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Martin – we don’t have a labour shortage but do have a profitability issue, wage costs £120m more than before pandemic: Tim Martin, chairman of JD Wetherspoon, has argued his business, and the wider sector, “doesn’t have a labour shortage, but does have a profitability issue”. Talking at the Casual Dining Show, he said his company’s wage costs are now £120m more than before the pandemic. Martin said: “We made £100m in profit before covid. Our sales now are around the same as they were before the pandemic and our wages costs are £120m more than they were before the pandemic. We don’t have a labour shortage but we have a profitability issue, which a lot of you share if you are in the industry. We don’t quite know what’s gone on, because people are paid more than ever before, yet the big statistics show they are still not compensating for inflation, so it is a very strange and unusual situation we are in. If anyone says they fully understand it, I doubt they actually really do.” Martin said the company’s wage costs were up £120m on the pre-pandemic figure of circa £600m, which is equal to a 20% increase compared with 2019. On energy bills, Martin said the business had hedged its costs and “won’t pay the full amount for a few more months”. He said: “You have to try to make sure you concentrate on things you can influence. We could try changing the menu, starting things later etc, but I am not sure for a company like ours, which sells more out of a confined space than other people do with their kitchens, that if we cut back on our kitchens, it would naturally lead to a saving on energy. We are wrestling with that issue, and we did consider switching equipment off and narrowing the menu but we thought it would backfire.” On the impact of inflation, Martin said the company won’t be doing “anything more than anyone else is doing”. He said: “We are trying to keep our prices as low as possible for customers, we are investigating the market to see what we can buy, but there is no easy way out.” He also said the experience that people come to Wetherspoon for had “probably switched a bit” since the pandemic, and most people are looking for a safe experience, whereas before they were “looking to mingle more”. He added: “Sales of cocktail shooters jumped enormously and at one stage we were selling more of them than real ale. Across the board, draught in Wetherspoon was down nearly 20%, but is now slowly coming back.”

Industry News:

Latest edition of Propel Turnover & Profits Blue Book being sent to Premium subscribers today: The latest edition of the Propel Turnover & Profits Blue Book, which is produced in association with Mapal Group, will be sent to Premium subscribers today (Friday, 16 September), at midday. The Blue Book now features 619 companies following the addition of another 22 companies, while accounts have been updated for 42 businesses. The Blue Book shows the effects of the pandemic, with total losses of £5.4bn being reported by 326 companies. However, a further 293 sector companies are still reporting total profits of £1.5bn. The 619 UK pub, restaurant, cafe and hotel operators featured have a collective turnover of £31.3bn. The Blue Book, which is updated every month, provides an insight into UK operator turnover and profitability over five years, profit conversion and directors’ earnings. Premium subscribers also receive the Multi-Site Operators Database, produced in association with Virgate, and the New Openings Database, which are also updated each month. Premium subscribers also have access to the UK Food and Beverage Franchisor Database, which will be updated every two months. Subscribers will also be given exclusive access to the recording of the Propel Multi-Club summer conference. The videos will be sent next Friday (23 September), at 9am. 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. Subscribers also receive access to Propel’s library of lockdown videos and Friday Wrap interviews, and to a curated video library of the sector’s finest leaders and entrepreneurs, offering their insights on running outstanding businesses in the sector. Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out; plus regular video content and exclusive columns from Propel group editor Mark Wingett.

Hopper – I expect more casual dining operators to explore the food-to-go space: Paul Hopper, founder of London-based Vietnamese street food concept HOP, has said he expects more casual dining operators to explore the food-to-go space, and that would have an impact on rents and expansion opportunities. Talking at the Lunch! trade show, Hopper said: “I think more casual dining operators will look to have a crack at our sector. You are already seeing that with the likes of Friday’s and its To Go concept. I expect more will follow. The issue is when they come into the sector it will increase competition for space and that will likely drive rent costs up.” Earlier this summer, the business opened a new site in the City, at London Wall. It followed the closure of its site at 2 Finsbury Avenue Square, Broadgate. The brand also operates a site at 10 Queens Head Passage, in the City. In June, it appointed Richard Franks, formerly of Chilango, as its new managing director to aid plans to open up to 20 new locations in the capital over the next five years. Hopper said: “We're going to be opening more but when the time is right and at a pace that suits the environment we're in. It could be three or four next year or could be ten.” HOP appointed Nick Ayerst – formerly managing director of TRG Concessions and Leon – earlier this year as a strategic advisor to explore franchising as a growth route for the brand.

Attwood – I think there will be a polarisation between brands that go down the self-order route and those that stay more traditional: Jim Attwood, managing director of Coco di Mama, the Azzurri Group-owned business, has argued he believes there will be a polarisation in the food-to-go market between those brand that use self-order kiosks and those that “stay traditional”. Attwood said the Italian food-to-go brand was currently trialling self-order kiosks and was seeing an “increase in average transaction spend immediately without really optimising that”. Talking at the Lunch! trade show, he said: “I can see the labour benefit and saving but one caveat for us is we are a hybrid of serve over the counter hot food, coffee shop and grab and go, and there are not many brands who have that three customer journeys. So, I am worried about going too fast until I understand how it impacts the vibe of the store, and the high energy we are proud of at Coco and the interaction with the team members. I think we will see a polarisation between those brands who possibly lean more towards quick service that will go down the self-order kiosk journey and others that stay traditional, but ultimately, I think there will be a price premium there.” When asked about price elasticity and ceilings on price, Attwood said: “I think we are at £7 in London, and there are brands that are more than £10. I don’t know whether there is a new ceiling but we are taking a cautious view. Our pricing strategy is a little and often, and we are constantly monitoring what our competitor set is doing and mindful of the supermarket occasion as well. Coffee price is creeping up to just over £3 unless you have a subscription model.” On staffing, he said: “If you had asked me about staffing this time last year, I thought the limit to our growth would have been the ability to recruit and retain staff, but what actually happened was the slower rate of recovery in London, allowed us to match that in terms of the speed of recruitment. I’m pleased to say where before we had a lot of Eastern European and Italians in our business, we are now attracting a lot of English school leavers. We also have a much higher mix of part-time workers.” Attwood also revealed the brand was introducing carbon footprint labelling to give “customers more choice around what impact they are having on the planet”.

JD Wetherspoon to open central London and transport hub pubs for Queen’s funeral but close elsewhere: JD Wetherspoon has announced it will keep all of its central London locations, railway station and airport pubs open during the Queen's funeral. The branches will be open from 8am until midnight to serve food and drink to the millions of mourners expected to descend on the capital. But most of Wetherspoons’ 851 pubs around the country will not open until after the state funeral, around 1pm, with regular trading hours after that. Wetherspoon hotels will maintain regular hours and be open for residents only. Brewer and retailer Greene King said the majority of its 2,600 venues will stay open so members of the public can share the experience. A spokesperson told the Daily Mail: “Our pubs are a place for communities to come together, so all of our pubs in central London and most of those with televisions across the country will be open throughout Monday showing HM Queen Elizabeth's funeral service. For those pubs and restaurants that don't have televisions, such as our casual dining venues, we'll be opening after the service.” Stonegate, which runs 4,500 pubs and bars, said it plans to keep managed venues open and show footage of the Queen's funeral. Those running its leased and tenanted pubs are able to decide independently whether they will open. Heineken's UK pub arm, Star Pubs & Bars, said it may keep some venues open for the day as well, allowing independent leaseholders to decide. London authorities are advising hospitality businesses in the capital to be “ready to open their doors” to serve huge crowds on the day of the funeral after companies raised concerns about a potential backlash against planned closures, reports the FT. The majority of establishments in the centre of London are planning to open at least part of the time, according to business leaders. Natural fast food brand Leon said in a statement: “We are taking into consideration the sensitivity of the day and making decisions with compassion for our teams as a priority. We are also mindful of the increased number of people who will be in London, and might be out in other parts of the country, to pay their respects and that they will need access to food, drink and facilities.”

Beckett – you have to hone in on the question, what are we really good at? Will Beckett, co-founder of Graphite Capital-backed steakhouse concept Hawksmoor, has said when it comes to levers to pull when navigating through the current challenges facing the sector, you have to hone in on the question: “What are we really good at?” Beckett told the Propel Multi-Club Conference: “I've got no secret lever that I can tell you about that. I thought about something that someone said, which is there are no free passes. Or something that my dad said to me at the beginning of covid when I was feeling a bit cheesed off, which was whining is not a strategy. I thought about that a lot. I think you've really got to hone in on the question: ‘What are we really good at?’ – and try to leverage the answer to that as much as you can. I mean, we've dropped things, such as Hawksmoor at home, which I really liked but it was really hard work for not a lot of reward – or at least not a lot of financial reward. There was a lot of brand reward. We've stopped doing things that we think we're not very good at and we've just really tried to focus on things that we are good at and within our control.” Beckett said when the company explored a possible initial public offering last year, in the end “the timing wasn't quite right”. He added: “We are also starting to see some of the differences between investor sentiment in the UK and in the US. Things seem much more buoyant in the US and although it's nice to think you know, if you get the kind of reviews or the rankings from the launch of our restaurant in New York, that would be impactful. But it's almost impossible to kind of overstate how big a country the US is and how little New York is representative of America. So, I think you know, the reviews and rankings certainly help, but we are a tiny, virtually unknown business in America, and we're going to try and build up there over time.”

UK brewers hit by soaring price of carbon dioxide: UK brewers are facing tenfold price rises for the carbon dioxide they use to carbonate and package beer, along with warnings of supply disruption that may threaten brewing ahead of the crucial Christmas season. Andy Tighe, policy director at the British Beer & Pub Association, told the FT: “Brewers have been approached with little or no notice by their suppliers to accept huge surcharges for the continued supply of carbon dioxide or issued with ‘force majeure’: letters to say ‘we can’t guarantee your supply will continue’. This risks an awful lot of production coming to a standstill just at the wrong time.” The market disruption follows a warning from US fertiliser group CF Industries last month that it would shut a major UK ammonia plant that makes carbon dioxide as a by-product after high natural gas prices made it economically unviable to run. William Lees-Jones, managing director at JW Lees, said carbon dioxide that had cost £250 a tonne in June was last week priced at £2,800 a tonne. He said brewers were already losing pub and retail customers after being unable to supply the quantities of beer ordered because of problems in the carbon dioxide market. Oliver Robinson, joint managing director of Robinsons in Stockport, said his brewery, which has turnover of about £80m a year, had paid £600,000 of surcharges on carbon dioxide this year and was recently quoted a spot price of £2,500 a tonne, which would have resulted in £2.6m of further unexpected costs. He said: “We cannot pass any of this on. We cannot pass it on to our own pubs because they’re already facing a huge squeeze with inflationary increases from all their other suppliers. We just have to take the hit. We’re prepared to support our pubs and our customers short-term but this cannot go on. It’s going to price us out of the market.”

Operators urged to get behind Hospitality Apprenticeships Week 2022: Operators are being urged to get behind Hospitality Apprenticeships Week 2022. Trade bodies, charities and training providers have come together to promote the initiative, which runs from 3-9 October. Hospitality Apprenticeships Week helps to showcase the unique and diverse career pathways the sector provides, coming at a time when there are currently record vacancies across the industry. The week is intended to challenge the misconceptions associated with careers in hospitality – shifting the view the sector offers only short-term jobs that lack progression, to one that offers fulfilling and rewarding career prospects. The initiative aims to clearly demonstrate how working in the industry is #MoreThanAJob. The week will also celebrate the apprentices working in the sector, and those that have completed their apprenticeships and progressed within their business. Kate Nicholls, chief executive of UKHospitality, said: “Initiatives such as this are incredibly important in shifting the level of understanding around what working in our amazing sector actually means and to show people the career opportunities that it presents. Ours is a creative, vibrant and fun sector in which people can go from bar to board in a very short timeframe. If the industry gets behind the week we can educate, engage and employ people of all levels of experience across the UK, not only helping to solve the current staff shortages but futureproofing the industry by attracting the brightest and best.”

Company News:

Pizza Pilgrims MD – utility bills will level out, attracting and retaining the best people more important: Gavin Smith, managing director of Pizza Pilgrims, has said he is more concerned with attracting and retaining the best people than utility bills. Smith was speaking about the future of the sector, which is facing rocketing gas and electricity bills, with the details of prime minister Liz Truss’ energy plan for businesses still to emerge. “We’re opening in Cambridge in November, and two weeks ago, we were signing the lease,” Smith told Casual Dining 2022. “We checked with the broker what the cost of gas and electricity would be for the next 12 months versus what was said three months ago, and it was 500% more. It means you then don’t hit your investment levels, but we took a view that we signed a lease for 15 years, and if that is the state of the nation for the next 15 years there will either be no restaurants or prices will change, but either way, let’s crack on. The big one, I think, will always be people. The gas and electricity prices will level out, we know that. How we attract and retain the best people will always be the most important thing we do.” Other things Pizza Pilgrims is doing to help attract and retain staff is having its head office team visit a different pizzeria each week to listen to staff concerns, and building on its training academy, which launched three years ago. “It’s not been a perfect journey, but we’re at the stage now where the academy needs to be rethought because it’s so busy,” said Smith. “We do make mistakes, but we’re pretty good at not making them happen time and time again.” In terms of keeping costs down, the business is looking at cutting out the middle man when dealing with suppliers. “We can’t effect the global commodity price of cheese or flour or wheat, but we can think about where we buy from,” said Smith. “We’re coming to the latter stages now of what is basically a supply chain review. Why don’t we go straight to the farm in Italy we’ve been working with for ten years to get our cheese, but always bought through an intermediary, and broker agreements at source for 30% of what we buy, and the other 70% will go through a distributer? We’ve made a commercial saving and strengthened the partnership.” Currently at 21 sites, including two concessions, Cambridge will be Pizza Pilgrims’ next opening before it then heads to Nottingham, and then back to the capital for a launch in Queen’s Park. “I don’t see any reason why this brand can’t go beyond these shores or beyond a certain number, but we don’t look that far ahead,” Smith added. “We get phone calls about franchise opportunities, and maybe that’s the right thing in the future, but not yet. We’ve not proved ourselves outside London, and there’s still a lot of low hanging fruit around there. We need to grow at a pace that is right.”

We Are Bar Group placed on market: We Are Bar Group, the London bar operator, has been placed on the market, Propel has learned. It is understood an accelerated sales process has been begun for the seven-strong City of London business, which operates the Jamies wine bars brand. Propel understands We Are Bar Group is working with Axia Valuation Services on its options under the heading Project Manhattan. The business operates the Jamies in Adam’s Court, St Mary At Hill, Tudor Street and in Ludgate Hill, plus Number 25 in Birchin Lane, The Bolthole in Suffolk Lane and Willy’s Wine Bar in Fenchurch Street. At the start of last year, the business had its company voluntary arrangement proposals approved by the majority of its creditors. In March 2019, Ian Banks left his position as chief executive after chairman Simon Vardigans took full control of the company. Vardigans brought in the Roger Payne-led Enhanced Hospitality to help manage the group’s venues and is understood to have injected a substantial amount of cash into the business. It is thought a pre-pack administration might be one of the options the business explores.

Boparan Restaurant Group launches debut Cinnamon Kitchen retail range: Boparan Restaurant Group-owned The Cinnamon Collection has entered into an exclusive partnership with Tesco for the launch of a debut retail range of chilled Indian ready meals under its modern Indian restaurant brand, Cinnamon Kitchen. The 16-strong restaurant-inspired range has launched in 450 Tesco stores nationwide, aiming to bring “the essence of Cinnamon Kitchen’s subtly spiced contemporary dining experience to customers’ homes”. Recipes have been created in collaboration with Cinnamon Kitchen founder Vivek Singh. The range features four categories – mains, centrepieces, tiffins and sides. Main meals for one include the restaurant’s signature butter chicken, cauliflower makhani and king prawn moilee, with centrepieces such as tandoori chicken and Kerala spiced beef serving two. Sides feature black dahl, lemon and turmeric rice and Bombay aloo. Singh said: “We are thrilled to be launching our fresh range from Cinnamon Kitchen, allowing us to bring popular dishes from our well-loved London restaurants into homes across the country. As the cost of living continues to rise, we hope our customers will find this range an accessible option for enjoying restaurant quality food at home.”

Nelsons Hotels & Inns facing rise in its energy bills from £300,000 a year to £2.2m as it calls for immediate government support: North west hotel and gastropub operator Nelsons Hotels & Inns is facing a rise in its energy bills from £300,000 a year to £2.2m – and has called for immediate support from the government. The company is now having to rethink and potentially cut back on certain costs and design plans for its fifth venue opening in Greasby, on the Wirral, this winter in light of the “extortionate” rise in bills on the horizon. Director Andrew Nelson said: “The deepening energy crisis is already creating troublesome situations for the hotel trade and hospitality industry, with the increasing cost of utilities for businesses becoming a frightening prospect. Following the turbulent times that businesses have faced throughout the covid-19 pandemic, the soaring rise in energy bills will unfortunately be an additional hurdle that many businesses will not be able to overcome. As a group, we have been seeking out prices to renew our contracts with supplies, but many companies are refusing to currently offer a price due to the ongoing situation. However, indicative pricing has come back with a 512% increase on electricity and a 1,216% increase on gas. These numbers would see our energy bills rise from £300,000 per year to an estimated £2.2m, which would have a significant effect on our company profits and how we operate pricing for our portfolio of properties. The aid that the government put in place throughout the covid-19 pandemic was a huge help to our industry, but unless the government provides immediate support for businesses, many operators will simply close permanently as their utility contracts become due for renewal.”

Papa John’s delivery driver turned multi-unit franchisee opens fifth site with Alton launch: Papa John’s delivery driver turned multi-unit franchisee, Jay Singh, has opened his fifth site. The new store has opened in Alton, Hampshire, adding to outlets in Farnham, Basingstoke, Andover and Farnborough. Singh started out as a delivery driver for the company, before working his way up to become a store manager over several years. In 2010, Singh acquired his first franchised Papa John’s store, in Basingstoke. The Alton store is centrally located in High Street and has been fitted out with Papa John’s refreshed branding. Singh said: “I could see the business opportunity while I worked as an employee, then I used the experience and knowledge I’d learned to grow a portfolio of my own stores. It’s been an amazing journey. I am considering further expansion in the region in the future too.” Papa John’s operates more than 500 sites in the UK.

Staycity secures £30m loan and opens seventh Dublin site, like-for-like revpar and operating margins now ahead of 2019 levels: Aparthotel operator Staycity Group has secured a five-year £30m loan facility from OakNorth Bank, with further facilities available if required. It comes as the business opens its seventh property in Dublin, giving it nearly 1,200 apartments in its home city. The new backing from OakNorth Bank sees the conversion of a £15m covid support loan granted in 2020 to a regular loan facility on the back of Staycity’s like-for-like revpar and operating margins now ahead of 2019 levels together with healthy bookings into the final trading quarter of 2022. It leaves Staycity with around €55m of liquidity and an expectation of being debt-free in three years. Further contingency has also been provided by the Ireland Strategic Investment Fund (ISIF), which has extended Staycity’s credit facility from €20m to €30m for five years if required. Staycity has undergone a period of prolific expansion over the past two years, opening 2,700 self-catering apartments across its Staycity and Wilde brands – the most recent of which is its new flagship in Dublin’s Little Mary Street. The aparthotel is the largest of its 32 European properties to date with 340 studio and one-bed apartments. “Staycity is going into 2023 in a strong position with trading this year having surpassed our expectations,” said chief executive and co-founder Tom Walsh. “Our sales have been driven by leisure recovery and growth through our corporate channels. We are also pleased our guest scores across both brands are very high. Looking forward, we’re cautious as all businesses are facing a number of macroeconomic threats including high levels of inflation, rising energy costs and the ongoing impact of the war in Ukraine. With these new OakNorth and ISIF facilities in place we have contingency plans if the economy moves into recession.”

The Scotsman Group acquires Glasgow bar and restaurant: The Scotsman Group, which operates a large portfolio of hospitality venues in Scotland, has acquired Skerryvore, the company that owns and operates Oran Mor, a bar, restaurant and club in Glasgow’s West End. The Scotsman Group stated: “We have been fans of the operation at Oran Mor since its inception some 20 years ago by founder Colin Beattie, and we are happy to confirm Colin will continue working with the business as chairman of Skerryvore going forward. We are no strangers to operating in the West End ourselves with Hillhead Bookclub, the Grosvenor Cinema & Cafe and The Bothy in Ruthven Lane, and we are very much looking forward to our involvement in this historic venue. In addition, we want to take a moment to say a warm welcome to the current Oran Mor team to The Scotsman Group family.”

Coupette operator to open authentic Indian restaurant in west London: Subjahit Mitra, who is behind London bar Coupette, is opening an authentic Indian restaurant in the capital. Mitra has teamed up with executive chef Arsh Thakur to launch BKC, standing for Biryani Kebab Chai, which will offer Indian cuisine from the Awadhi (now Lucknow) region. The venue will open in Edgware Road, west London, on Thursday, 22 September. The grab-and-go style 40-cover restaurant will serve traditional biryanis, Northern Indian kebabs, and chai, showcasing traditional ingredients, recipes, and techniques. Lucknow cuisine, known for the art of cooking over slow fire, heroes' kebabs, kormas, biryanis, kaliyas, nahari-kulchas, zarda, sheermal, rumali rotis and warqi parathas. BKC will serve a variety of Awadhi kebabs, which will be traditionally grilled on a chula or skillet as opposed to tandoor in Punjab, the star being the Seekh kebab, made with lamb mince and spices. Biryanis at BKC will be made with mutton or chicken for meat eaters alongside vegetable or vegan versions, all served in traditional earthen clay pots. Drinks will include traditional chai – including Karak Chai (translated to strong tea) – that will be made with evaporated milk to create a rich and creamy taste.

Market Place London reveals 12-strong trader line-up for Vauxhall launch: Food hall concept Market Place London has revealed the line-up of traders for the opening of its Vauxhall venue. Situated in the arches next door to Vauxhall station, Market Place Vauxhall will house 12 restaurant spaces, a standalone bar, a DJ booth, and seating for 200 people. The food offering will explore global cuisines from local operators featuring independent bakery and baking school Bread Ahead; Curry On Naanstop, which will offer traditional Mumbai recipes; and Rudies Jerk Shack. Other operators include Persian-inspired Chelo, bubble tea concept East And Tea Co, Sri Lankan street food concept Karapincha and Mamma Mia! Pasta, which is adding to its Tooting restaurant. They will be joined by Neapolitan pizza and focaccia Made In Puglia, which is doubling up having launched in Hackney Wick; Argentinian barbecue concept Argentinian Grill; Bangkok-inspired Momo Thai; Hermanos Taco House and Farm House Kebab, which specialises in healthy, fresh Turkish cuisine sourced from ethical British farms. Market Place Vauxhall will open on Friday, 23 September and will follow the model of its sites in Hounslow and Peckham, aiming to “support independent business owners and remove barriers for start-up food and drink vendors to start or grow” by offering affordable street food stalls.

Denbies reports ‘strong’ order book as business builds back from pandemic: Surrey-based wine estate Denbies has reported it has a “strong” order book and an increasing number of functions and events taking place as it builds back from the pandemic. The business said its Denbies Vineyard hotel continues to perform better than forecast and further investment has been made to “expand the hospitality offering, enhance the guest experience and maintain a zero-carbon footprint”. It comes as the business reported turnover increased to £7,232,991 for the year ending 31 December 2021 compared with £4,631,152 the previous year. The figure was also slightly ahead of the £7,011,812 reported in 2019 – the last full year before the pandemic. Ebitda climbed to £1,810,245 from £580,111 the year before (2019: £341,478). The business reported a pre-tax profit of £1,521,612 compared with a profit of £273,411 the previous year (2019: profit of £156,968). No dividend was paid (2020: zero). Denbies received government grants totalling £441,836 (2020: £555,284). In their report accompanying the accounts, the directors stated: “The business will continue to maximise organic growth in all departments, and review all options for future opportunities and investment to expand current operations.”

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