Story of the Day:
Deutsche Bank – Whitbread shares could have 85% upside: Deutsche Bank analyst Geof Collyer has suggested that Whitbread shares could rise to 85% more than their current value under chief executive Andy Harrison’s growth plan. He said: “Whitbread has had a great year – (with) upward revision of the business milestones and strong operational outperformance (again). The longer-term growth and value creation story remains very much intact. We have lain out how one can get to 6,250p (+85%) by the end of the current chief executive milestone plan. By developing strong rollout programmes for its hotels in UK and its coffee shops both at home and internationally, and by improving operational performance and positioning relative to their competitive sets, Whitbread should be capable of attractive earnings and dividends growth compounding over the medium to long term in double-digit percentage growth per annum. The group has a relatively conservative balance sheet that could allow for opportunistic acquisitions were they to present themselves, and is living within its cash flows, which are forecast to fund some £1.7bn of capex (split 35/65 maintenance and development) over the next five years. We see Whitbread as one of our stronger organic growth stories, with probably a more robust business mix than many other stocks in the leisure sector – a confidence underpinned by the group’s five year growth milestones. Our analysis of the European hotel space shows that Whitbread should move from the number three player by profit before tax to the number one player over the next four years. This significant shift in the group’s relative importance has yet to be recognised by the market. In addition, the self-help story has some time to run, delivering double-digit earnings and dividend growth over the next three to five years, providing solid compounding returns for investors. However, after its significant run this year, up 35% since the April lows, we think that the shares need to consolidate here and pause for breath. We have raised our target price from 3,350p to 3,485p, but the twelve month upside is not enough to maintain our ‘Buy’ stance, so we are downgrading to a ‘Hold’.”
Industry News:
Enterprise Inns names Lord Nelson, Luddenden as Community Hero winner: The Lord Nelson in Luddenden, near Halifax, run by licensee Debbie Collinge, has been named as overall winner of Enterprise Inns Community Hero Awards. The licensee wins £10,000 to spend in her local community – the money will be used to buy IT equipment for her village to use and a small gritter and plough to help ensure mobility within the village during time when it is affected by snow. A total of 17 other Enterprise Inns licensees, regional community-minded winners, receive £5,000 to spend in their communities. Brandon Lewis MP, who attended the awards event last night, said: “It’s great to see so many pubs playing such key role in communities.”
Starbucks opens first stand-alone tea store: Almost a year after buying the US tea retailer Teavana, Starbucks has opened its first tea bar under the Teavana name, on Madison Avenue in New York City. Starbucks said Teavana Fine Teas + Teavana Tea Bar will serve cakes and other food including flatbreads, salads and small plates ranging in price from $3 to $15. Drink prices will range from $3 to $6, and include novelties such as a Spiced Mandarin Oolong tea and a Pineapple Kona Pop and Blueberry Bliss iced tea. Starbucks opened a tea shop last year near its headquarters in Seattle under its Tazo brand. Next month, that store will be converted into a Teavana tea bar as well. When Starbucks bought Teavana, which has 300 shopping mall sites in the US selling loose-leaf and exotic teas, last November for $620m it said it planned to open stand-alone Teavana stores in the United States and abroad but add tea bars that serve prepared drinks in existing Teavana stores. Starbucks has said it plans to use the Teavana acquisition to make tea a bigger part of American culture, as it has with coffee. “Tea has been a part of Starbucks heritage since 1971, when we were founded as Starbucks Coffee, Tea and Spices, and this new store concept elevates the tea experience in the same way we’ve done for coffee,” said Howard Schultz, Starbucks chief executive. “As the second most-consumed global beverage behind water, tea presents a $90 billion global market opportunity, and we are excited to celebrate the first retail example of how our two companies are coming together.”
Stephen Fry provides pub purchase boost: Actor Stephen Fry has given the community campaign to buy The King’s Arms at Shouldham, Norfolk, a big boost by tweeting about it Residents decided to sell £150,000 of shares so people could buy and own part of the pub, but were £5,700 short three days before a funding deadline. Keith Matthews, treasurer of the Save Our King’s Arms campaign, said: “He tweeted on Friday and in the afternoon I got surge of (mobile) messages saying people had donated. We extended our deadline so we could sell as much as possible, but £5,000 over a weekend is pretty good.” People from as far away as New Zealand, Hong Kong and Canada have bought shares in the 17th Century pub, with one woman from Belgium, who “wanted to buy her own part of England”, contributing £2,000 to the cause.
Alastair Campbell calls for review of 24-hour licensing: Tony Blair’s director of communications Alastair Campbell has called for a review of 24-hour licensing, brought in during Blair’s tenure. He said: “A proper alcohol strategy would cover a review of 24-hour licensing. There are now twice as many places where you can buy alcohol than there were in the 1950s and 1960s. Some of that’s down to 24-hour licensing: the licensing regulations don’t have to take in the impact on public health. They should.”
Milton Keynes votes against Late Night Levy: Milton Keynes’ full council has voted against introducing a Late Night Levy The decision overturns a licensing committee vote in favour of introducing the levy on May 1, 2014. A spokesman for the Association of Licensed Multiple Retailers said the decision came “thanks to strong trade representations and large dose of commonsense”.
Company News:
Brewhouse & Kitchen secures second site: Brewhouse & Kitchen, the EIS company headed by Simon Bunn and Kris Gumbrell, has secured its second site, at the Brewery Square development in Dorchester, once home to Eldridge Pope’s brewery. Simon Bunn, the managing director of Brewhouse & Kitchen, said: “Building on the success of our first brewing pub in Portsmouth, Brewhouse & Kitchen at Brewery Square will not only bring brewing back to the brewery but will provide an excellent menu and a fantastic beer garden.” Bunn told Propel he hopes to open the site in March or April next year. He also revealed that the company is in negotiations on two other sites. Andrew Wadsworth, director of the Brewery Square development company, Waterhouse, said: “Brewhouse & Kitchen is a terrific addition to Brewery Square. The copper brewing vats on show in the pub are a memorable feature.” The freehold of the company’s first site in Portsmouth, the White Swan was acquired for less than its asking price of £700,000 – it is one of five Wetherspoon pubs brought to market through agent Christie + Co. Brewhouse & Kitchen will join Wagamama, Carluccio’s, Zizzi, PizzaExpress, Nando’s, Vivo Lounge, Costa, Café Panini’s and Simon’s Deli in the Brewery Square development.
Whitbread chief – 89% of coffee market still to get: Whitbread chief executive Andy Harrison has denied that the coffee market has become saturated. Costa opened 185 new outlets in the UK in the last year and now has 800 more than Starbucks. “We still think there are opportunities for many more stores, the coffee category is growing at 5% per annum so I don’t think we are at saturation,” Harrison said. “We’ve gone from 7% of the market to 11%, but there’s still 89% left.”
500-seater restaurant opens as part of Dobbies-Tesco joint venture: A 500-seater restaurant is opening in King’s Lynn, Norfolk this week as part of a joint development between the garden centre operator Dobbies and the supermarket chain Tesco. Dobbies’ regional manager, Nick Anderson, said that of the 130 staff hired to work in the £8m garden centre, on the Hardwick Industrial Estate, “around 90 will be working in the restaurant”. It will seat 500, with space for an additional 100 on the patio and a further 70 seats in the cafe. This is the first time that Tesco and Dobbies will have a combined superstore and garden centre in the UK. Tesco is closing its current supermarket in King’s Lynn to move to the new site.
Pizza Rossa seeks crowd-funding support: A new takeaway pizzeria chain, Pizza Rossa, is looking to raise £280,000 through the crowd-funding website Crowdcube in return for 26% of its equity. The concept, which was winner of the London Business School Business Plan Competition 2013, want to become the UK’s leading premium pizza al taglio (pizza by-the-square-slice) brand in the UK. Corrado Accardi developed the business model after studying professional pizza-making at a leading pizza school in Italy.
McDonald’s get go-ahead to convert Little Chef site in New Forest: McDonald’s has won planning consent to convert a former Little Chef site on the A31 at Picket Post, near Ringwood, Hampshire into a restaurant and drive-thru facility. A previous proposal to redevelop the site was rejected earlier this year on environmental grounds. But a revised scheme was backed by the New Forest National Park Authority after McDonald’s pledged to screen the restaurant more effectively. It coincides with plans to create about 75 jobs by building a McDonald’s on the former site of The Red Lion pub in Totton, Southampton.
Giraffe launches autumn menu: Giraffe, the family restaurant brand owned by Tesco, has launched its autumn menu. In the starter’s section new dishes include crispy fish sticks with smoked garlic caesar dip and Cajun chicken tenders. New mains include the kimchi burger with Korean barbecue sauce and hot and sour slaw, the return of the farmers’ market burrito and a new piri-piri grilled half chicken. A tiramisu sundae has been added to the dessert menu.
Fuller’s puts Reading pub on the market: London brewer and retailer Fuller Smith and Turner has put the Butler in Reading on the market. Landlady Lynne Trussler said: “We are all totally and utterly gutted. The Butlers is so well known for its live music, we are booked up until January and we hope to be here until well into the new year. The most important thing is we want this to stay as a pub. We do not want another Tesco or a block of flats – it is crucial it stays as it is.” Agent Savills has put the Grade II listed building on the market for £400,000 and describes it as a “two-storey detached public house with first floor managers accommodation”.
Magpie Brewery to open craft ale bar with staff paid ‘living wage’: Nottingham’s Magpie Brewery is to open a new craft ale bar near Nottingham Castle before Christmas. The Crafty Crow pub will open on the site of the old BZR bar on Friar Lane and create up to 15 jobs. Bob Douglas, the owner of Magpie Brewery, said: “It’s good that people are looking at what’s new to drink. There’s a strong brewing tradition in Nottingham which we are pleased to be part of. We’re looking at around 15 jobs being created at the pub in both part-time and full-time, and we will pay the staff a living wage because we think it’s the right thing to do.”
Prezzo introduces smartphone payment app: Restaurant group Prezzo has launched an app that enables diners to pay for their meal using their smartphone. The app can be used in the company’s 186 restaurants across the UK. Diners will no longer need to wait for the bill or card machine to pay for their meal. Instead they can view their bill on their smartphone at any time during their meal and pay when they wish to leave the restaurant. It also allows diners to split the bill with friends and add a tip. Once the transaction has gone through, an email receipt is sent to the phone. To use the app, diners select the relevant Prezzo restaurant and are given a four-digit code. They then give the code to the waiter with their order and from then are in control of the payment. Prezzo’s chief executive, Jonathan Kaye, said: “We are pleased to be the first UK-wide restaurant chain to offer this exciting payment technology to diners in our restaurants. We are a forward-thinking company and are always looking at new ways to make our guests’ experience at our restaurants more enjoyable.” Kaye said he was confident that the app “will prove both popular and successful.” Payment can be made by debit or credit card and also using PayPal and is powered by MyCheck. The app can be downloaded at www.prezzorestaurants.co.uk/mobile-apps and also from the Apple app store or Android store.
Date set for Chicago opening of Eataly: The Chicago outpost of Mario Batali’s emporium Eataly will open at the end of next month. The 63,000 sq ft space houses eight Italian-themed restaurants, a 150-seat pizza bar, and a mozzarella bar. The New York branch has a turnover of $80m a year.
Simon French – Spirit will be higher quality investment if debt re-schedule accepted: Panmure Gordon leisure analyst Simon French says Spirit will become a higher quality investment if it can re-schedule its debts with bondholders. French issued a ‘Buy’ note with a 110p target price, saying: “Mike Tye and Paddy Gallagher gave an upbeat presentation to the Panmure sales team last night, highlighting that a more flexible debt structure provides the headroom to implement its growth strategy which will also result in assets and cash flow accumulating at the PLC level. Assuming the targeted take up of the A6 and A7 bonds, Spirit becomes a higher quality investment and we expect the group’s discount to the peer group to narrow sharply. The debt re-profiling paves the way for a full debt restructure in five years’ time. We reiterate our ‘Buy’ recommendation and 110p target price, implying circa 49% potential upside.”
Jamie’s Italian set for Easter 2014 opening in Harrogate: Work has started on the £9m Harrogate House restaurant scheme on Parliament Street in Harrogate that will house Jamie’s Italian when it opens at Easter 2014. The new Jamie’s is one of four new units. Talks are under way over the other sites. Lateral’s retail development director, Marcus Briggs, said: “This will deliver a stunning scheme in the heart of Harrogate with an enviable restaurant line up anchored by Jamie’s Italian in time for the Tour de France coming past their front doors on 5 July 2014.”
Punch Taverns partners multi-site operator for £300k investment in Sheffield: Punch Taverns and the multi-site pub operator Danny Grayson are making a £300,000 co-investment in Sheffield’s Sportsman pub, on Harvey Clough Road. Grayson, who also operates Punch’s Champs sports bar on Ecclesall Road, said: “We already operate Champs and we could see the potential in the Sportsman to bring it back to the community as a ‘local’s local’. We will be re-introducing food and creating a new menu, featuring our famous Champs burger and we will be screening sports.” The pub will re-open towards the end of November.
Hotel-restaurant-bar plan for Titanic owner’s old HQ: The building that was the headquarters of the White Star Line, owner of the Titanic, is set to be turned into an aparthotel with restaurant and bar attached. The application to convert Albion House, a grade-II listed property on The Strand in Liverpool dating from 1898, comes from Signature Living, which already runs four accommodation complexes in the city, as well as a restaurant, a members-only bar and a nightclub. The plan has received the backing of English Heritage, which said it could make an “extremely positive addition” to Liverpool’s waterfront, and the lord mayor of Liverpool. The city’s planning committee is expected to pass the application at a meeting next week, after planning officials said the proposed hotel use, including 35 apartments and 30 ensuite rooms, with an associated restaurant, bar and function room, “accord with land use policy and practice for the area” and “would complement the main office use of the area and contribute positively to the growing leisure and tourism market in Liverpool.” The scheme was “a sensitive restoration of this outstanding Grade II-listed building, enhancing those aspects considered to be of most historic and architectural significance,” they said. The hotel will be called Signature Living Hotel – Home of the Titanic. Signature was founded in 2008 by Lawrence and Katie Kenwright.
Big orders for Hallowe’en from Enterprise and Wetherspoon help boost Pendle Witches brewer: Moorhouse’s, the Burnley brewer, has seen business boosted by “substantial” orders from Enterprise and JD Wetherspoon for its Pendle Witches beers in time for Hallowe’en. The brewery saw sales more than double for the first week of October compared to 2012, to 663 barrels. In recent years sales have climbed by more than 35% during the weeks before Hallowe’en. David Grant, Moorhouse’s managing director, said: “Hallowe’en just gets busier and busier each year, even more than Christmas, as our witch brands become more widely known. Without a doubt, this year looks set to be truly outstanding, despite trading conditions at their toughest ever.” The brewery’s Pendle Witches beers take their inspiration from named for the witches who lived around Pendle Hill, near Burnley, in the early 17th century, many of whom were hanged after being found guilty of witchcraft. They include Broomstick Bitter, Black Witch, Witches Cauldron, Witchfinder General and Witch Hunt.
Death of MD sees hotel put up for sale: The unexpected death of its managing director has seen a hotel with its own herd of deer come on the market. Whitworth Hall Hotel in Spennymoor, County Durham, a 29-bedroom hotel with two restaurants and conference and banqueting suites, is currently being run by administrators from Begbies Traynor after the death of managing director Alan Lax in the summer. Administrator Andrew Haslam said: “Following the sudden passing of the managing director a few months ago, the remaining directors have continued to operate the business to the best of their ability, however due to the general economic climate, they have been unable to turn the business around. After discussions with the stakeholders, a decision was taken by the directors to appoint joint administrators. We are continuing to trade the business and the hotel is running as normal while it is marketed.” The hotel which is situated in a country park complete with a herd of deer, “enjoys an idyllic location and has great facilities, including 29 recently refurbished luxury bedrooms,” Haslam said. “With its excellent reputation and outstanding recommendations on leading review websites, we are confident of finding a buyer quickly. We have already received significant interest in the business as a going concern which we anticipate will result in securing a future for one of the county’s premier hotels.”
Backpackers’ hostel in Nottingham expands: The Igloo Backpackers Hotel has expanded its premises in Nottingham city centre by buying the building down the street. NG Chartered Surveyors sold 106 Mansfield Road to the company in an off-market deal after Igloo outgrew its existing premises at 110 Mansfield Road. Igloo’s owner, Bettina Kristiansen, said: “We’ve had some very successful years and have now outgrown our shell. Well-run hostels now have great homely and clean facilities, good security and offer the opportunity to self-cater and be part of a social environment.” Kristiansen, who said she had “big ideas and plans for further expansion in the melting pot already,” is turning 106 Mansfield Road into “Igloo Pods”, which will have seven private rooms. The premises will also have “high quality” bathrooms and a fully-equipped self-catering kitchen/lounge.
Real China to open in Gloucester Quays: The Real China, the Chinese buffet chain, is due to open in Gloucester Quays, Gloucester in around six weeks’ time. It will join other eateries in a row underneath the Cineworld cinema, which is to be unveiled in December. Vincent Went, operations director at the chain, said: “We are not sure exactly what date we will open yet but it will be in about a month and a half’s time. We have not started to fit out the restaurant yet.” Went revealed that the chain had looked at opening in Gloucester in 2008: “We were looking at it five years ago but there wasn’t much happening. Now we have a good deal and we think it is going to be busy down there. We are looking forward to coming to Gloucester.” The restaurant, Real China’s 26th outlet, will have 100 covers. Other outlets at Gloucester Quays include PizzaExpress, Nando’s, Ed’s Easy Diner, Zizzi, Chimichanga and Coal Grill and Bar.
Boutique B&B opens fine-dining restaurant: A five-star boutique B&B has handed over its dining room to two aspiring chefs to open a fine-dining restaurant. The Cottage Lodge Guest House, in the New Forest, is now home to the Fallen Tree restaurant, run by two chefs both aged 27, Philip Holmes, from Plymouth and Radovan Fabo, from Slovakia. The maître d’ is Diana Mintuchova, 25, also from Slovakia. Christina Simons, owner of Cottage Lodge, said that the B&B was keen to make more use of its “lovely, spacious dining room” and the chefs and maître d’ were available to work, as the restaurant they were running was closing for the winter: “They had nothing but skill, energy, ingenuity and the confidence to ask me if they could run a restaurant at Cottage Lodge. And, in a Jamie-Oliver-15-inspired moment, I thought, ‘Why not?’.”
BrewDog announces record growth in 2013: Scottish brewer and retailer BrewDog has announced a fifth consecutive year of record growth in 2013 and is on track to turnover £19m, up from £10.8m in 2012. To support its continued growth, the craft brewer is looking to expand its management team with a number of positions being available from today. BrewDog currently employing more than 200 staff across its network of bars and offices, and plans to create more than 50 new jobs in the next 6 months including key management positions. It is currently advertising for a head of sales, a UK on-trade account manager and a UK off-trade account manager. BrewDog is also unveiling a new £5m expansion of its Ellon brewery later this month. The company plans to open nine new bars in the next six months, including five UK sites, and international bars in Sao Paulo, New Delhi and Berlin. The brewery’s rapid growth is in part funded by its crowdfunding scheme “Equity for Punks”. A third round of the scheme launched in June this year and raised £1m in 24 hours. Having raised £3.6m in less than four months, BrewDog is likely to reach its £4m target ahead of its January 2014 deadline. James Watt, co-founder of BrewDog, said: “The media says the beer market is in decline, but it’s just being redefined. Sales of craft beer are growing and will continue to grow, demonstrating the global thirst for beer with real soul. The craft beer revolution has exploded from its niche starting point to an international movement. In 2007, BrewDog consisted of two humans and a dog. We are growing [and] we’re looking for some beer maniacs who are as passionate about great craft beer as we are to join the team. Our success is a direct result of the awesome team of misfits we have built over the past few years and we invest a great deal of time into ensuring we get the right man, woman or dog for the job. If you live and breathe craft beer and like to shake stuff up we want to hear from you. The third round of Equity for Punks will give a huge boost to our expansion plans and allow us to spread the craft beer revolution even further. Our Equity Punks are the cornerstone of everything we do and its great to share our growth with them. It’s their passion for great beer which has put us where we are now, and we want to put them at the heart of the operation.”
