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Morning Briefing for pub, restaurant and food wervice operators

Mon 19th May 2014 - Propel Monday News Briefing

Story of the Day:

Lewis and Caring top hospitality names on Sunday Times Rich List: Joe Lewis, who owns a £509m stake in Mitchells & Butlers, and Richard Caring, owner of Bill's and Grillshack, are the top hospitality names on the latest Sunday Times Rich List, with assets of £3.35bn and £800m respectively. Other names on the list include Trevor Hemmings, owner of Trust Inns; Tim Martin, founder of JD Wetherspoon; the Kaye family, founders of the Ask, Zizzi and Prezzo chains, among other venture; Jamie Oliver; Luke Johnson; and the McMullen family. The complete list of hospitality figures in the top 1,000 richest people in Britain includes:
Joe Lewis, 25th in the ST Rich List with £3.35bn, has interests in more than 150 companies, including a £509m stake in Mitchells & Butlers, and Tavistock Restaurants in the United States. He also owns Tottenham Hotspur football club.
Richard Caring, 125th on the list with £800m, owns restaurant concepts including Bill's and Grillshack, as well as The Ivy and Annabel’s nightclub. The Sunday Times puts his worth at £100m higher than last year.
Trevor Hemmings, 164th on the list with £625m, owns Trust Inns, the 500-strong pub estate.
Marlon Abela, 290th on the list, with £325m, owns the Greenhouse restaurant in London.
Adam, Samuel and Jonathan Kaye, 295th on the list with £320m, £155m up on 2013: Adam and Samuel, sons of Phillip Kaye, the former chief executive of City Centre Restaurants – now the Restaurant Group – who once controlled such seminal British eateries as Garfunkel's, Deep Pan Pizza, Angus Steak Houses and Golden Egg, themselves founded and later sold the Ask and Zizzi chains They now run the AIM-listed Tasty, which runs Wildwood and Dim T. Their cousin Jonathan, 35, founded Prezzo. The family stakes in Tasty and Prezzo are worth £249m.
Tim Martin, 306th on the list, with £305m, has seen his fortune climb more than £100m in the past year, according to the Sunday Times, as shares in the pub company he founded, JD Wetherspoon, have risen.
Robert Earl, 330th on the list with £280m, and the founder of Planet Hollywood, currently runs the Buca di Beppo Italian restaurant chain in the United States, and the Earl of Sandwich chain, which is looking to open in UK travel locations.
Hugh Osmond, 367th on the list with £250m, took PizzaExpress to market and founded Punch Taverns, and said last year that after an 11-year break he was looking to a possible return to investing in the hospitality market.
Jamie and Jools Oliver, 396th on the list with £240m: Oliver's Jamie's Italian restaurant chain is thriving, but he has also sold 10 million cookbooks, putting him second only to JK Rowling as Britain’s biggest-selling author.
Nigel Wray, 402nd on the list with £236m, once owned almost a third of Domino's Pizza, where he sat on the board as a non-executive director, but sold his last tranche of shares last year for a total of £144m.
Luke Johnson, 458th on the list, with £200m, currently has interests in Patisserie Valerie, Red Hot World Buffet, Strada and the bakery and cafe chain Gails.
Julian Metcalfe, 647th on the list, founded Pret a Manger in 1986 and made £50m when it was sold. He now owns the Itsu healthy eating chain, which has more than 40 outlets.
Jonathan and Lesley Wilde and family, 665th on the list with £136m: the Wilde family runs Bettys and Taylors of Harrogate, which operates six Bettys Tea Rooms and the Yorkshire Tea brand.
David McMullen and family, 691st on the list with £130m, own the Hertford brewer and retailer McMullen & Sons, which reported profits of £10.3m in 2012.
Sinclair Beecham, 813th on the list, at £110m, was the co-founder of Pret a Manger and still owns a stake in the chain. He made £20m profit from the sale of his Hoxton Hotel venture in 2012.

Industry news:

Gourmet Italian trade show set for East London in July: Bellavita, which claims to be the UK’s largest trade show solely dedicated to gourmet Italian products, will be held from 19 to 21 July at the Old Truman Brewery in Brick lane, East London. The show is officially supported by the Italian Trade Agency and the Italian Ministry of Economic Development, and will see more than 200 brands exhibiting, from independent artisan food and drink producers to well-known names including Lavazza coffee and Campari. The founder of the show, Aldo Mazzocco, said: “Currently there are no unique platforms which Italian companies can trust to promote their products abroad. The aim of Bellavita is to spread the word of the true excellence of Italy and is a great opportunity for the Italian economy."

Darden to sell Red Lobster to investment firm for $2.1bn cash: The American conglomerate Darden Restaurants, which owns the Olive Garden chain, is to sell its 700 Red Lobster seafood outlets to the investment firm Golden Gate Capital for $2.1bn in cash. Several activist investors have opposed the move, arguing instead for a larger restructuring of Darden. Darden announced late last year that it planned to either spin off or sell Red Lobster to improve its financial performance. Both Olive Garden and Red Lobster have been losing customers in recent years, unable to compete with fast-casual chains such as Chipotle and Panera Bread. The company sees more potential in fixing Olive Garden, which has about 830 locations. Executives say it is a better fit with Darden's other chains that cater to diners willing to spend more, such as Longhorn Steakhouse and Capital Grille. Golden Gate Capital has made a $1.5bn deal to sell the Red Lobster property portfolio, then lease it back.

Panera Bread reveals test restaurant close to Yale University: Panera Bread, the chain of bakery-cafe fast casual restaurants with 1,800 outlets in the United States and Canada, has revealed the existence of a test bakery-restaurant close to Yale University where products are trialled in a "real world" setting. The outlet looks much like the company’s other stores, but offers access to a large pool of young customers for testing out ideas and recipes, said Panera Bread's ghead baker, Tom Gumpel. “Right outside our front door is the freshman dorm of Yale University,” Gumpel said. The test restaurant was used by the chain, which has bakers in every outlet, to develop a new sprouted grain bagel that now appears on the menu at all its stores.

Krispy Kreme opens 600th international store: The doughnut retailer Krispy Kreme has opened its 600th international store, in Carolina, Puerto Rico. The chain's local franchisee, Caribbean Glaze, runs six other Krispy Kreme outlets in the territory. Krispy Kreme doughnuts are now on sale in more than 20 countries around the world.

Company news:

Carlyle, CVC and Advent all looking at PizzaExpress: The private equity groups Carlyle, CVC and Advent are all looking at acquiring PizzaExpress, which has been put up for sale by its ultimate owner, Cinven, for a price starting at £1bn, according to the Sunday Telegraph. First-round bids for the chain were lodged late last week. The newspaper also reported that Gondola, the holding company through which Cinven controls PizzaExpress, is looking to spin off its other two Italian restaurant chains, Ask Italian and Zizzi, in a float or sale. However, it said, Harvey Smyth, Gondola's chief executive, is keen for Ask and Zizzi to finish a programme intended to revitalise their brands and outlets. The revamp has seen the chef Theo Randall brought in to work on menus and a retail product range. Last year Gondola sold the burger chain Byron to Hutton Collins for £100m, helping to reduce its net debt to less than £3425m. PizzaExpress is about to celebrate its 500th restaurant opening, with a branch in Beijing, and intends opening 20 restaurants a year in the UK for the next 10 years. It has been criticised by Luke Johnson, the entrepreneur who, with Hugh Osmond, first floated the chain on the London Stock Exchange in 1993, for its discounting, with Johnson telling the latest edition of Propel Quarterly magazine: "They charge about £7.50 for a margherita, I think that is too much for what is not the best pizza on the high street anymore by any means. However, they discount massively, so you get someone paying £7.50 for a margherita sitting next to someone paying half that, and I think that is storing up trouble." PizzaExpress, however, said the policy had been "extremely effective" in expanding its customer base, and Wednesday nights, when two-for-one deals are available, are now as busy as Saturday nights.

Tiger Bills to open in Blackpool: Tiger Bills, the Western cuisine meets Thai food brand founded by James Eyre, is to open a restaurant on Blackpool Pleasure Beach early in the summer. It will be the brand's sixth outlet, after Birmingham, Consett, Exeter, Torquay and Whitley Bay. A seventh site is lined up in Worcester, while earlier this year the chain signed a contract with a master franchisee for London which should mean nine new restaurants to be launched in the Greater London area over the next three years. The chain's menu marries Thai cuisine with Western grill dishes, including stir fries and curries, racks of ribs, steaks and burgers. The Blackpool restaurant will be on the ground floor of the Art Deco Casino Building. Eyre, chief executive of the Lifestyle Hospitality Group said: “We are delighted to be taking our Tiger Bills brand to Blackpool Pleasure Beach. It complements the world-famous Pleasure Beach and its visitors perfectly, catering for everyone from families with young children to cocktail connoisseurs.”

Bar owner looks to turn railway station left-luggage office into pub, restaurant and brewery: Breeze Ventures, which runs the bar and restaurant Pacific House in Newcastle upon Tyne, is seeking to turn the former left luggage building at Newcastle Central Station into a 4,100 sq ft pub and restaurant. The railway station is being redeveloped as part of a £200m regeneration scheme for the city's Stephenson Quarter. The 3,600 sq ft two-storey left-luggage building built in the early 20th century. The company's plans propose the change of use and refurbishment of the grade I-listed building, located on the western side of the station, into a new bar and dining area for travelling passengers and non-station users. The designs also include a 470 sq ft extension to the rear of the building, which would house a micro-brewery, cellar and refuse facility. The development will attempt to retain the original features, including the glazed brickwork, staircase and timber wall panelling, of the building. If the scheme is approved, the new bar will join an existing bar and pub Centurion, which is located in the station's former first-class passenger lounge and fronts Neville Street. The plans for the new pub-restaurant were prepared by Dakota House of Design, which also worked on the interior design for the Apartment Luxe Bar & Dining Room in Newcastle. The £8.6m project to regenerate the Victorian railway station, which opened in 1850, was approved in 2013.

Ed's Easy Diner seeks outlet in former Sunderland toy shop: Ed's Easy Diner had submitted an application to Sunderland Council to change the Build A Bear Workshop in the Bridges shopping centre into a restaurant. Five people work at Build-A-Bear, but if Ed’s Diner gets the green light it would employ 20 full-time staff and ten part-time. A decision on the plans is expected to be delegated to the council’s director of development and regeneration. Ed’s Easy Diner's nearest restaurant to Sunderland is in the Metrocentre in Gateshead.

NewRiver to built majority of new Co-op convenience stores on land next door to Marston's pubs: The retail REIT NewRiver, which acquired 202 pubs from Marston’s in December in a deal worth £90m, is to build the majority of the 54 Co-op convenience stores planned for a swath of the sites in the pub car park, to protect the value of the pub. NewRiver's chairman, Paul Roy, said: “With our appreciation of the rapidly growing demand from major food retailers to expand their convenience store estate, we identified an intuitive opportunity to facilitate this growth. Pubs can be ideal properties to accommodate convenience stores and it was with this in mind that we hand-selected selected the pubs that formed the portfolio acquired from Marston's.” On average, each of the pubs had 24 car parking spaces – convenience store operators generally seek 10 to 15 car park spaces –with 3,100 sq ft of commercial space – convenience store requirements range from 2,500 to 4,000 sq ft. The majority of the sites NewRiver bought had good roadside visibility and were located in residential areas, which Roy said was exactly the profile that convenience store operators were seeking. The average pub site area is 24,000 sq ft, which, he said, offered scope to build new convenience stores in the car park while protecting the value of the pub. The remaining 140-plus pubs not suitable for having a convenience store put up next door will be conventional conversions from public house use to C-Stores, or redeveloped as standalone convenience stores. Additional uses such as branded restaurants, drive-through food outlets, residential and medical centres have also been identified, Roy said. As part of the transaction, Marston'sagreed to manage the portfolio on a four-year leaseback basis at a fixed annual rental, which, based on the acquisition price of £90m, equates to a net initial yield of 12.9%.

Weight Watchers opens 'free food' pop-up cafe in London: Weight Watchers has opened a pop-up cafe at Monikers in Hoxton Square, East London for a week, with all foods free of charge in exchange for visitors spreading the feel-good message via social media. The Feel Good Cafe aims to champion "choice, flavour and real food". It opened on Friday, 16 May, after research commissioned by Weight Watchers Foods found considerable confusion around dieting, with over half of UK women (52%) unsure where to begin when contemplating weight loss and fewer than one in ten (8%) feeling confident when it comes to making healthier food choices. The cafe will be open ntil 23 May, with the potential to spread nationwide in the future. Matt Davis, head of licensing at Weight Watchers UK said: "Our research reveals that people want to control their weight while still feeling satisfied, and without compromising on flavour and satisfaction. We’re launching Weight Watchers Feel Good Café to demonstrate that this can be done and to empower people to feel good about the food that they love to eat. The Feel Good Café is the perfect way to showcase our confidence in our Weight Watchers Foods product range and our pride in our expertise and our heritage.” The cafe is serving a range of breakfasts, lunches and dinners in a restaurant format using a selection of the 250-strong range of Weight Watchers branded supermarket foods.

'Unprecedented surge' in hotel and pub sales, says Bristol-based property agent: Hospitality sector specialists at Colliers International’s Bristol office have said they are busier than ever with an unprecedented surge in business. Colliers International's hotels director, Peter Brunt, said it was a question of owners taking advantage of the improving market. He said: “We have been active throughout the downturn, but now the market is beginning to take off. We expect to see something of a ‘spring rush’ every year but we haven’t seen anything on this scale since 2007.” Properties being offered range from top-flight hotels in Bath to country pubs and boutique hotels across Wales and the West of England, Brunt said. He said the noticeable growth in the market had encouraged many owners to take the opportunity to get on with plans that some had shelved over the last few years. “My take is that owners are seeing that we can sell property and have now decided to take the plunge after years of putting up with quieter market conditions," Brunt said. “The properties being offered are from across the hotels spectrum – and the reasons for sale we are seeing are underlining the fact we are not just talking about distressed sales."

First Ivy Cafe granted licence by Westminster Council: A licence for the on-sale of alcohol and late-night refreshment for the Ivy Cafe all-day cafe spin-off planned by Richard Caring’s Caprice Holdings at the former Pizza Unit site at 1a Henrietta Street in Covent Garden, Central London has been granted by Westminster Council. Caring owns the celebrity Ivy restaurant in Covent Garden. The hours approved were until 00.30am Monday to Thursday, 1am Friday and Saturday and 23.30pm Sunday. A request for a 1.30am closing time on Saturdays was turned down.

Grand Union Bars puts special 'World Cup burgers' on the menu: Grand Union Bars, the chain of London-based burger bars, has designed a line-up of "World Cup burgers" representing 11 of the countries participating in the World Cup in Brazil this summer. The burgers, which cost £9 each, are: Argentine – Steak with Chimichuri sauce; Australian – Beetroot and pineapple; Brazilian – Jalapeño Salsa; English – Bacon and fried egg; French – Brie and onion; German – Schnitzel burger; Greek – Haloumi; Italian – Mozzarella and Parma ham; Mexican – Jalapeños and hot sauce; Spanish – Chorizo; United States – Classic burger. The chain is showing World Cup matches at each of its eight venues, and is offering theT hai beach huts at its Brixton, Camden and Wandsworth venues for groups to pre-book for each match, with a range of all-inclusive food and drink packages. The chain is also running a competition for those who book one of the huts for a match: predict that game’s score and win a complimentary round of beers or cocktails for the hut.

Vaping cafe opens in Bolton: What is believed to be one of the country's first vaping cafes, selling e-cigarettes, has opened in Bolton. The Flavour Vapour cafe in Manchester Road, Burnden, sells e-cigarettes alongside hot and cold drinks and cakes.The country’s first e-cigarette cafe opened in Shoreditch, East London last month. The owner of the Bolton cafe, Ian Hopkinson, 40, had run an e-cigarette shop at the premises, since October 2012, but recently decided to expand his business into a cafe. He said: “What we want to do is to provide people with a relaxed atmosphere where they can freely use e-cigarettes and enjoy a coffee – but people who don’t smoke e-cigs are more than welcome here too.” Smoking e-cigarettes, or vaping, is generally permitted in pubs and restaurants, though a number of places, including JD Wetherspoon, have banned e-cigarettes because of the difficulty staff have from telling them apart from the real thing.

CaterCost links up with Tiger Bills to introduce menu-costing software to Asia: The hospitality software company CaterCost has signed a deal to introduce its menu costing and profit analysis software to Asia with the help of Patrick Mauser, international franchise director at Tiger Bills, the Western cuisine meets Thai food brand. CaterCost ruses live data to create accurate dish specifications, withf additional functions including profit warnings to flag up underperforming dishes; real time theoretical reports on menu performances; and a dish photo and recipe method function to eliminate error and ensure total consistency. It is used in the UK by companies such as Punch Taverns and McManus Pub Company. Mauser says: “I had been searching for a long time to find a food costing program suitable for Asia. I found CaterCost and realised the long search was over." Catercost has appointed Mauser as its franchise director to lead expansion of the software throughout Asia country-by-country.

City Pub Co puts Three Blackbirds, Newmarket up for sale: City Pub Company, founded in 2011 by Clive Watson, David Bruce and John Roberts, has put one of its pubs, the Three Blackbirds, Woodditton, Newmarket, Suffolk up for sale. The 17th century village pub has recently been granted planning permission for nine letting rooms. The freehold is being sold by Everard Cole by way of formal tender, which should be in Wednesday, 2 July 2014. It is one of nine pubs run by City Pub Company (East), which, together with its sister City Pub Company (West), announced last year they would be raising a joint £10m of Enterprise Investment Scheme funds to grow the joint estate to at least 20 pubs by the end of this year.

Twins seek funds for 'Cereal Killer Cafe': Two twins from Belfast are seeking to raise £60,000 through crowd funding to open a "cereals only" eaterie in East London to be called the Cereal Killer Cafe. In their prospectus on the crowd funding website Indigogo, identical twins Alan and Gary Keery said the Cereal Killer Cafe would stock 100 cereals, 12 milks, and 20 toppings, along with 18 flavours of poptarts, toast with choice of spread, and "London's best locally sourced coffee and tea." The venue will be "a nostalgic cafe in Shoreditch, East London, with comfortable seating, amazing local coffee, and the interior decked out in vintage cereal memorabilia to keep your eyes and mouth busy." The twins said they had already put £20,000 of their own money into the venture, and hoped to open in late 2014. However, since their appeal started on 2 May, they had only raised £780.

Harry Ramsden's franchisee appoints property adviser in search for sites in Yorkshire: JVP Ventures, the first franchisee for the Harry Ramsden’s fish and chip restaurant chain, has appointed the property agent JLL to provide advice as it searches for new sites in Yorkshire. Harry Ramsden’s launched its franchising initiative last autumn as part of its growth strategy. JVP Ventures, which is run by Vikesh and Dimple Patel, is looking to have 50 outlets operating within five years and is now seeking suitable premises from 1,000 to 4,000 sq ft for both the Traditional Local and Restaurant concepts. Matt Jackson, a surveyor in JLL’s Leeds office, said: “We are delighted to be involved with the ambitious expansion programme of such an iconic Yorkshire brand as Harry Ramsden’s and look forward to working closely with JVP Ventures.”

KFC to appeal after drive-through restaurant turned down in Aldershot: KFC is to appeal against Rushmoor Council’s decision to reject plans for a drive-through restaurant in Aldershot. The proposal for a KFC in North Close, off North Lane, were unanimously turned down by the council's development control committee because the site is seen as important for industrial employment. KFC's senior development manager Phil Speechley spoke in favour of the application, saying the company had consulted with the community and received positive feedback about the 50 new jobs it would create. He also said the company was willing to make a required financial contribution to transport projects, which was also thought to be an obstacle to gaining permission. However, councillors said the land should not be used to accommodate "yet another take-away selling hydrogenated food products", while neighbours had complained about the increased litter, noise, traffic an d delivery lorry movements the restaurant would create. After the council’s decision, a KFC spokesman said: “We were obviously disappointed that our planning application for the Aldershot site was rejected as we believe that KFC would be a positive addition to the community, with the potential to create significantly more career opportunities than an alternative industrial use on the land. We will be submitting an appeal which addresses the concerns raised by Rushmoor Council and hope to have some good news soon.” Ironically, after turning down the application for the restaurant, the committee then voted to approve a separate application for totem signs, menus and advertising banners, despite protests from committee members, who described granting the permission as a pointless exercise. A number of councillors attempted to have the menu application thrown out, but no reasons relating to planning policy could be found to refuse it and KFC is now free to erect them if it wishes, despite the lack of an accompanying restaurant. The permission would cease if the land were to be purchased by another company or individual.

Pizza Hut to quit Worthing: Pizza Hut is top close its restaurant in South Street, Worthing, Sussex when the lease runs out in September. Bookmaker William Hill has applied for a betting licence at the premises. A spokesperson for Pizza Hut said: “We continually evaluate the location of our restaurants to ensure they are in the best possible areas to meet consumer demand, and won’t be renewing our lease of our South Street restaurant in September. We have other popular dine in restaurants in Brighton, Chichester and Bognor so will still have a strong presence in the region. All our staff will be relocated to other restaurants in the local area where possible.”

Wetherspoon opens pub on site of former Isle of Wight church: JD Wetherspoon is opening its latest pub on the Isle of Wight tomorrow (Tuesday), in a former Congregational church in Newport. The pub is called the Man in the Moon, which was evidently the name of a building on the site as far back as 1680. It became a church in 1848, but the church closed in 2002, and the building has been used since as a bar and nightclub. Wetherspoon spent £1.86 million developing the site from its most recent incarnation as the Temptation nightclub in St James’s Street.

Stonegate reopens Cardiff landmark after £370,000 investment: Stonegate Pub Company is reopening the Owain Glyndwr pub, a short distance from the Millennium Stadium in Cardiff, this week after spending £370,000 on the venue. The pub now has street seating in the pedestrianised area out front, and opens at 9am for breakfast.

TGI Pubs cuts losses: TGI Pubs, the managed pubs and bars operator that is a wholly owned subsidiary of the Tattershall Castle Group, cut its operating losses before tax for the year to 31 August 2013 by 3% compared to the same period 12 months earlier, to £1.71m. The total loss before tax was down 25% to £1.75m, after losses on disposal of assets fell from £573,000 for the year to £40,000. Average weekly sales rose slightly to £13,873 from £13,726, though turnover was down 16.8% to £20.2m, while the gross profit margin remained steady at 71.4%the ebitda percentage before head office costs to sales fell from 5.9% to 4.8%. Sister company TCG Taverns saw turnover fall 12% to £8.05m for the year to 31 August 2013, while its ebitda margin before head office costs fell from 9.3% the year before to 8.9% as losses before tax rose slightly to £268,000 from £260,000. Average weekly sales per unit rose marginally from £15,315 in 2012 to £15,478, while the gross margin to sales slipped from 75.4% to £75.3%. Among other key performance indicators, rent to sales rose to £23.1% from 22.1%.

Ex-Adnams pub could become police station: A former Adnams pub, the King's Head in the brewer's home town of Southwold, Suffolk, which was closed last year, could become a police station. Suffolk's police and crime commissioner said talks were advanced and a community hub could also provide a base for the town's library. The police commissioner said the existing police station was too large for the force's needs He said: "If we can do a deal with Adnams to buy the pub, then we wouldn't necessarily need to sell the existing police station site immediately because property retains its value in Southwold."