Story of the Day:
Tortilla targets growth to 45 sites after securing £11.135m in funding from Santander: Tortilla, the largest fast-casual Mexican restaurant group in the UK and Europe, has secured £11.135m in bank financing from Santander Corporate Banking. The debt facility, alongside Tortilla’s previous investment from Quilvest Private Equity, provides the company with unparalleled financing amongst the UK’s expanding fast-casual Mexican operators. Richard Morris, managing director of Tortilla, said: “We are delighted to continue our relationship with Santander. This outstanding level of support will fund our business to around 45 sites within the next three years, during which time our plan is to bring our burritos and tacos to the whole of the UK. We’ve had an exceptional year at Tortilla with fantastic like-for-like sales and eight new store openings in prime locations such as Richmond, Camden, Westfield London and Liverpool, taking us to 21 restaurants.” Andrew Tully, head of structured finance at Santander, said: “We first met this young and exciting business two years ago when it had nine restaurants and ambitions for a national roll out. We are delighted to have helped them finance their expansion since then, and the latest financing follows our original commitment to be their long-term partner. It is particularly pleasing that the new facilities we have provided will directly assist in the creation of jobs, through financing the opening of a further 25 restaurants.” Tortilla serves up classic California-style Burritos and Tacos inspired by the taquerias in the Mission District of San Francisco‚ the self-proclaimed burrito capital of the world.
Industry News:
Jill McDonald – consumer research and investment the keys to McDonald’s success: McDonald’s UK boss Jill McDonald has argued that investment and customer insights have been the key to McDonald’s success in the UK, where the company has enjoyed 34 consecutive quarters of like-for-like sales growth. She told The Daily Telegraph: “Certainly one thing I did when I joined the business in 2006 was really dial up the investment in consumer insight. We had learned from previous times in the UK, ten years ago what happens when you move away from the customer. So absolutely number one is get closer to your customers and get better insights, that’s a real competitive advantage. Then, invest in what is going to make the difference to them and what is going to drive additional visits. We have been investing in both restaurant experience, which started in 2006 and was completed in 2012, and in food quality, where that is freedom food pork, free-range eggs or 100% breast meat in chicken nuggets.”
Grub Club founder invited to advise government on helping emerging entrepreneurs: The founders of start-up Grub Club, the online marketplace for alternative dining, will close its crowd funding campaign this week and take a seat in Westminster to advise the government on how to aid Britain’s emerging entrepreneurs. Having raised £160,000 through CrowdCube, co-founders of Grub Club, Olivia Sibony and Siddarth VijayaKumar, have been recognised for their work in empowering small businesses, promoting rising and established chefs and unique venues and regenerating communities such as Deptford, through food pop-ups. The pair, who met by chance in India in 2010, have now been invited to sit on two boards, assisting the shadow government form its policies to support entrepreneurs and to advise on the sharing economy. Experiencing the benefits of government support first-hand, including a special loan system and Westminster council’s mentorship programme, the pair will draw on their own experiences and expertise, to ensure other entrepreneurs receive the relevant mentorship and financial support. A spokesman said: “In an age where supporting Britain’s high streets and buying locally is prevalent, Grub Club is keen to aid the regeneration of declining areas, support new talent without the usual heavy investment and big risk, and ultimately make dining out a more sociable experience.”
Northern Ireland faces soaring rate rises: Venues around Northern Ireland are facing soaring rate rises. The net annual value (NAV) of many sites in Belfast’s city centre has soared as property values have shot up in areas that were down-at-heel in 2001 but are now fashionable. Colin Neill, of Pubs of Ulster, said the increases would be “a tough pill for businesses to swallow”. The Spaniard in the Cathedral Quarter’s Skipper Street – part of the Beannchor portfolio – faces almost a five-fold increase in its NAV, from £10,200 to £49,000. The Dirty Onion on Hill Street has been given a revised NAV of £135,000 – up from £32,500. Group finance director James Sinton said the revaluation “will undoubtedly place added pressure to what is already an extremely challenging trading environment”.
TripAdvisor launches Hotelwatchdog.com: Airfarewatchdog.com, a site owned by TripAdvisor, has devised a better way to book a room, with software that filters the hundreds of accommodation choices in large cities down to a manageable 20. “No more drowning in thousands of options,” the company promises in the launch announcement of Hotelwatchdog, an extension of the airfare site. The algorithm powering Hotelwatchdog also tracks hotels’ past prices to determine a 45-day average, offering a quick comparison to the quote for your stay. The price data comes from online travel agencies and hotel-specific booking websites.
UK’s first board game cafe opens: London’s first board game cafe, Draughts, is set to open in Haggerston at the weekend. The concept, which was conceived by Toby Hamand and Nick Curci, will open at 337 Acton Mews, near Haggerston station. The cafe will provide customers with the chance to browse an extensive collection of board games and play over a drink with friends. Hamand financed Draughts partly through the online fundraising site, Kickstarter. He raised nearly £21,000, more than double the £10,000 required to get the project off the ground. Draughts was inspired by ‘Snakes and Lattes’, the world’s first board game cafe in Canada. Draughts will charge non-members £5 to play a board game for an unlimited amount of time, with members paying £3.50. The cafe will also serve as a venue for board game workshops and tournaments, as well as less game-related events like speed dating.
New awards to celebrate the best in beer marketing are launched: A new set of awards has been launched to recognise the very best in beer marketing in 12 categories. The brainchild of beer writer, Pete Brown alongside industry marketers Jo Miller and James Cuthbertson, the Beer Marketing Awards will celebrate the marketers and creative teams behind the brands. From these, an overall winner will be announced as well as an award for ‘Outstanding Individual achievement’, which will highlight the individual who, in the minds of the judges, has had the most impact in the way beer is marketed in the UK. The judges, lead by beer writer, Pete Brown, include leading on and off trade operators, beer journalists, bloggers and award-winning marketers. Pete Brown said: “Whether you’re a mainstream lager brand creating a large scale TV advertising campaign or a microbrewer pouring your creativity into social media, in the modern market it’s not enough to simply brew a great beer – it needs to be communicated and presented to the drinker in the most compelling and attractive way possible.” Details of how to enter can be found at
www.beermarketingawards.co.uk with a closing date for entries of 23 January. Winners will be announced at an event on 14 April 2015 at the Truman Brewery, Brick Lane, London.
Company News:
JD Wetherspoon executive directors remuneration drops: The remuneration of JD Wetherspoon’s three executive directors dropped to £1,533,000 in 2014 compared to £2,184,000 in 2013. In addition, chairman Tim Martin earned £324,000, the same as the year before although his taxable benefits increased to £29,000 from £14,000 in the year prior. Chief executive John Hutson saw his basic remuneration increase 2.5% to £453,000 from £442,000 the year before but his performance bonus dropped to £44,000 from £85,000 the year before and long-term incentives dropped to £168,000 from £467,000 the year prior. Overall, he earned £741,000 compared to £1,079,000 in 2013. Both finance director Kirk Davis and personnel and legal director Sue Cacioppo were awarded 11% more in basic salary (on account of increased seniority and contribution) to receive £241,000 and £252,000 in basic salary, respectively. But reductions in bonus and long-term incentive payments meant Davis earned a total of £395,000 (down from £535,000 in 2013) and Cacioppo earned a total of £417,000 (compared to £570,000 in 2013).
Ottolenghi reports £1.5m profit: Ottolenghi, the restaurant company headed by chef Yotam Ottolenghi, has reported pre-tax profit of £1,591,812 in the year ended 31 March 2014, compared to £1,846,474 the year before. Turnover rose to £12,939,272 compared to £12,336,555 the year prior. A dividend of £1,100,000 was paid to shareholders (2013: £900,000). The highest paid director earned remuneration of £225,000. The company has 185 staff, down from 204 the year before.
New restaurant brand wins Start Up award: A newcomer to the Harrogate restaurant scene has been named the regional winner of the government’s Big Start Up Loans Competition. Entrepreneur David Atkinson set up The Yorkshire Meatball Company, on Station Bridge, five months ago and took out a Start Up Loan to help fund growth. Since then, the company has served nearly 10,000 customers and beat off strong competition from 550 entrants to be named regional winner for Yorkshire and the Humber. Atkinson said: “This venture has given me a new and exciting purpose. I am also proudly working with one of my own sons as co-founder in developing a business with a real, tangible growth prospect.”
Lovely Pubs to open eighth pub on Thursday: Lovely Pubs, led by Paul Salisbury and Paul Hales, who oversaw the roll-out of Mitchells and Butlers’ 80-strong Premium Country Dining Group of country gastro-pubs, will open its eighth pub this Thursday (20 November). The company has bought The Moat House Inn, Kings Coughton, Alcester, Worcestershire, a former Spirit leased pub with 4.5 acres of land, off an asking price of £300,000. The pub has 160 covers and Lovely Pubs is investing around £700,000. It will have a wood-fired oven installed with the aim of serving a range of gratin dishes. The new pub will have a strong cider focus, being in the middle of an apple-growing area, and rooms based around a shooting theme, with names such as Holland & Holland and Purdey. The new site comes 15 months after the company opened The Queen’s Head in Bromsgrove, a former Enterprise Inns site, after an £800,000 investment.
Gordon Ramsay – a rival sabotaged opening of new Heddon Street restaurant: Chef Gordon Ramsay has claimed a rival sabotaged the opening of his new Heddon Street Kitchen restaurant by making 100 fake bookings. The chef told The Jonathan Ross chat show that a rival booked 100 out of the 140 table spaces with fictitious reservations, leaving just 40 people in the restaurant on opening night. He said staff were left upset and would now have to re-confirm every single booking to ensure the episode did not happen again. The new opening marks Ramsay’s 12th restaurant in the capital, and brings his total number of venues up to 24 worldwide – sharing seven Michelin stars between them. “It’s bad spirit and you see the staff and they are down and frustrated, I was there to pick them up and make sure we stay focused,” Ramsay told the show.
Sites let to Stonegate, Shepherd Neame, Laine Pub Company and PizzaExpress to be auctioned: Pubs let to Stonegate Pub Company, Shepherd Neame and Laine Pub Company are to be auctioned by Allsop on 10 December. The freehold of The Lamb in Edmonton Green, London, let to Stonegate, is offered with a guide price of £525,000 to £550,000. The site was let to Barracuda Pub Company on a rent of £95,470 per annum in 2005 but rent was reduced to £30,000 per annum in the wake of the pre-pack administration of Barracuda in December 2011. The freehold of The Cask and Glass in Palace Street, Victoria, London, let to Shepherd Neame on a rent of £78,149 per annum until 2044, is offered with a guide price of £1.65m plus. The freehold of The Shakespeare’s Head in Chatham Place, Brighton, let to Laine Pub Company on a rent of £74,175 per annum until 2022, is offered with a guide price of £725,000 plus. The freehold of a newly developed restaurant site in Hemnall Street, Epping, Essex, let to PizzaExpress on a rent of £108,000 per annum rising to £122,000 per annum by 2018, is offered with a guide price of £1.85m to £1.95m – the lease expires in 2039.
Beerhouse concept planned for Bradford’s emerging North Parade: Business partners Jas Bhatt and Kathy O’Brien, who operate The Boathouse Inn, in Saltaire, are planning to develop the Bradford independent leisure scene in the emerging North Parade by opening The Beerhouse, with a focus on offering a wide selection of craft beers along with Yorkshire cask ales and home-cooked pub food made from locally-sourced produce. The plans also include an outdoor seating area to form part of the wider European-style ‘café’ culture which is starting to take shape across the city centre. A planning application has been submitted to change the use of the long-established Table Décor furnishing shop, as the owners have decided to vacate the retail frontage and relocate to the upper floor where they will concentrate on their online operation. The pub development would help to preserve and enhance the five-storey Victorian listed building which was historically the home of Liverpool & Victoria Insurance. The premises has been on the market for 18 months. The Beerhouse is one of the bigger projects lined up for North Parade – in an area currently undergoing a renaissance which is being tagged as Bradford’s Independent Quarter. The scheme would create 30 new jobs for the city centre. An application is being submitted for city centre Growth Zone funding to underpin the project.
New bakery concept to launch in Chelmsford: A new bakery restaurant concept, Bake ‘n’ Grape, is to open in Chelmsford next year, with a further 12 openings planned throughout the UK by 2018. It will introduce technology that allows customers to pre-order, via mobile devices, before they reach the shop, in order to appeal to commuters. The 6,000 square foot site will contain an on-site bakery and open kitchen. It will look to employ five to six bakers, as well as run an apprenticeship scheme. Chris Windram, managing director of the CaefMafia, previously worked in software. He said: “What struck me was that the cafe and restaurant sector is one of the few not affected by today’s mobile technology. Why can’t consumers click onto their phones and pre-order their coffee? This saves the hassle of queuing. We have designed an app and a website so our customers will be able to do this. We want to bring back freshness, and offer more than a par-baked loaf or pastry. All our recipes will be made from scratch, and the new bakery gives us flexibility to bring back speciality loaves and sourdoughs.” Windram said he would look to places which were similar to Chelmsford and lacking in fresh bakeries, such as Brentwood for a second site. He also said the third opening would be somewhere in London, before the firm expanded back out again.
Restaurant brands sign deal for Leeds Merrion Centre: Town Centre Securities has agreed deals for a noodle bar chain and a Thai food specialist to take space at the Merrion Centre in Leeds. The Chopstix Group has more than 44 units across the UK and has now invested £150,000 opening a 2,000 sq ft outlet at the Merrion Centre, signing a 15-year lease with TCS. Menashe Sadik, managing director at Chopstix, said: “The Arena Quarter is an amazing new urban regeneration project and provides the perfect setting for our Chopstix noodle bar. Our location in the Merrion Centre means we are able to serve the community in a high footfall shopping centre which gives us the opportunity to trade for longer hours.” Also agreeing a deal is Yorkshire-based chain My Thai. This is the third opening for the business, adding to restaurants in Bradford and Halifax. It has invested more than £50,000 into the refurbishment of its 482 square foot site in the Merrion Centre. The restaurant has been set up by Simon Grybass and his business partner Bee Latham. Latham is originally from Thailand and has successfully operated a string of Thai restaurants across the world.
SA Brain places sites on the market: Cardiff-based brewer and retailer SA Brain is selling a handful of sites. It is looking to sell the Churchills hotel close to Howells School in Cardiff. The company is also selling the Bacchus bar on Park Place in the capital, which closed in May this year, and has submitted plans to demolish the former Farmers Arms pub in the Waunarlwydd area of Swansea to make way for a housing development. Brains chief executive Scott Waddington told the local newspaper: “The sale of Bacchus, Churchills and the proposed development of The Farmers Arms in Waunarlwydd are not part of an accelerated program of divestment at Brains. Like any operator, we constantly review our pub estate to ensure we remain relevant to our customers and leverage our assets successfully. The pub landscape has changed significantly in recent years and the make-up of our property portfolio has evolved to enable a sustainable future for the Brains business. While we are always reluctant to sell properties, a small number of closures have occurred. As a company, we remain acquisitive. The recent purchase of the former Goscombe pub in Canton – which is currently being transformed into the Plum Tree café bar – and further acquisitions of Coffee#1 sites is testament to this strategy.”
Jamie Rollo – beer market stabilisation is good news for Punch and Enterprise: Morgan Stanley leisure analyst Jamie Rollo has argued that the current stabilisation in beer market volumes is good news for tenanted pub companies. He said: “UK on-trade beer volumes have flattened in the last year, a significant improvement on the 6-9% drops seen after the smoking ban and recession. We put this down to a stronger economy, beer duty cuts, and the benefit from the World Cup and better weather in 2014. Annual beer sales for the whole of the UK (on- and off-trade) for the year to Sept rose 1.4%, the third quarter to have reported an increase after 29 consecutive quarters of decline. This should be good news for pub operators, particularly tenanted and leased pubcos such as Enterprise Inns and Punch Taverns, for whom beer commission is around half their income. Indeed, tenanted and leased pub like-for-likes have been outperforming managed pub like-for-likes for the last four months.”
Edwardian Group updates Scoff & Banter offer: Edwardian Group London has updated its food and beverage offering at its Scoff & Banter site on Cromwell Road, Kensington. The restaurant has been updated with reclaimed furniture and fittings, intricately detailed high ceilings in keeping with the listed building, and elegant yet welcoming bay windows. It has been re-designed to encourage interaction and a sense of stylish comfort, with high sharing tables and a private dining room, perfect for dinners, events and family gatherings. Director of food and beverage, Russ Brown, who has launched various dining concepts for Edwardian Group London this year, said: “We’re really excited about this re-design. We want to welcome local people who want to meet for dinner, coffee or a catch-up with the newspapers. This is the first of the Scoff & Banter offerings we’re re-launching and we’re looking forward to becoming a focal point for the neighbourhood.”
Investigation raises questions over Starbucks Dutch tax deal: The tax deal between Starbucks and the Dutch government may amount to illegal state aid, according to EU regulators. The arrangement allows the world’s biggest coffee chain to pay tax on a lower income base, a move which constitutes state aid, they said in a letter to the Dutch government. The remarks come five months after Brussels opened an investigation into the coffee chain’s tax arrangements. It is one of a string of similar investigations into so-called “sweetheart” deals between European governments and major companies including Amazon, Apple, and car maker Fiat. “The Commission’s preliminary view is that the Advanced Pricing Arrangements in favour of Starbucks Manufacturing EMEA BV constitutes State aid. The Commission has doubts about the compatibility of such aid with the internal market,” the EU executive said in a statement. The Dutch government has said it is “confident” the investigation will find no evidence of illegal state aid to Starbucks and that the arrangement meets internationally agreed standards.
Chef Jason Atherton – top restaurants as big a draw as theatres in London: Michelin-starred chef Jason Atherton has argued that London restaurants are now the equal of West End theatres as tourist attractions. Atherton, whose restaurants include Pollen Street Social and Berners Tavern, said diners “have never had it so good”. “The power of food and beverage to the traveller today is so significant that people plan their trips around what restaurants they are going to go to,” he told The London Evening Standard. “It’s just incredible. If you cast your memory back 20 years ago, your night out would consist of bars, and you’d probably have eaten at home. Absolutely now the first meeting point is the restaurant. The other stuff comes much later on in the evening. Or you go to places like Zuma where they provide everything. London’s restaurants are a massive draw.” He claimed prices are 60% lower than Paris for the same quality. “London is cheap. We have got sea bass on the menu at £32. I pay £11 a portion just to buy it raw. Then I have got to make the sauce, pay the chef, the rent, someone to collect the coats – it goes on and on.”
Conwy planners give £1m restaurant the go-ahead: Conwy Council’s planning committee has given the green light to a £1 million restaurant on the site of an old garage. Members voted to approve the development on the old Billington’s Garage site on Llanrwst Road, Conwy, a move that is set to create up to 40 jobs. Developers York Design and Construction can now begin finalising construction plans for the two-tier restaurant, which has capacity to seat 220 people. They will also be “working closely” with heritage group Cadw to ensure that the “integrity of Conwy Castle” remains intact after committee raised fears it would spoil views of the castle.
JD Wetherspoon opens another pub in Corby, exchanges in Ramsgate: JD Wetherspoon has opened another pub in Corby, creating 70 jobs. The company has spent £2.25 million on redeveloping the site in Elizabeth Street, Corby, for its new pub and hotel The Saxon Crown. The new-look pub has a ground floor bar, and beer garden to the rear of the premises. The hotel has 12 bedrooms as well as a reception area and two conference rooms. Meanwhile, Thanet District Council has exchanged contracts with JD Wetherspoon in connection with The Royal Victoria Pavilion in Ramsgate. The agreement means that, subject to planning permission, the company will progress their proposal to create a pub in two thirds of the building. The remaining third would then be sublet to suitable tenants on a commercial basis. The property, which has been empty since 2008, is a substantial Grade II listed building within an important conservation area. It requires significant investment to bring back into use. JD Wetherspoon’s proposal would see several million pound invested to bring the whole building back to its former glory.
Domino’s UK wins pizza delivery chain of the year: Domino’s Pizza UK has been awarded ‘Pizza Delivery Chain of the Year’ at the annual Pizza Pasta & Italian Food Industry Awards. The gala dinner awards hosted at the Lancaster London Hotel, reward and celebrate the continuing success and innovation of the UK’s pizza, pasta and Italian food business. Domino’s hard work and commitment to the industry set itself apart from fellow delivery chains who also made the shortlist, including Papa John’s, Pizza Hut and Firezza Ltd. Chief executive David Wild said: “This award is a well-deserved testament to our dedicated franchisees and team members who work tirelessly, day-in day-out to deliver fresh hand-made piping hot pizzas to our loyal customers. Domino’s is on the road to becoming the number one pizza company in the world and in every neighbourhood, and this award signifies another major milestone in the UK.”
Woolworths in Australia cleared of Jamie Oliver advertising campaign wrong-doing: Woolworths in Australia has been cleared by a consumer watchdog of any wrongdoing when charging suppliers for its Jamie Oliver advertising campaign. The Australian Competition and Consumer Commission spoke to 200 suppliers about a voluntary charge they were asked to pay Woolworths for the celebrity chef to star in its advertising. Chairman of the ACCC, Rod Sims, talked about the case in a speech to the Australian Farm Institute. He said he couldn’t find any examples of the supermarket chain breaking the law. “The ACCC has not received any evidence that suppliers were unfairly pressured.” The case is now closed.
Magicgoal sells events catering business: Magicgoal Ltd, which trades as Fine Burger Co and The Fine Food Company has sold its event catering division, which includes a number of high profile contracts at some of the country’s most prestigious events and venues. Newly created Fine Event Co, headed by experienced operator Chris Peedell, will take over the day-to-day running of the business. “l’m proud to hand over the reigns to an experienced operator who will build on our legacy and take the business to the next level,” said Robert Tame, managing director of The Fine Food Company. The sale enables Magicgoal Ltd to build on the success of its fixed-site operations and concentrate on its strategy to further develop fixed-site formats at high footfall locations, notably with the opening of an outlet on the newly created mezzanine food court at Euston Station in early 2015. Magicgoal Ltd continues to operate Fine Burger Co at St Pancras International Station and Excel London, as well as Fine Chicken Co at Excel and Coffee Dogs at Kings Cross Square. Chris Peedell’s Fine Event Co will take over the operation of 11 mobile catering units, including Fine Burger Co, Fine Chicken Co and Fine Fish Co at events across the UK.
£2bn scheme to redevelop New Covet Garden with restaurants gets go-ahead: Joint venture development partners Vinci and St Modwen have gained planning for the £2bn regeneration of the New Covent Garden Market site in central London. The plans with the Covent Garden Market Authority will lead to the transformation of the 57-acre site situated next to Vauxhall Cross in the Nine Elms regeneration zone. The multi-phase scheme will take ten years to build and includes development of 550,000 sq ft of modern facilities to house the 200 businesses that make up the UK’s largest fruit, vegetable and flower market. Construction work will be funded from the release of 20 acres of surplus land for a residential led mixed-use regeneration scheme. Much of this will be built on a separate site joined by a 1km linear park. In total more than 3,000 new homes and 135,000 sq ft of new office space and 100,000 sq ft of retail and leisure will be built. Development work on the new market will commence in 2015 and on the first phase of the surplus land in 2017.
Work starts on Marston’s pub restaurant in Doncaster: Building work has started on site to construct a new Marston’s pub and restaurant at Thorne Park, Doncaster. The venue is the first building to start in phase two of the 20 acre mixed use development located at junction six of the M18, at Thorne, by Henry Boot Developments Limited. The King’s Chamber by Marston’s Inns and Taverns is expected to create 45-50 new jobs in the area and will cater for up to 180 diners. “We’re extremely excited about our latest pub, which we hope will build a great reputation locally, offering top quality pub food and an unrivalled selection of cask beers from across the country,” said George Georgiou, area operations manager for Marston’s Inns and Taverns. The pub kicks off the second phase of development for retail/leisure provision on the site with a significant proportion also allocated for a Tesco supermarket and filling station as well as two drive-thru restaurants.
Bibendum reports soaring Prosecco sales: Drinks supplier Bibendum Wine has reported a major increase in sales of premium Prosecco over the past year. Over the past 12 months Bibendum’s sales of premium Prosecco (which is classed as Prosecco that costs 20% or more than the average Prosecco on the list) has seen an increase of 150%. Sales of super-premium (classed as Prosecco which costs 50% or more than the average Prosecco on the list) has seen an increase of 295%. These sales statistics come within a category that is in massive growth across the market. In the last quarter, Bibendum saw Prosecco sales up 33% by volume and 15% by value, and with the festive trading period upon us, it is expected that growth within this category will continue well into the New Year. The move towards premium Prosecco suggests that consumers are trading up within the category as they become more familiar with the different styles and flavours associated with the Italian sparkling wine. Mark Riley, sales director for Bibendum, said: “It has been widely reported that Prosecco is driving massive growth within the sparkling wine category. It seems that now that there is an established customer base for Prosecco, the tastes of these customers are evolving. Prosecco is no longer seen as a cheap alternative to Champagne, it is a category within its own right. Consumers are now looking to experiment within the category and trade up to try a more premium example of a sparkling wine they enjoy.”
Simon French – short-term trading softness at The Restaurant Group: Cenkos Leisure analyst Simon French has described The Restaurant Group’s Friday trading update as ‘disappointing’ with year-to-date like-for-like sales growth of 3.0% compared to 3.5% after 34 weeks and his forecast of 3.5% – total sales are up 10.3%. He said: “Furthermore, the group has identified slightly firmer wage cost inflation and lumpy pre-opening costs which will curb margins. As such we downgrade our slightly above consensus 2014 PBT forecast by 4% to £78.5m and our 2015 forecast by 3% to £88.1m. Management is more cautious on the short-term outlook but we would expect rising wage inflation to ultimately feed back into stronger top-line growth and we believe the group can open circa 45 new restaurants next year. It is unusual for the group to disappoint and we expect the stock to react harshly. This should provide a suitable entry point for those who have found the valuation too rich up until now and we reiterate our Buy recommendation. Like-for-like sales growth in H2 so far (19 weeks to 9 November) is a very respectable 3.7%, representing an acceleration on the 2.5% achieved in H1 but the performance is mixed with the last 11 weeks circa 1.5% compared to circa 6.5% in the first eight weeks of the period. In essence, like-for-like sales have slowed since August – but the group has under indexed the market as per the Coffer Peach Tracker we estimate – and new openings have slipped slightly. Ongoing weakness in cinema admissions has not helped but paradoxically just as real wage inflation has arrived, consumer expenditure appears to have slowed. Having spoken to management we detect a more cautious tone on the short-term outlook with trading likely to be subdued until the General Election in May next year. Thereafter the outlook improves with a stronger cinema release schedule and real wage growth of circa 2-3%; indeed the slightly firmer wage cost inflation that is currently curbing margins should feed back into top line growth within six to nine months, we estimate.”
Muthu Hotels makes UK debut: The Belstead Brook Hotel in Ipswich, which was put up for sale in July with an asking price of £2.5 million through agent Fleurets, has been acquired for an undisclosed sum by a leisure company based in India. Muthu Hotels specialises in resort complexes, operating a total of 14 other properties in Portugal, Spain, India and Singapore – The Belstead Brook is its first site in the UK. It is part of the MG Muthu Group of companies based in the Indian city of Chennai (formerly known as Madras) which also has interests in sectors including logistics, mining, construction and restaurants. The 88-bedroom Belstead Brook Hotel, which also includes a restaurant, conference and wedding facilities, a garden bar and a leisure club with an indoor pool, was marketed through leisure property specialist Fleurets, which described the sale as “a unique opportunity”.
