Analyst – why haven’t M&B’s like-for-likes been improving?: Morgan Stanley leisure analyst Jamie Rollo has questioned why Mitchells & Butlers like-for-like sales have been static given improvement in some of the lead indicators. Ahead of results next week, he stated: “Mitchells & Butlers’ business transformation plan focuses on people and guests, on the basis that lower staff turnover, better “scores on the doors”, improved systems and product innovation, and in particular a better “net promoter score” should all lead to improved sales. This makes sense, and its KPIs have all been moving in the right direction except for like-for-like sales, which have been underperforming the market for several years now. The trouble with some of these KPIs is that they ignore how well the competition is doing (perhaps improving at a faster rate?), might suffer from sample bias, and can ignore lapsed users. We think M&B is a cheap stock, but success on its business transformation may remain questionable for as long as its like-for-like sales and profits underperform peers.”

 

James Rollo – market rents could even be a positive for Enterprise Inns: Morgan Stanley leisure analyst Jamie Rollo has floated the idea that the legislative introduction of market rents option (MRO) could be a positive for Enterprise Inns. He said: “If it passes into law, the Bill will receive Royal Assent in March or so. It will then take 12-18 months or so for an adjudicator’s office to be put into place for the working application of the Code. The MRO alternative can then only be triggered at the point of the rent review, which can be up to five years. So this looks likely to be a seven-year journey. This suggests a £10-15m profit hit to Enterprise Inns over five to seven years. At £2m to £3m each year, or circa 1% to Ebitda, this seems manageable, and is similar to the sort of pressure it has faced over the last five years anyway (e.g. contractual beer discounts passed on to lessees have increased from £50m in 2008 to £82m in 2014). The 20% share price drop seems like something of an overreaction to us, if understandable. Could it even be a positive? We can envisage a scenario where pubcos exit another, say, 25% of their pubs as the assets are either worth more to a managed operator, or as alternative use if the MRO leads to an unworkable drop in income. The remaining pubs would be on fixed, upwards only, RPI-linked contracts, and Enterprise Inns could convert to a REIT and re-list in the property sector. As a property company it looks very cheap, trading on a 60% discount to Net Asset Value and a 10% Ebitda yield, cheap for a property stock. Even if we assume a worst-case scenario in which 25% of its wet rent vanishes and is not replaced with rent (£50m), partially offset by discretionary support going (£7m) and admin costs halving (£18m), this implies a £25m Ebitda downgrade (8%), and leaves the shares offering a not unreasonable 8% Ebitda yield.” 

 

Simon Emeny – coffee sales at Fuller’s have hit 1.25m cups a year: Fuller’s chief executive Simon Emeny has reported that coffee sales at the company have hit 1.25m cups a year. Emeny said the opening of a stand-alone coffee shop in Ealing, the Field, would provide the company with a centre of excellence to help expand sales further. “It’s trading very well – I go there quite often myself,” he said. Of the vote in the House of Commons to provide pubco tenants with a market rent option, he said: “I’m disappointed for pubs generally. It’s not going to directly affect Fuller’s but it’s going to end up penalising the people it’s designed to help.” Emeny said the move would have a negative effect “on swathes of community pubs” in the UK. The company has also moved Richard Fuller to the new role of corporate affairs directors because of the “ever increasing amount of government intervention in our sector”, a role previously covered by tenanted division head Mike Clist, who is due to retire. “Mike Clist has done an outstanding job for the industry – he’s a tough act to follow,” said Emeny. The company also reported that a new application portal had resulted in 8000 applications for jobs with 840 team members appointed. Emeny said the company has devised a personality profile for the ideal Fuller’s recruits and the portal is helping pub managers find applicants with the right personality attributes. The company stated that the acquisition of 51% of The Stable would allow the development of female-friendly cider and pizza offer akin to the successful development of the company Pie and Ale brand 20 years ago. Four new Stable openings are planned for 2015.

 

Inventive plans Revolucion de Cuba bar in Reading: The New Inventive Bar Company, which already runs a Revolution bar in Station Road, Reading, is seeking to open one of its Revolucion de Cuba rum bars in the town – part of a plan to open 12 sites to add to the existing five within two years. The company has applied for permission to change the old HMV shop in Friar Street, Reading into a Revolucion de Cuba venue. New Inventive has told Reading Council that opening a new bar on the site would create 30 new full-time and 25 new part-time jobs as well as “add to the vibrancy and vitality of the town”. The proposal would be for two bars on the ground floor with a capacity for approximately 500 people, with a small smoking area at the back. A further bar, called the Havana bar, would be on the first floor with new glazed doors opening out onto a roof terrace, with a total capacity of 220 people. The proposals are currently out for public consultation. If successful, Inventive will apply for a 10am to 2am license daily. Inventive currently has five other Revolucion de Cuba bars, in Manchester, Norwich, Cardiff, Derby and Sheffield.

Indian Restaurants hires Tina English as commercial director: Indian Restaurants, the company behind The Cinnamon Club, Cinnamon Kitchen and Cinnamon Soho overseen by chief executive and executive chef Vivek Singh, has hired Tina English as commercial director. Her new role will see her hone and develop the Cinnamon Kitchen brand, in addition to exploring and executing other brand development opportunities for the Cinnamon Group. Previously, she has worked as managing director of The Ignite Group, commercial director for the dim sum group Ping Pong, and commercial director for Paramount Restaurants. Singh said: “We are delighted to welcome Tina into a newly-founded position at the company. Her main focus will be to strengthen, refine and build the Cinnamon Kitchen brand and I’m sure with her extensive experience and industry knowledge, she’ll be a real asset to the team.”

BrewDog opens in Bologna, Italy: Scottish brewer and retailer BrewDog has opened in Bologna, Italy. Located in an atmospheric old dance school in one of the city’s most vibrant districts, BrewDog Bologna has capacity for 100 people and will feature 16 beers on tap from renowned breweries spread all over the world.The interior will also feature unique design elements created by Bolognese artists and the bar will serve gourmet sandwiches, cheese and meat platters, and vegetarian and vegan options designed to complement the eclectic range of beers. BrewDog intends to use the bar as a hotbed for the burgeoning craft beer revolution in Italy, providing regular ‘Meet the brewer’ events that will give customers face time with some of the most creative brewers the world has to offer. Staff will also provide brew sessions and beer schools for customers looking to learn more about craft beer, its ingredients and the brewing process. The new Bologna bar is BrewDog’s eleventh bar launch this year alone, including São Paulo, Tokyo, Sheffield, Gothenburg, Dundee, Florence, Cardiff, Ellon, and Clapham Junction, London

Camra to let its logo be used to promote sales in Tesco: The Campaign for Real Ale, which has been fighting the conversion of many pubs to supermarkets, is lending its name to a range of beers sold in Tesco. The consumer body’s logo will appear above a new bay within the beer aisle in more than 50 stores as part of a trial. Camra, which has more than 180,000 members, launched its “Camra says this is real ale” logo in 2009 for brewers and retailers to place on bottles and shelf edges as part of its Real Ale in a Bottle scheme. Tesco is the first big retailers to use it on a larger scale. Camra will also provide educational point-of-sale material during the trial next year. Camra’s press manager Neil Walker told OLN: “Tesco is putting together all its bottle- conditioned beers in one section with our logo saying it’s real ale. Lots of supermarkets sell bottle-conditioned ales, but it’s good to see them being separated out to help consumers try them. There are a number of things we wouldn’t agree with Tesco’s on about what it does, but on this one we definitely do.”