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Morning Briefing for pub, restaurant and food wervice operators

Tue 15th Oct 2013 - Caffe Nero, City Pub Company, Living Room and Spirit

Story of the Day:

Two Living Room sites to be converted to Stonegate brands: Two of the portfolio of 13 Living Rooms sites acquired by Stonegate Pub Company in mid-August are to be converted to Stonegate’s existing brands. The Living Room at The Hub in Milton Keynes is set to close at the end of this month and re-launch as Missoula on the weekend of 28 November. The Living Room at Tower Bridge is to be converted to a Slug & Lettuce with a view to re-opening the site in mid-November. Stonegate said: “The Living Room sites are being viewed independently as to whether they will remain a Living Room or converted.” The redesigned Milton Keynes venue will include a brand new food menu, a bar upstairs as well as expanded floor space. Stonegate bought the 13-strong Living Room estate from Premium Bars & Restaurants. The precise value of the deal was not revealed but it was rumoured Stonegate paid around £10m. At the time of the acquisition, Stonegate chief executive Toby Smith said: “We are delighted to have acquired the Living Room business and are looking forward to working with the current team to operate what are undoubtedly some of the finest sites in the UK.” There had been speculation that Stonegate may look to convert some of the sites to its Slug & Lettuce brand, which the company is looking to double in size after three years of consecutive double-digit sales growth.

Industry News:

Hospitality firms warned over illegal worker fines: In the past five years the hospitality sector has paid fines totalling £55m for employing illegal workers, it has been revealed. Paul Watson, customer success manager for Fourth, the management solutions software provider, told the company’s customer conference 2013 at the British Museum in London that in Leatherhead recently an organisation had five employees working without work permits and was faced with a fine of £50,000, which put it into administration. He said: “With the introduction of RTI (Real Time Information), and of course, pension reform, new fines are being introduced every day, and we’ve already heard that the pensions regulator has imposed its first fines on an employer who wasn’t communicating effectively with its employees. All of these fines go up to a maximum of £10,000 per employee.” Watson told the conference that the better burger brand Byron, which has 34 outlets, mostly in London, had solved the problem of managers employing illegal workers by instigating a system that involved a scan of any new worker’s proof of eligibility being uploaded into the personnel file. The central payroll team gets an email saying this has happened, and they can then check that the work permit is valid. “The chance of fines is thus completely removed,” Watson said.

McDonald’s to publish 20m paperbacks: McDonald’s is set to become one of the largest publishers of children’s books in the United States next month when it distributes 20 million paperbacks. The books, which will be distributed with Happy Meals, have been written by McDonald’s advertising agency, Leo Burnett, and reportedly focus on healthy eating and exercise. Titles include The Goat Who Ate Everything and Doddi the Dodo Goes To Orlando, in what has been widely seen as another move to shore up McDonald’s poor reputation on nutrition. “Happy Meals fun for kids can be used to educate and inspire good choices,” the company said.

Starbucks starts petition to end government shutdown: Starbucks founder Howard Schultz is to start a customer petition calling for an end to the government shutdown in the US. In an open letter to business leaders about the halt in government services, Schultz said he hoped to use Starbucks’ scale for good by inviting customers and employees to sign the petition, which will be available at Starbucks’ 11,000 US locations from Friday until Sunday. The petition, which Schultz described as nonpartisan and “civil and respectful”, asks Congress and the White House to re-open the government to serve the people; pay debts on time to avoid another financial crisis; and pass a bipartisan and comprehensive long-term budget deal by the end of the year.

Phil Mellows – scraping personal licences is ‘nuts’: Senior sector commentator Phil Mellows has described the government’s plan to abolish personal licences as “nuts”. Writing in his blog for CPL Training, Mellows said: “It will roll back the modest gains the pub industry has made in professionalising the role of the publican. This is important, not just for questions of social responsibility, but for making sure that pubs adapt to a changing world and give people the kind of places with the standards they demand.” See more at: http://www.cpltraining.co.uk/philmellows/post/Save-our-pubs-save-the-personal-licence.aspx#sthash.IloUHkzf.dpuf.

Trinity Leeds to launch food extension this week: Trinity Leeds, the £350m city-centre shopping and leisure development owned by Land Securities, is launching its new food hall this Thursday (17 October), which will feature street food vendors, pop-up market stalls and emerging high street food brands. The 20,000 sq ft street food concept, Trinity Kitchen, will feature seven permanent high street brands, all new to Leeds, along with five “pop-ups”, which will change on a monthly basis. Trinity Kitchen will select the five street food vans from across the UK with the help of the food journalist and curator of the British Street Food Awards Richard Johnson. The chosen vendors will be launched from the street by hydraulic lift up and into an opening in the wall of the first floor of Trinity Kitchen. The first street food vendors to trade for the first four weeks include the Leeds-based company The Marvellous Tea Dance, Big Apple Hotdogs, Gurmetti, and Manjit’s Kitchen. Restaurant operators include Pho Café, who will be bringing its Vietnamese food to the city, Chicago Rib Shack and PizzaLuxe.

Company News:

Douglas Jack issues ‘Buy’ note on Spirit shares: Numis Securities leisure analyst Douglas Jack has issued a ‘Buy’ note on Spirit Pub Company shares with a Price Target of 90p. He said: “Spirit’s full year results are due on Tuesday 22 October. We forecast profit before tax of £54.1m (up 6%; or up 12% for those who prefer to value the company on an ex-OLP basis); consensus is £54.7m. The detailed full year trading statement left little room for surprise; attention should focus on current trading, cost inflation, capex and bond refinancing plans. We believe a solid update on these areas should help to rerate the shares from the 12% equity free cash flow yield (2013E). Despite the forecast upside and circa £80m of cash tax credits, Spirit has the lowest valuation in the managed pub sector on all metrics. We believe this reflects the onerous lease provision (which should be down to just £5.5m per annum in 2014E), a past slowdown in like-for-like sales and aggressive bond amortisation in 2015E. We would buy the shares, which, in our view, underestimate management’s ability to grow like-for-like sales and refinance the A1/A3 bonds (should it choose to).”

Jam House in Birmingham set to expand: The Jam House in Birmingham’s Jewellery Quarter is set for further expansion after Birmingham Properties Group’s relocation from the late night jazz venue. BPG has moved into its own city centre scheme in Edmund Street. It comes after the completion of a new 20-year lease to the Jam House across 3,000 sq ft at 1 St Paul’s Square. The accommodation will now be converted into a new bar and restaurant area.

Independent newspaper criticises Caffe Nero for not paying corporation tax: The Independent newspaper has criticised Caffe Nero for paying no corporation tax. The newspaper reported: “The coffee chain Caffe Nero paid no corporation tax for the third year in a row despite making a pre-tax profit of £21.1m, up 11% on last year, according to its latest accounts. It legally routed its operations through its parent company in the Isle of Man and used a complex structure of subsidiaries to avoid corporation tax on its profits. Sales increased 4.6% to £204m in the year to the end of May but the accounts filed with Companies House show it paid zero income tax by claiming group relief and deferred tax to its other businesses.”

Le Bistrot Pierre to open in Torquay: Le Bistro Pierre will open a flagship site in Torquay’s Palm Court redevelopment next year. The company, which opened a branch at the Royal William Yard in Plymouth last Easter, will be investing a “substantial six-figure sum” to open up in the £12m Torquay scheme. Rob Beacham, co-founder of Le Bistrot Pierre, said: “Abbey Sands is going to be a very striking addition to the Torquay seafront. It will be a landmark building for Torbay and we are delighted to be part of such a prestigious scheme. Each of our bistrots is styled a little differently to complement the building it is in but, while our look changes between each bistrot, customers can expect the same personal, attentive service and high quality simple French cookery to enjoy every day.”

City Pub Company acquires Norwich freehold: City Pub Company, the EIS company led by Clive Watson, has acquired a freehold in Norwich’s “Golden Triangle” in an off-market deal through agent Everard Cole. The property provides an 80-cover restaurant, separate bar and letting rooms on a site of 35,000 sq ft. The venue will be given substantial investment in the new year but will operate under a similar format for the time being. Everard Cole has also acquired sites for the company in Cambridge, Bath, Henley, Winchester and Oxford. The site will become part of the City Pub Company East division, led by Rupert Clark. 

Wetherspoon achieves record Good Beer Guide listings: JD Wetherspoon has achieved a record number of listings in the Campaign for Real Ale Good Beer Guide 2014. A total of 283 Wetherspoon pubs features in the UK’s best-selling beer and pub guide. It is the highest number of any pub company in the UK. The figure is a rise of 10.5% on the 256 Wetherspoon pubs in the 2013 guide. Local Camra branch members chose the pubs for inclusion in the guide after regular visits to check on the quality of the real ales on offer. They also took into account customer service, décor and overall atmosphere. In several towns, the only pub listed in the guide was a Wetherspoon outlet. A Camra spokesman said: “All of the pubs deserve their place in Good Beer Guide 2014.”

Luminar signs up Smirnoff to sponsor its Big Night Out: Nightclub company Luminar has signed up Diageo’s Smirnoff vodka brand to sponsor its Big Night Out entertainment package for the second consecutive year. The UK’s largest nightclub operator, with 55 venues from Aberdeen in the north to Plymouth in the south, launched The Big Night Out last year in 18 of its largest venues on the last Saturday of the month. The branded night attracted almost 500,000 customers. Luminar’s head of marketing, Tim Howard, said: “We are very proud of our Big Night Out concept, with great entertainment at the centre of our managers’ mind-set. To have a leading brand like Smirnoff as its sponsor for a second year is fantastic. We have a strong relationship with Diageo, who share our passion for delivering a great customer experience both on the dance floor and across our digital assets.”

Stonegate pubs trial new food trends menu: Six Stonegate Pub Company pubs in Birmingham have launched their latest menus, which feature some of the newest UK food trends . The Abbey on Abbey Road in Smethwick, Hillyfields on Quinton Road, White Wart at Tile Cross, Rising Sun on Cockshut Hill, Cross Keys in Erdington and Bagot Arms on Eachelhurst Road have introduced a low -calorie meal section, a customisation option encouraging customers to create their own dishes by selecting accompaniments and sauces and a choice of hotdogs reflecting the trend towards American-style dining. The new low-calorie meal section features four dishes under 500 calories, including a chicken and roasted pepper salad at just 400 calories and a smoky three-bean chilli at 455 calories. The trend for customers to have dishes “their own way” has been introduced to the grill section of the menu. Customers can select chicken or rump steak skewers, decide whether to accompany them with potato wedges, chips, side salad or spicy vegetable rice and also decide which one of five sauce options to top them with. The new pork and beef hotdogs are served three ways, as a classic hot dog, a loaded hotdog with fried red onion, mushroom and melted cheese or as a chilli hotdog, topped with three-bean chilli, fried red onion and melted cheese. The pubs now offer nine dishes within its hugely popular two meals for £8 all-day deal. Stonegate’s head of food development, Perry Huntley, said: “We have incorporated food trends such as the influence of American dishes as well as the desire of lower-calorie options into this latest menu while still keeping our customer favourites. In fact, several top pub classic dishes such as hand-battered fish and chips now feature in our ‘two meals for £8’ deal. We’ve maintained our great value throughout with some unbeatable deals such as two for the price of one desserts, tea or coffee for just 99p and children’s main course for £2.99.”

Two Yorkshire brewers to open new pubs in York this Friday: Two Yorkshire brewers will both open new pubs in York this Friday. Ossett Brewery is opening the Hop York in Fossgate and Leeds Brewery is opening the Duke of York in King’s Square. Leeds Brewery has converted a former estate agent’s at the southern end of King’s Square. Leeds Brewery was founded (and is still run) by University of York graduates Michael Brothwell and Sam Moss, who both live in York. The pub will showcase Leeds’s core beer range, including Leodis lager, Pale, Best, Midnight Bell and Yorkshire Gold, and will also feature a range of beers from other Yorkshire brewers. Ossett has taken over and converted a former fishmonger’s shop that has more recently been Fellini’s Italian restaurant and Leila’s tearoom. On the bar will be Ossett’s core range of Yorkshire Blonde, Big Red, Silver King and Excelsior, plus four rotating guests.

Tiger Bill’s lines up six openings: Tiger Bill’s, the East meets West franchised fusion cuisine concept has six openings lined up in the next six months, starting with a 95-seat restaurant in Whitley Bay in two weeks’ time. Restaurateur Mustaque Rahman and business partner Istiaq Hasan came across the chain and decided that there was nothing like it in the North East. Rahman said: “This is a growing brand and we thought it would be perfect for us as there really is nothing else like it.” Other openings are planned foe Consett in mid-November, Coulsdon, Surrey in late November, Worcester and Cheltenham in February 2014 and Lymington in March 2014.

Former Leon staffer plans casual pork inspired restaurant: Blackfoot, a new casual pork-inspired neighbourhood restaurant, has secured its first site. It has taken a 15-year lease on the former 1,200 sq ft Clarks Pie and Mash shop at 46 Exmouth Market in North London and hopes to open at the beginning of December. Blackfoot is the brainchild of Tom Ward, previously operations manager at Leon, and will focus on quality pork, farmed in the UK and served in a friendly and welcoming atmosphere. The restaurant will offer simple food with bold flavours and an array of craft beers, English ciders and wine on tap. Ward is teaming up with his ex colleague and Leon co-founder Allegra McEvedy, and James Knight (formerly of Copita). Joshua Rose, of agent Shelley Sandzer, which secured the deal, said: “This is a really exciting new concept, created by a very passionate team who will undoubtedly enhance Exmouth Market’s food and beverage offering, adding to the Markets image as an established foodie hot spot. I anticipate Blackfoot attracting a wide-ranging fan base from the outset and quickly establishing itself among the other successful restaurants on the street, such as Morro, Morrito and Caravan.”

St Austell creates Champagne-style Brut lager: St Austell Brewery has partnered the award-winning vineyard Camel Valley to create a limited edition Champagne-style version of its popular Cornish lager, Korev. The 7.5% brew, called Korev Brut, has been dry-hopped using Nelson Sauvin hops to give it a clean, crisp character. St Austell Brewery’s head brewer, Roger Ryman, said: “We’ve never tried the Champagne process with a crisp, fresh beer before but it seems to be a great fit. This is a really specialist, niche brew and is perfect for popping open on a special occasion.”

Jarrow Brewery puts Magnesia Bank pub on the market: Jarrow Brewery has placed the landmark Tyneside pub the Magnesia Bank on the market after a change of direction. For the last 18 months the pub, in North Shields, has been owned and operated by Jarrow Brewery which has invested heavily in the refurbishment of the building since it was bought via Christie + Co from a corporate operator. Jarrow Brewery has also worked hard to increase the trade levels and to restore the building to its former glory. However, the brewery now wishes to sell due to what it called “a change of direction”. Mark Worley, Associate director and licensed specialist at Christie + Co in Newcastle, said: “Current trade, which is improving rapidly, is entirely wet-led, however, there is a large and well-equipped catering kitchen which could be utilised to develop a food offering and further improve turnover.” The Magnesia Bank is for sale at a freehold asking price of £375,000.

Enterprise Inns awards 18 pubs £5,000 each to invest in their communities: 18 Enterprise publicans have each been awarded £5,000 to invest in their communities as part of the 2013 Community Hero Awards. The regional winners have been chosen by a specially selected panel of judges, including 2012 National Winner Jim Woolley from The Hare Inn in Linslade, Buckinghamshire. Also on the panel was John Longden, chief executive of Pub is The Hub, John Melia, client development director at the BII, John Ellery, founder of Ellery Consulting, and Enterprise’s commercial director, Ed Cottrell.

Giggling Squid secures Giraffe site in Horsham: The Thai chain Giggling Squid, owned by Andy and Pranee Laurillard, have secured the former Giraffe site in Horsham, Sussex for a new opening planned by the end of this year. Giggling Squid, which aims to be the first national Thai chain, is the tenth site acquired by the company. It will open its eighth site in Stratford-upon-Avon, occupying a former Strada, at the end of this month.

Domino’s Pizza in Poland expands to Krakow: Domino’s Pizza Poland has opened its first store outside of Warsaw. The new store is in Krakow and will be followed by additional stores in that city in the coming months. Krakow is Poland’s third largest city, with more than 750,000 inhabitants. This site and all additional sites will be supplied by DP Poland’s commissary in Warsaw. Chief executive Peter Shaw said: “Extending outside of Warsaw is key to our strategy of developing a successful Domino’s franchise in Poland. Krakow is a significant and affluent city that meets our roll-out criteria. We are excited about the opportunity Krakow gives our business and we look forward to further extending our brand reach in the near future.”

Micro-pub opens in Bromsgrove: The first micro-pub, The Little Alehouse, has opened in Bromsgrove’s Worcester Road. Owner Terry Bacon said: “Everyone I have spoken to thinks it’s a brilliant idea, with many saying it is what Bromsgrove needs.”

West Somerset pub company makes final three in business awards: Pips Pubs, the West Somerset pub company, has made it through to the final three of this year’s Somerset Business Awards in the New Business Award Category. Pips Pubs operates the Culbone, Exmoor’s highest inn, and Pips Fish in Minehead. Managing director Mark Sanders said: “We are delighted that our commitment to the community and local producers has been recognised. We love this beautiful part of the UK.” Bethan Baigent, one of the judges for the New Business of the Year category, said: “We are extremely impressed by Pips Pub’s passion, commitment to working with local produce, suppliers and the local community and their vision for growth in Somerset.”

Mark Hix to open sixth site next month: Restaurants Etc, which owns five Mark Hix restaurants including his new chicken and steak concept Tramshed in Shoreditch, East London, is opening a new 5,000 sq ft restaurant in Devonshire Square, in the City of London, after agent Davis Coffer Lyons secured a letting on the former Sushinho site. As with the East London establishment, the 100-cover restaurant will offer a straightforward choice between chicken and steak. The menu focuses on quality and value and includes a whole Swainson House Farm roast chicken for two or three to share, a 250g or 500g Glenarm mighty-marbled steak, a 1kg porterhouse or kilo rib steaks all served with chips and Bearnaise. There will also be a Mark’s Bar in the basement, with a 2.30am licence, which will serve a similar cocktail and food menu as its namesake in Soho. The new restaurant will open next month. Mark Hix said: “This is a hugely exciting acquisition for us, we’ve been looking to open a site in the City for some time and this site meets our criteria on many levels, not least because it has a great basement where I can open our second cocktail bar.” Josh Leon, associate director at DCL said: “I know Mark and Ratnesh very well and knew a ‘Hix’ business could really thrive in this location. We knew the owners of Sushinho needed a fast sale but weren’t keen on an open marketing campaign so we acted quickly and got the deal sewn up in just over a week from viewing to completion. Jack Stacey at Blackstone, the owners of Devonshire Square, was really proactive and forward-thinking which was instrumental and I think it’s a great outcome for them too. Hix is well-known in the City and has a lot of fans there so we are confident this new restaurant will be a success.”

Ex-AB Inbev man joins Arran Brewery: A man who built greenfield breweries in Russia, helped turn Boddingtons from a local to a national brewer and worked on nitrokeg beers and the first widget can for ales has joined the Scottish firm Arran Brewery as a non-executive director. Nick Pyne began his career in brewing with Scottish and Newcastle in the late 1980s, spent 11 years working for the Whitbread Beer Company and later joined Interbrew, where he lead the zone brewery support function in western and central and eastern Europe after that company became AB InBev. Arran’s managing director, Gerald Michaluk, said: “ I am delighted that Nick could join us on the board, he has been at the leading edge of technology innovation in the brewing industry for most of his career and has all the skills required to help advise on the scaling of Arran Brewery and building our new facilities. There will be a few more additions to our board as we near the launch of our crowd funding initiative in November.” Arran plans to raise £4m via a public share sale beginning this month for expanding its pub and brewery business.

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