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Pavli – pub groups need to be producing like-for-like sales growth of 29% to stand still on 2019 profit numbers: Paul Pavli, former managing director of Punch Taverns and sector consultant, has argued pubs would currently need to be generating like-for-like sales growth of 29% to stand still on 2019 profit numbers. Pavli said: “With the likes of CGA reporting like-for-like sales at circa 5%, and Mitchells & Butlers and JD Wetherspoon reporting like-for-likes sales (after VAT benefit) in negative numbers based on 2019, we all know how tough it is out there right now with all of the cost inflation. But what like-for-likes sales do businesses need to report to grow profit on 2019 numbers? I spoke with 18 operators who between them run 384 venues in the pub space, and the details below show the issues these good operators have. Their like-for-like sales were up circa 8.1%; staff cost increases for food businesses were at circa 8.9%; food cost inflation was up 7%; drinks cost increases (into them) stood at 4%; and energy costs had increased on average 83% (some still locked in, while some paying as much as 300% more). I then created a P&L/forecast based on these increases. It showed wet-led and food-led pubs need 29% like-for-like sales growth to stand still on 2019 profit numbers. If these businesses pass on all food and drink prices rises into their business, they still need to find 19% like-for-like sales growth to stand still on profit. Wet-only businesses need 18% like-for-like sales to do the same, and if they pass on all drinks price rises, they need 10% like-for-like sales growth to cover all other cost increases. How many businesses have we seen reporting like-for-like sales in that range? I keep reading about businesses returning to profitable sales, which is great, but if we use 2019 as a comparison, we’re going to have some massive shortfalls on profit.” Michael Toon, financial director at Comptoir Group, said: “It feels like it’s been this way since 2008, always needing a good like-for-like sales increase to cover national minimum wage, utilities, food and beverage etc. But yes, at present, maybe as bad as it’s ever been.” Duncan Garrood, chairman of Small Beer Brew Co and former chief executive of Punch and Bill’s, added: “At the end of the day, profit has to return, and it looks clear that is going to be a very selective process.”

Industry News:

Cluster of London cafe openings to feature in next edition of The New Openings Database, 18,300-word report included: A cluster of London cafe openings will feature in the next edition of The New Openings Database, which is produced in association with StarStock. The database will show the details of 356 newly announced site openings and upcoming launches for Premium subscribers when it is published on Friday (5 August), at midday. The database shows the details of which company has opened a site or its plans to open one in the future. It will have details on what type of site it is and its location. There will also be a website link to the businesses so you can find out more about them. It is published on a monthly basis. The next edition features Where The Pancakes Are, the buttermilk pancakes and cafe concept founded by Patricia Trijbits, which is opening a new site at the Battersea Power Station development. Also added this month is independent neighbourhood cafe Beam, which focuses on healthy breakfast, brunch and lunch dishes inspired by Mediterranean and British cuisine, which is opening a fourth London site later this year, in Muswell Hill. In addition, eggs-centred concept Yolk, founded by Nick Philpot, which is to launch a fourth site in London, in Cabot Square, will be featured. Meanwhile, cafe and bar concept Morty & Bob’s, which is the brainchild of Charlie Phillips and Jesse Bliss, and is to open a second restaurant in London, in Kensal Rise, is included. Premium subscribers will also receive a 18,300-word report on the new additions to the database. Premium subscribers also receive access to three other databases. The latest Propel Multi-Site Database, which is produced in association with Virgate, was sent to Premium subscribers last Friday (29 July). The database contained 43 new companies, bringing the total number of businesses listed up to 2,572. The 217 sites run by those 43 new additions means the entire database of sites has reached 66,223 sites. Premium subscribers also received a 3,200-word report on the new businesses added. The go-to database provides company names, the people in charge, how many sites each firm operates, its trading name and its registered name at Companies House if different. There is also a synopsis of what the business does and significant news associated with it. Premium subscribers also receive the Turnover & Profits Blue Book, which is produced in association with Mapal Group, and the UK Food and Beverage Franchisor Database, which is an exhaustive guide to the companies offering a food and beverage franchise in the UK and will be updated every two months. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £895 plus VAT – whether they are an operator or a supplier. The single subscription rate is £445 plus VAT for operators and £545 plus VAT for suppliers. Email jo.charity@propelinfo.com to upgrade your subscription. Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out; regular video content and regular exclusive columns from Propel group editor Mark Wingett.

NTIA calls for government support after one fifth of nightclubs lost in last three years: The Night Time Industries Association (NTIA) has called for government support after releasing figures showing one fifth of nightclubs have been lost in the last three years. The figures also show there are only 1,130 nightclubs left in the UK, which is down substantially since the pandemic, with the Midlands and north being hit the hardest. The culmination of pandemic debt, growing energy bills, workforce challenges, supply chain issues, increased insurance premiums, landlord pressures and product cost increases have created a perfect storm, says the NTIA. Operating cost pressures, coupled with consumers having less disposable income, have seen both ticket sales and visitor frequency slow down. There is still some way to go to see the true impact of cost inflation on businesses, with more than half of businesses surveyed by the NTIA saying they are still to renew their energy contracts. Further closures would drastically affect the night time economy’s contribution to the UK economy – currently £112bn in revenue per annum (6% of the UK's total) – NTIA chief executive Michael Kill warned. “Late night economy businesses were one of the quickest sectors to rebound during the financial crash many years ago, harbouring an abundance of resilience and entrepreneurial spirit,” said Kill. “These businesses, particularly nightclubs, have a huge part to play in the regeneration of high streets in towns and cities across the UK, not forgetting the important part they play in peoples’ physical, mental and social wellbeing. The government needs to recognise the economic, cultural, and community value of clubs and the wider night time economy. We must protect these businesses, using every means possible, and recognise their importance before it’s too late.” Labour’s shadow levelling up secretary, Lisa Nandy, said in June that reopening nightclubs in struggling towns and city centres could help revive high streets and boost the economy. In response, Arith Liyanage, who operates Night Owl nightclubs in both Birmingham and London, said nightclubs must move away from the traditional one-size-fits-all model and offer more specialist and safer nights out if they’re to really help UK towns level up. “The old-fashioned mainstream nightclub with the big disco ball and dry smoke model is pretty much dead,” said Liyanage, who plans to grow his concept on a national basis. “People have a lot more choice in hospitality now and will pick something that fits their lifestyle.”

Back-of-house staff now commanding more than £10 an hour as hospitality headcount hits two-year high, but 6% of workers leaving per month: Hospitality staffing numbers are nearing pre-pandemic levels, but a series of factors such as increasing rates of pay, high staff turnover, and the changing make-up of the workforce, are piling pressure on employers. The latest data from software provider Fourth shows there are now more people working in hospitality than at any time in the last two years but back-of-house workers in pubs and restaurants are now commanding more than £10 per hour. The overall staffing headcount is up 21.7% compared with June 2021. However, the industry is still having to replace the 6% of the labour force who leave every month despite rates of pay rising sharply – up 8.5% for pub workers and 6% for restaurant employees. The rate of growth in staff numbers in pubs has slowed compared with other sectors. It was up by just 1.9% in June. This contrasts with hotels (27.3%), quick service restaurants (25.8%) and restaurants (25.7%). Pubs initially bounced back faster than other types of venue when restrictions were lifted. Pubs are also experiencing the highest leaver rates: 8.4% in April and 7.1% in June. Hotels are the most stable with a 5% leaver rate. Younger workers (18-20) are enjoying faster growth in hourly rates of pay. A 20-year-old back-of-house pub worker was earning 13.8% more in June 2022 than 12 months previously. Across the sector, hours worked in June 2022 were up 17.3% versus June 2021 and 449.2% against June 2020, when hospitality was largely closed in the UK. EU workers now account for just 26.3% of the workforce, compared with 43.2% in January 2019 and 35.9% in July last year. Non-EU workers now account for 17.9% of the entire hospitality workforce (up from 11% in January 2019). British representation has gone from 45.8% to 55.8% in that period. However, the data shows signs of a slowdown in the growth of British workers in hospitality, as it has only gone up by 0.7 percentage points since January 2022, when they accounted for 55.1% of the workforce.

PCA to ‘reset its aims’ to meet ‘current and future trading challenges’: The pubs code adjudicator (PCA) is looking to “reset it aims” to “meet current and future trading challenges”. The body, which regulates relationships between pub companies owning 500 or more tied pubs and their tied tenants, has produced its first PCA Strategy Report, which looks to “rebalance the tied pubs trade”. It will aim to answer 95% of all enquiries within 15 working days, and appoint an arbitrator for 90% of disputes within 25 working days of accepting a referral and receiving all relevant information. It wants to make tenants more aware of their rights and how to access them, of what their options are if they feel unfairly treated, and the steps they can take to address it. It also wants to make pub companies more aware of their obligations with regards to the code and clearer on its processes, while ensuring a “quality arbitration service” for both sides. “This represents the first time the PCA, in consultation with key cross-sector stakeholders, has developed a future-focused approach towards meeting the needs of the sector,” said PCA, Fiona Dickie. “The PCA has shifted further in to the regulatory role over the last two years and needs to develop this pathway to place greater weight on listening and talking to people, as well as keeping the space in which to make impartial regulatory decisions. The journey of the PCA has been a process of development, and the covid-19 pandemic meant a new focus to make sure tenants’ code rights were protected, as the entire industry concentrated on its very survival. Moving forward, in recognition of the benefits of support that business partnership can bring, there is an opportunity for a reset for the PCA and the tied relationship to meet multiple trading challenges now and in the future.”

Nick Jones – hospitality should be the national service and people should do a year in it: Nick Jones, founder and chief executive of Soho House, has argued hospitality should be the “national service” and people should “go and do a year” in it. Speaking on the latest Diary of a CEO podcast from entrepreneur Steven Bartlett, Jones said: “It (hospitality) has taught me everything. I think it should be the national service, and people should go and do a year in hospitality because I think it teaches you so much. I spoke earlier about me going into a kitchen and really learning how to get on with people from different backgrounds, different countries, different everything. And I think it really teaches you to be part of a team and people you work with in the kitchen or the person cleaning the dishes or a person, cleaning the rooms, that you all have to work together to make it happen. It really takes the shyness out of you and it gives you an ability to get on with people, which I think is a really useful tool. I think it’s better than a maths degree, getting on with people. I think you learn useful practical things like making a bed or keeping your place tidy or clearing a table of plates. When you’ve got a family gathering or something you can suddenly clear the plates and stack them up or you can make a cocktail, which is really nice. Even if you’re not in hospitality any more, you can still make cocktails, you can still make a bed, you can still hopefully get on with people. You have to become quite organised in your mind, and I think hospitality is a very rewarding industry for that.”

TikTok starts selling fresh food, teams up with Pasta Evangelists: TikTok has started selling fresh food on its platform for the first time in the UK, with Pasta Evangelists among the brands available on the social network. The social media platform’s users are now able to buy directly from brand pages on the app. Other food brands selling via the platform include The Veg Box Company and The Fish Company. The food companies, which will take responsibility for delivery of orders, can work with TikTok’s network of creators to run live content and offer users exclusive discounts. TikTok e-commerce operations senior director Patrick Nommensen said: “TikTok has made it easier for food brands and creators to be discovered, and we have an active community of food lovers on the platform. Enabling fresh food brands and creators to sell directly to our community through a seamless transaction on TikTok Shop is a logical next step. There will also be a huge opportunity for new food brands looking for a springboard to market, and I am excited to see more fresh products available on the platform.” Pasta Evangelists co-founder and chief marketing officer, Finn Lagun, added: “It’s an exciting opportunity to change the face of modern retail, all while delivering people delicious fresh pasta.”

Company News:

Red Engine doubles site acquisition targets for 2023, plans eight to ten new venues year on year: Red Engine, the team behind Flight Club and Electric Shuffle, is doubling its site acquisition targets for 2023 and is planning eight to ten new venues year on year. The group launched its first site, Flight Club Shoreditch, in 2015, and has subsequently grown to 11 sites across the UK. Still to open this year are a Flight Club in Cardiff and an Electric Shuffle Leeds, and an international Electric Shuffle site in Austin, Texas. It is now reaching out to potential landlords to assist with its growth plans, which include a further eight venues in the US and one in Australia. Red Engine’s UK property agent, Alex Hill, of The Leisure Partnership, said: “The company’s venues are usually fully booked on key nights up to eight weeks in advance.” Red Engine chief executive Steve Moore told Propel in April that, following the opening of its latest site, a regional debut for Flight Club in Cheltenham, he believes the company can take both concepts to at least 100 sites in the UK. He said this domestic growth could be complemented by four US openings a year, two in Australia and one in Ireland. The company has been expanding in the US in partnership with State of Play Hospitality, and is set to start rolling out in Australia by the end of the year through an agreement with Capitol Corp.

Xenia Walters steps down as Snowfox Group CFO: Xenia Walters has stepped down as chief financial officer of Snowfox Group, which owns the YO!, Taiko and Bento brands, Propel has learned. Walters joined Snowfox in March 2021 from SDL, the listed professional services provider, where she was group chief financial officer. Prior to SDL, Walters held chief financial officer roles in a number of private equity-backed businesses including Frank Recruitment Group, Oxford International Education Group and INTO University Partnerships. A spokesperson for Snowfox Group told Propel: “Xenia has decided to step down from the group and will take some time off before exploring new opportunities. We thank Xenia for all her tremendous hard work and wish her every success with her new endeavours.” The company’s current finance function features Tim Everitt as group financial controller and Will Human as chief financial officer for YO! UK and rest of the world.

Stonegate Group announces raft of new senior operational roles: Stonegate Group has announced a number of new senior operational roles as the business structure is aligned to support the company’s formats and future growth strategy. Nick Andrews is appointed managing director for Stonegate Pub Partners, Craft Union and Vixen, while Nick Light, who was previously managing director for the group’s Publican Partners, will move into the new role of director of business transformation (Publican Partners). Both roles will report into chief executive Simon Longbottom. A number of new positions have also been created including the senior role of business unit director (BUD) across managed pubs, Publican Partners and Craft Union, which Stonegate said creates a further development step in the company’s “bar to boardroom” philosophy. Promoted into this role within its managed division are former operations directors Julie Lodge, responsible for Proper Pubs and Classics, and Sarah Miller, responsible for Be At One, Slug & Lettuce and Venues, who will both report into managing director Helen Charlesworth. They will be supported by a number of newly appointed operations directors including Matt Nowell, JP McKeown and James Beaumont. In addition, Neil McKie takes on the role of operations director for the newly integrated Social Pub and Kitchen format and Andrew Younger moves from Publican Partners to the position of operations director, Chapter Collection, the group’s fledgling, premium food format. Within the Publican Partners division, Mike Mannion and Darren King are promoted into the BUD role, as is Frazer Grimbleby for Craft Union. All three will report into Andrews. To support the Publican Partners structure there are a number of internally promoted operational directors including Martin McTigue and Salle Wroblewski-Brazel, as well as Yvonne Fraser who joins as operations director from Greene King. Longbottom said: “Each of our operating businesses now have the structure and leadership required to accelerate our performance as we continue to raise the bar on the great British pub.”

The Vurger Co backed by former Manchester United footballer in latest investment round, plans further expansion: Vegan fast-food concept The Vurger Co has been backed by former Manchester United and England footballer Chris Smalling in its latest investment round as it looks to further expand. Smalling, who now plays for AS Roma in Italy, has invested through his venture capitalist consultancy ForGood, adding to his portfolio of plant-friendly investments. The Vurger Co, founded in 2016 by Rachel Hugh and Neil Potts, recently opened its fourth restaurant, in Manchester, and will soon see its 100% vegan sauces, already available in the UK, USA and UAE, stocked by retailers in continental Europe too. Its latest round of funding, including Smalling’s investment, will enable it to expand both in the UK and abroad. Smalling said: “Since we tried Vurger’s food and sauces, we knew ForGood had to be part of the team. Not only is its food high quality and tasty, but it’s also had impressive growth too, and we’re excited to join it on the next chapter of its journey.” Hugh added: “We’re thrilled to welcome Chris Smalling and ForGood to The Vurger Co family and can’t wait to see our growth plans come to fruition. We started the brand in 2016 as a small London market stall, so to now have four restaurants, a consumer packaged goods sauce business and the backing from Chris is a real testament to the progress our brand has made since then.”

Danny Meyer steps down as CEO of Union Square Hospitality Group: US restaurant group Union Square Hospitality Group (USHG) has announced founder Danny Meyer is to step down as chief executive, effective Tuesday, 6 September. He will be replaced by Chip Wade, its current president and chief operating officer. Meyer will remain executive chairman of the company’s board, while Wade, who joined USHG in 2019, will also join the board of directors. Before joining USHG, Wade served as vice-president of operations for Red Lobster for just under six years, and before that held executive and leadership roles with Darden, Legal Sea Foods and Smokey Bones. At USHG, he has helped to rebuild the group in the wake of the pandemic, launch the group’s newest restaurant, Ci Siamo, and led its Union Square Events arm. In his role as executive chairman, the company said Meyer will continue to collaborate with the USHG leadership team on the “creation of new restaurant concepts, consult on innovation and expansion strategies, and remain an active advisor and mentor to the USHG culinary, beverage and restaurant management leadership teams”. Meyer, who is chairman of Shake Shack, said: “Starting this company 37 years ago – with aspirations to open just one successful restaurant – and seeing the outstanding and inspirational role our colleagues have come to play in our industry – has been the personal and professional joy of a lifetime. When Chip joined us three years ago, our hope was that he’d one day be prepared to succeed me as USHG’s leader, and that day has unquestionably arrived.” Wade added: “As chief executive, I’m looking forward to accelerating our growth through cultural, operational and financial performance, in addition to driving new business priorities.”

Tortilla launches inaugural loyalty club membership scheme: Tortilla, the fast-casual Mexican restaurant group, has launched its first loyalty club membership scheme, Tortilla Club, Propel has learned. The scheme will allow customers to earn stamps and redeem rewards including a free main of their choice after collecting nine stamps, and offers perks at birthdays, for “saucy specials” and an initial eight stamps just for signing up. The scheme saw 15,000 card downloads in the first two weeks of launch. The company said the scheme is a key part of its “ambitious corporate growth strategy, specifically seeking to enhance active customer engagement through its clearly defined multi-channel marketing approach”. Megan Burton-Brown, head of marketing at Tortilla, said: “We’re excited about the launch of Tortilla Club, and very proud the scheme has already had such an incredible reception. This further reflects the brand’s clear popularity and growing engagement with customers, which has been a key focus for the business over the last few years. Our down-to-earth marketing and digital strategy continues to be an important and effective driver of customer footfall to our restaurants, both during and post covid, and has been successful in introducing new customers to our brand while continuing to engage those who frequently return. We can’t wait to see more of this success as the club continues to evolve into the future.”

Burhill Group buys Manchester Total Ninja site: Burhill Group (BGL), owner and operator of 22 golf courses across ten UK golf clubs as well as 14 Adventure Leisure facilities, has acquired the Total Ninja site in Manchester. Innovation Leisure, which focuses on producing and installing equipment for adventure parks, had operated Total Ninja, in Trafford Park, Stretford, for more than five years. It has now been bought by BGL subsidiary Ninja Leisure, which has also launched five Ninja Warrior UK Adventure Park venues, including one in Swansea last month. Andrew Scholey, operations and development director of Ninja Leisure and Adventure Leisure at BGL, said: “I am delighted to add to our portfolio with one of the most enjoyed and highly regarded leisure products in the market. We look forward to opening many more Total Ninja and leisure venues in the UK in the coming years.” BGL, which recently opened crazy golf concepts Bunkers in Swansea and Sidcup Family Golf in south London, is also lining up a 14th site under its Mr Mulligans crazy golf brand.

Heineken warns of higher prices to come driven by soaring costs: Heineken has warned the price of a pint will rise further over the next year as the Dutch brewer expects to pass on higher costs to consumers. The company, which beat revenue and profit estimates in the first six months of the year, said it was selling more beer than before the pandemic as consumers across Europe shrugged off rising prices and returned to bars. “The high [costs] that we currently see and that we’ve seen over the past half year have not yet found their way into [consumer] prices – this is to come,” Heineken chief financial officer Harold van den Broek told the FT. The average price of a pint of draught lager in the UK was £4.09 in June, an increase of 13p since January, according to the Office for National Statistics. Van den Broek said soaring inflation and natural gas prices in Europe, which were now ten times higher than the average over the past decade, have also prompted Heineken to raise prices. The average cost of Heineken’s beverages has increased 8.9% in the past six months compared with the same period a year ago. However, Heineken’s chief executive and chair Dolf van den Brink said it was not clear how surging inflation would impact future consumer demand. He added he was “moderately confident” the company would not have to curtail production in the next few months but did not rule out this option in the event of “extreme scenarios”. Heineken’s revenues rose 37% to €16.4bn in the six months to July, which van den Brink said was “unprecedented”, compared with the lockdown-marred year before.

German Doner Kebab strengthens leadership team: German Doner Kebab (GDK), owned by Hero Brands, has strengthened its leadership team to support the brand’s ambitious expansion plans. Deon Pillay joins as chief procurement and sustainability officer amidst the organisation’s ambitious global growth during 2022. Pillay brings with him more than 18 years of senior supply chain and procurement leadership having worked for companies such as Peloton, Mars, Samsung and Nando’s. Imran Sayeed, chief executive of GDK International, said: “Deon has a fantastic breadth of experience across global markets and knows how to create a well-run and cost-efficient supply chain. He will be instrumental in our international expansion plans and will further reinforce GDK as a game-changing brand.” GDK now has more than 130 restaurants worldwide and plans to open 106 new sites globally during 2022.

Star Pubs & Bars to invest £200,000 in World Cup promotion: Heineken-owned Star Pubs & Bars will invest £200,000 in World Cup support for its pubs this winter. With new research revealing almost half of all people who will watch the FIFA World Cup this November and December plan to do so in a pub, Star Pubs & Bars is launching its biggest ever promotional package to help its pubs maximise the event. This will include funding discounts on Sky subscriptions, an online hub focused on hosting sporting events, and fresh marketing material for use in advance of the tournament. In addition, it will be providing bunting, external signage and social media assets, while 150 sports-focused pubs will get a World Cup makeover and special promotions. Caren Geering, central operations director for Star Pubs & Bars, said: “Our advice is to plan now for the World Cup, and this year’s is unique as it’s over the festive season. Many pubs are planning for Christmas already, and it’s vital they consider how they will incorporate the World Cup to maximise both occasions. While hosting celebratory meals, Christmas parties and sports screenings at the same time is a great revenue booster, it is logistically challenging. We’ll be giving lots of ideas on how to approach it.”

Popeyes to make north east debut this month: Popeyes Louisiana Kitchen, the US fried chicken quick-service brand, will make its north east debut this month with an opening in Gateshead. The restaurant, based at the Metrocentre, will launch on Saturday, 20 August and be its fourth UK site. The venue, located on the ground floor of the Yellow Mall Qube, will seat up to 98 people. Neil Williamson, Popeyes UK chief operating officer, said: “I am excited to be expanding the Popeyes brand into the north east. Most global brands that come across to the UK are keen to take over the south first and often don’t consider the north until years later, which is why we always felt it was important to establish Popeyes up north in the early stages of our UK expansion. The north east is an incredible part of the UK with much in common with the brand’s New Orleans roots – fierce local pride; a rich history; appreciation for a good party and above all a big heart. I believe our legendary menu and Southern hospitality will really win the hearts and tastebuds of the north east.” Popeyes – which has opened UK sites in Stratford, Chelmsford and Romford – has also secured venues in Derby, Reading, Nottingham, Brighton, Ealing and Oxford for openings this year, and is understood to be in talks on sites in Glasgow and Cambridge. The restaurant at Westfield Stratford is the brand’s highest-taking restaurant globally.

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