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Morning Briefing for pub, restaurant and food wervice operators

Fri 16th Aug 2013 - Giggling Squid, Pesto, M&B, McDonald's and PizzaExpress

Story of the day:

VisitBritain reports record numbers of UK visitors in June: There are further signs that the UK is reaping an Olympics legacy as record numbers of visitors came to the UK in June, the second successive month of record visits and spend. A total of 2.89 million visitors entered the UK in June, 12% more than in June 2012, according to VisitBritain. The June surge pushed the total number of overseas visitors in the first six months of 2013 to 15.2m, which is the highest number since the credit crunch in 2008. VisitBritain overseas director Keith Beacham said: “If this trend continues it would see us welcome one overseas visitor every second of every day of every month of the year. This is great news for the economy and a further sign that tourism is delivering growth across the economy.” June saw a large increase in spending by overseas visitors, with a total of £1.84bn spent, 13% more than in June 2012. The first six months of 2013 have seen record spend in the UK of £8.7 billion by foreign tourists. Over the 12 months to June 2013 there has been record spend of £19.49 billion. Visitor numbers were particularly strong from emerging economies in Asia and Central and Latin America in the first half of 2013 – visitor numbers from China grew 24% between January and June compared to the year before. Barclays head of travel Chris Lee said: “A weak sterling is making the UK increasingly appealing to foreign visitors who can make their money go that much further.” Overall figures still show a sizeable tourism deficit with 26 million Britons travelling abroad between January and June compared to the 15.2m that came here.

Industry news:

Starbucks to double premium Clover roll-out: Starbucks plans to double the number of locations around the world that offer the premium Clover coffee brewing system and high-end Reserve coffees by the end of next year. About 500 sites within the 19,209-unit chain now offer Clover machines, with ten international markets covered, including the UK. Clover uses vacuum-press technology to brew one cup at a time. Howard Schultz, Starbucks chief executive, has called Clover “one of the most significant innovations in coffee brewing since the introduction of the espresso machine”.

Red Bull versus Redwell dispute over: The dispute that Red Bull began with Norwich microbrewery Redwell Brewing has ended a day after Red Bull threatened legal action over the similarity to its own name. Red Bull said that there is now “no dispute” and that the brewery can continue to use the name as long as it isn’t used for energy drink products.

Elliotts moves to Milton Keynes: Food and drink public relations and marketing agency Elliotts, headed by Ann Elliott, has moved to Milton Keynes as it continues its expansion. Clients include Spirit Pub Company, Tragus, catering equipment firm Bunzl and food supplier Brakes. After doubling in size over the last two years, the agency decided to move to Linford Wood in Milton Keynes from its base in Great Horwood, Buckinghamshire. Ann Elliott said: “After 12 years working in Great Horwood we’re delighted to be bringing our business to Milton Keynes. The majority of our team lives in the city, and with so much of our business conducted in London it was important for us to make travelling to the capital as easy as possible.”

Lib Dems launch campaign to save the Richmond Park Tavern: Local Liberal Democrats have launched a campaign to stop developers turning the historic Richmond Park Tavern into a Tesco Express convenience store. After council planning officials rejected plans for six townhouses, the developers are now requesting the council approves the original plans or they will offer Tesco the chance to convert the pub into an Express store. Local campaigner Caitriona McGilvray said: “This is no way for developers to behave. Council planning officials rejected their plans on perfectly reasonable grounds. Instead of trying to force the council’s hand they should be engaging with them – and the local community – to get a solution that works for everyone.”

John Lewis set to launch new restaurant concept: Retailer John Lewis is set to launch a new restaurant concept to attract more customers into its department stores. Chief executive Andy Street said John Lewis’ restaurants and cafeterias are profitable and provided good quality, “middle of the road” food, but are not “cutting edge” brands. “There is an opportunity to bring some more diversification into our catering offer. By having a slightly different branding offer we can attract a different customer,” he told City AM: “The world is changing very fast. Given that the world is moving online, all non-food retailers are having to work out what the new ways of satisfying customers are.”

Eataly targets China: Eataly, the Italian food phenomenon owned partially by Mario Batali and partners Joe and Lidia Bastianich which takes $80m a year in New York, is looking to open a site in China. Joe Bastianich told AdWeek magazine he wants to target Shanghai. “It’s 25 million people who hopefully want to eat some pizza and pasta and drink Italian wine.” Eataly already has four sits in Japan. 

BBPA – put pubs first in business rates review: The British Beer & Pub Association (BBPA) has called on the government to put pubs first when reviewing the future of business rates. The BBPA has pressed the Pubs Minister Brandon Lewis to raise the plight of pubs as part of any cross-government review of business rates. The trade association is putting together a package of proposals for consideration by BIS and Treasury officials which includes: A call for the small business rate relief to be extended at least until the end of the Parliament (it is currently due to end in April 2014); A nationwide take-up campaign urging local authorities to offer rural rate relief to pubs in remote villages; a review of the business rate revaluation process to enable pubs to automatically trigger business rate revaluations when their turnover is materially reduced. Policy director Andy Tighe said: “Business rates now account for well over 10% of a pub’s operating costs. It is a significant part of the tax burden on pubs and anything Brandon Lewis can do to put forward our proposals will be warmly welcomed by the pub sector.”

Company news:

Giggling Squid acquires two more sites: Giggling Squid, the six-strong Thai concept headed by Andy and Pranee Laurillard that has ambitions to become the first national chain in the UK, has secured two more sites. The company has exchanged on a Strada site in Stratford-upon-Avon and a former snooker club in Maidstone, Kent, which will become the largest Giggling Squid so far with 200 covers inside and 60 outside. The company, which opened its sixth site in Reigate, Surrey last month, expects to open the Stratford site before Christmas and the Maidstone venue early in 2014. The company has previously announced it is opening in Marlow later this year. Giggling Squid is understood to be negotiations on a site in Horsham, West Sussex. At the end of last month, Propel reported that Giggling Squid had received preliminary approaches from half a dozen private equity firms, including Kings Park Capital and Piper Private Equity. The company, which was founded in 2008, is understood to be happy to continue its expansion using cash flow and bank debt but would consider private equity investment in the medium term.

Pesto in the Pub plans three more openings in 2013 – and ten in 2014: Pesto in the Pub, the Italian tapas concept led by La Tasca founder Neil Gatt and Sara Edwards, is planning three more openings in 2013 – and hopes to open as many as ten sites in 2014. The company is opening its second Spirit site, Pesto at the Red Lion, Harrogate on 26 August after a £400,000 co-investment. It also has its first Star Pubs & Bars site lined up for Sutton Coldfield and hopes to re-open another Punch Tavern sites in Belper before the end of the year, which would increase the estate to 12 sites. The ten openings scheduled for 2014 will be a combination of tied and free-of-tie sites. Gatt told Propel: “Trade is very buoyant. We’re hugely up on last year - we’ve had some very big weeks.”

PizzaExpress to open in Hatfield: PizzaExpress is to open in Hatfield shopping centre in October. It will open a restaurant on the walkway joining the Odeon cinema and the main shopping mall at the Galleria retail park, situated between peri-peri chicken chain Nando’s and Real China. Operator Gondola Holdings has opened eight new sites so far in 2013 to bring its estate size to 418, with an average spend per head of £15. Chairman Chris Woodhouse has claimed that there is room in the UK market for at least another 200 PizzaExpress sites. PizzaExpress was recently named the favourite brand among 18-24 year-olds in a Youth 100 poll.

YO! Sushi – two new sushi restaurants in Cheltenham a sign of changing tastes: Cheltenham has gone from having no sushi restaurants to having two within a fortnight. YO Sushi has opened in a former Pizza Hut site and has been joined by a second sushi concept, Kobuisushi, run by local businesswoman Emma Graveney. She said: “It is such a vibrant town and there wasn’t a sushi bar when I moved here three years ago. I think competition will be good for business. Hopefully a chain like YO! Sushi will raise awareness about our food. There is definitely room for two.” A spokesman for YO! Sushi said: “There has been incredible demand for (a sushi bar) in Cheltenham, which has made our decision all the more easy to make. Having another sushi restaurant opening at the same time is just a sign of how tastes in the UK are changing and developing which is a really positive step.”

New York’s Altamarea Group to open Chopshop on 2 September: The Altamarea Group will officially open its butcher-inspired Chop Shop, on Haymarket on 2 September, with Will Guess as the venture’s UK director. The restaurant will serve a mix of London and New York-influenced dishes, with a focus on steaks and chops.

McDonald’s multi-site franchisee Cherry Lewis-Taylor makes finals of franchisee awards: McDonald’s multi-site franchisee Cherry Lewis, who owns sites at Braintree, Maldon and South Woodham Ferrers, has made the finals of the British Franchise Association 2013 awards in the Female Franchisee of the Year section. She used to command 130 soldiers in the Royal Artillery. She said: “I realised that the job would encompass all the skills that I had learnt – man management, planning, accounts and administration and wouldn’t cost as much as I had expected. It also sounded a lot of fun, could be financially rewarding, but most importantly I would be my own boss. I was used to changing jobs every two years so moving to another one at McDonald’s wasn’t so difficult – I also felt well trained, having completed almost a years training with McDonald’s and ready to take up the challenge. There’s a huge investment at stake, but one of the main differences is that with this franchise, you are in it for the long haul. I’ve been a franchisee for nearly 11 years, just over half way through my 20-year deal. At the end of that period, there is the opportunity to re-negotiate the lease and it is also possible for my children to become second-generation franchisees should they wish.” The winner is unveiled on 3 October.

Stonegate Pub Company to close Aylesbury Slug & Lettuce: Stonegate Pub Compsny is to close its Aylesbury Slug & Lettuce next Monday (August 19) when the lease expires. A Stonegate Pub Company spokeswoman told the local newspaper: “The lease on the Slug & Lettuce in Aylesbury has come to an end and the site is being returned to the landlord for redevelopment. As a result of the lease coming to an end, we are currently in the process of finding suitable employment opportunities for the 12-strong team at Slug & Lettuce. It is our intention to invest in our other Stonegate pub in the town, The Kingsbury on Kingsbury Square, in the near future.” There is local speculation that the site is to be let to Wagamama, which is advertising for staff in the town.

Mitchells & Butlers transfers former franchise pub to its Castle division: Mitchells & Butlers (M&B) is to re-open its Early Derby pub in Kilburn High Road, formerly operated within the franchised division, as part of its Castle estate of premium and iconic pubs. It will re-open in late September with reclaimed timber flooring, exposed brickwork and rustic oak paneling. Curved Chesterfield-style sofas, distressed tables, hanging pendant lamps and vintage chandeliers will complete the look. The drinks list will feature Meantime Yakima Red and Camden Brewery Hells Lager alongside local cask ales, ciders and homemade soft drinks. M&B’s 62-strong franchise division was close to being sold a couple of years ago but the move was eventually vetoed by key shareholder Joe Lewis. Now the strategy is to return sites, where desirable, to the managed estate – The Engineer in Primrose Hill is another recent example.

Wall Street Journal features European hostel providers, including Beds & Bars: The highly regarded Wall Street Journal has turned its spotlight on the new generation of European hostel operators seeking to open in the US, including UK-based export success Beds & Bars, led by Keith Knowles. The newspaper stated: “Beds & Bars, a UK-based company that operates 20 hostels in eight European countries, is scouting locations in five major US cities, including New York, Washington, DC and San Francisco, for its St Christopher’s Inns brand. Beds & Bars spokesman Robert Savage said its European hostels have counted one million customers over the past 12 months. Hostels in the US have been typically under-invested, unsafe and lacking any type of service culture,” says Josh Wyatt, director of hotels for Patron Capital Partners, the London-based private-equity firm that owns Generator. The firm has raised €150 million ($200 million) to develop the business in the US. “What has emerged over the past several years is that funds like ours have come in and brought creative people to change the experience,” he added.

Chef & Brewer offers customers the chance to produce their own wine: Spirit’s Chef & Brewer brand is offering wine connoisseurs the opportunity to produce their own wine direct from their own grapevine in a French vineyard. The pub brand is offering wine buffs the chance to own their very own patch of vineyard in one of France’s famous grape-growing regions. The winner will also reap the benefits of the harvest later in the year as the package also includes six bottles of wine from the vineyard, plus two nights’ accommodation for two people near to the vineyard, with flights and spending money included. A spokesperson for Chef & Brewer said: “Our guests regularly ask where our great range of wines come from, so we are excited to be offering them the chance to experience a grape harvest first-hand in the famed French vineyard regions.” The competition closes on Friday 30 August.

Oxford Inns and Hotels to close historic Norfolk site: Oxford Inns and Hotels is to close its historic old Brewery Hotel in Reepham, Norfolk this month, blaming a lack of trade. The hotel, which includes a bar, restaurant and 23 bedrooms, is understood to be operating at a loss and requires considerable investment. It is believed members of staff have been given notice, although it has not yet been confirmed when exactly the Old Brewery House Hotel will close. People in the town said its closure will be a “sad loss” but hope that a new hotelier will take on the Grade II listed building.

Cheers world buffet restaurant to open on site of former Luminar site: A world buffet restaurant called Cheers, with 300 covers, will open on the site of the former Ikon nightclub in Bolton, a Luminar freehold site closed since January 2012. There will be a food court on the former dance floor and a food island near the kitchen on the ground floor. The balcony on the first floor will be transformed into a waiting area, bar and function area. It will serve Chinese, Indian, Thai, Japanese, Italian and Spanish all under one roof. Restaurateur Michael Shek, who already runs two restaurants in Warrington and Stockport, said: “I thought Bolton would be a great place for my new business because it’s a big town with a big population and I think there’ll be a real demand for it.”

Pub People Company co-invests £400,000 with Punch in Nottinghamshire pub: Pub People Company, the East Midlands multiple headed by Kevin Sammons, will re-open the Keyworth Tavern in Nottingham’s Fairview area next Monday (19 August) after a £400,000 co-investment. The menu will have a local flavour with food will be sourced from Nottinghamshire farms. Andrew Crawford, operations director of Pub People, said: “We could see the potential of the site and the role the pub plays in the community and we wanted to expand on this.”

JD Wetherspoon unveils start date on £1.5m Stirling pub: Wetherspoon is to start building work on its first pub in Stirling towards the end of November, with the pub set to open in March 2014. The pub is to be built on the site of a disused retail shop in Spital Street. It will cost £1.5 million to develop and be named ‘The Crossed Peels’. A total of 50 new jobs will be created. The company is in the process of submitting plans for signage and fascia to the local authority. Wetherspoon chairman Tim Martin said: “We are confident that it will be a good addition to Stirling’s social scene and also act as a catalyst for other businesses to invest in the area.”

Rules on lap-dancing venues in Scotland should be tightened: Venues seeking to stage lap dancing should not be able to call it burlesque or exotic dancing to get round new licensing rules, it has been suggested. In a draft response to a Scottish Government consultation, Highland licensing officials said artistic performances should be clearly defined. They said this would distinguish them from sexual entertainment and prevent rules from being circumvented. The Scottish Government is consulting on proposals to establish a new licensing regime for sexual entertainment venues.

Luminar confirms Cambridge investment: Nightclub company Luminar has confirmed plans to transform The Place in Cambridge into a boutique nightclub called Kuda that will create 15 new jobs. The nightclub on Sidney Street will re-open on Saturday 24 August following a £75,000 refurbishment. Kuda’s manager Richard Hill said: “This is the club’s first makeover in over six years and it’s time to reward our loyal customers with an exciting, stylish club that will have the wow factor. Not only is our name changing but we’ll also have a completely new interior design and the addition of more private booths.”

Technomic – US fast casual chicken brands saw healthy growth in 2012: Research firm Technomic has reported chicken-focused concepts in its Top 150 Fast-Casual Chain Restaurants list saw US sales climb a healthy 11.3% to more than $3.2 billion in 2012. Unit count rose 4.7% to 2,447. That’s not quite as strong a performance as the Top 150 fast-casual concepts recorded as a group – sales for the Top 150 overall rose 13.1% and unit count increased 9.3%. But the top fast-casual chicken chains still outperformed the overall limited-service chicken segment, which includes fast-food as well as fast-casual concepts. And of the 12 chicken chains on this year’s Top 150 Fast Casual list, four saw sales gains greater than 15% in 2012. Zaxby’s leads the fast-casual chicken segment with a No. 6 overall on the Top 150 list, with US sales of more than $979 million last year—an increase of 16.5% over 2011 with units rising 4.6% to 565.

Kout spends £3.15m to enter UK coffee market: Expanding Kuwait-based Kout Food Group has completed it second deal in August by buying the share capital of South West Coffee, which operates eight Costa Coffee franchises, for 1.4m Kuwaiti dinars – around £3,150,000. South West Coffee, headed by husband-and-wife team Stuart and Lynn Montgomery, was Costa Coffee UK Franchisee of the year for 2010-11 and 2011-12 – the company has openings in Portishead, Kingswood and Clevedon lined up. . At the start of the month, Kout Food Group expanded its UK presence by buying 78 of the 80-strong Little Chef restaurant estate from private equity firm R Capital in a deal estimated to be worth around £14m. Kout Food Group already has a sizeable business in the UK that stretches from fast food franchises through to a London noodle bar brand. The company partnered Wagamama founder Alan Yau to open Cha Cha Moon in 2008 and last year it launched Chi Wok, an Asian Fusion concept at the Westfield White City Shopping Mall with other sites now being sought. Kout also owns Maison Blanc, the artisan bakery. In addition, the bakery supplies 14 Maison Blanc shops based within London and the south east. In 2012, Kout, as part of its international expansion strategy, acquired the franchise rights for a total of eight Kentucky Fried Chicken sites in the UK from Banquets New Chicken for 2.25m Kuwaiti dinars to add to its existing UK fast food franchise business involving 33 branches of Burger King. Kout also operates 60 Burger King, 48 Pizza Hut franchises, five Applebees and four Taco Bells sites in the Middle East – and some of its own brands such as Scoop a Cone and Ayyame. Davis Coffer Lyons acted for Kout.

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