a quality community pub for the local area.”
Chipotle to boost marketing in the UK to counteract sluggish sales at first six sites: Chipotle will ramp up marketing in the UK to boost sales after sluggish takings, much lower than the US site average, at its first six sites in London. Commentators have blamed high prices and stark decor are turnoffs for Londoners. Spokesman Chris Arnold said the design of its restaurants “has never been a problem for us in 20 years and we don’t believe at all that it is an issue in London”.
Inglenook Inns and Taverns takes sixth Punch site: Inglenook Inns and Taverns has acquired its sixth Punch Taverns site, The Grapes in Goosnargh, which will undergo a £180,000 co-investment – it will re-open next month. James Waddington, director of Inglenook, which operates seven sites in total, said: “We could see the pub’s potential to become a pivotal part of the community and we share Punch’s vision to create a family-friendly venue with quality food and cask ales for the Goosnargh residents to enjoy. From the out-set we are looking to get the locals involved, we will be sourcing our products from local suppliers that we know and trust; our fruit and vegetables will come from farmers nearby – we will even be having our own Grapes-inspired flavoured sausages.”
Starbucks seeks tax breaks in the US: Coffee chain Starbucks, which has faced criticism for its low rates of tax payment in the UK, has sought new tax breaks in the United States. US lawmakers are considering overhauling the tax code for the first time since 1986 and scores of companies and interest groups have submitted comments to a tax committee in the US House of Representatives. Like other companies with substantial foreign profits, Starbucks wants profits made outside US borders to be spared, in whole or in part, from the US corporate income tax. Starbucks expressed support in its comment letter for a territorial tax system that would allow this. Starbucks also asked for expanded tax breaks for the royalties it is paid to entities that operate many of its stores outside the United States.
