Star Pubs & Bars

Story of the Day:

NewRiver Retail updates on pub estate management and development

NewRiver - The West Hill Tavern - pre-refurbProperty company NewRiver Retail has updated on progress in transferring pubs it acquired from Marston’s four years ago to its own management albeit outsourced to LT Management – it originally signed a four-year management contract with Marston’s that comes to an end next month. NewRiver retail stated: “In October 2013, we acquired a portfolio of 202 pubs from Marston’s (Trent portfolio). Each pub in the portfolio was hand-picked by management for its high roadside visibility, high passing footfall and prominent location, with the intention of converting a significant number for retail/residential use. The pubs in the portfolio traded strongly, with high occupancy and strong income returns, and consequently in August 2015 we acquired a second portfolio of 158 pubs from Punch (the Mantle portfolio). We have since sold 15 pubs and closed nine for convenience store conversion meaning we now have 336 pubs remaining in our portfolio. At the time of the Trent portfolio acquisition, we signed a four-year leaseback agreement with Marston’s, which comes to an end in December 2017. We put in place a structured programme to transfer the management of the Trent pubs to the management of NewRiver and LT Management, and through a detailed estate review, involving all relevant stakeholders, we split the transfer into small batches in order to manage the programme effectively and minimise disruption to trade. Throughout the programme our high quality in-house team of pub specialists have visited each site and worked with the publicans to ensure a smooth transition. Pleasingly, the majority of publicans have chosen to remain in their pubs following the transfer and our operations managers and instructed solicitors will ensure that new leases and tenancies are implemented seamlessly. For the minority of pubs where the publican intends to vacate, we will utilise our tried and tested lettings programme to recruit high quality publicans who will continue to grow the business. Throughout the transfer programme we have worked closely with Marston’s to ensure that the process has run as smoothly as possible. We were active in negotiating the transfer of a number of pubs in advance of the deadline, which meant that at the start of the period we had 123 Trent pubs to transfer. During the period we transferred a further 57 pubs, with an additional tranche of 38 completed post period end. We are on track to transfer the management of the remaining 28 pubs in December.” Of its own performance in the first half, Paul Roy, chairman, said: “I am pleased to report another successful and highly active period for NewRiver across all aspects of the business, as we continue to build a strong platform to deliver growing cash returns. In the capital markets, we have put down important foundations for the future. We raised £225m of equity at a substantial premium to net asset value, and completed the transitional move from secured to unsecured borrowing by raising £430m of unsecured facilities, providing us with increased flexibility and maturity at a reduced cost. Despite a more challenging environment, we continue to be encouraged by the long-term trends we are seeing across our convenience and community-focused retail and leisure portfolio. Convenience is a key driver for our customers and their frequent spend on non-discretionary items makes us resilient to the growth of online, as well as fluctuations in the consumer economy over the long-term. Looking ahead, with our well positioned convenience-led community-focused portfolio and financial capacity, we are confident in our ability to continue to deliver growing cash returns to our shareholders.”

SSP Group reports sales and profit growth

SSP Group, the operator of food and beverage outlets in travel locations worldwide, has reported revenue of £2,379.1m, up 11.7% at constant currency, and 19.5% at actual exchange rates for the year ended 30 September 2017. Underlying operating profit was £162.9m, up 27.0% at constant currency, and 34.2% at actual exchange rates. Like-for-like sales were up 3.1% driven by growth in air passenger travel and retailing initiatives. Underlying profit before tax of £148.7m, up 38.3%. Reported profit before tax of £144.8m, up 37.1%. It plans a special dividend of circa £100m and share consolidation. Kate Swann, chief executive of SSP Group, said: “SSP has delivered another good performance in 2017. Operating profit was up 27.0% at constant currency, driven by good like-for-like sales growth, substantial new contract openings and further operational improvements. We have grown our presence across the world, particularly in North America and Asia and we are pleased with the performance of our new business in India. We have invested significant capital in the business this year, our highest to date, and at the same time we are returning cash to shareholders. The new financial year has started in line with our expectations and, whilst a degree of uncertainty always exists around passenger numbers in the short term, we continue to be well placed to benefit from the structural growth opportunities in our markets.” The company added: “The financial performance of the group is presented on an underlying basis, for which the statutory reported results are adjusted for the impact of foreign exchange, the amortisation of intangible assets created on the acquisition of the SSP business in 2006 and the revaluation of the obligation to acquire an additional share of TFS by the end of calendar year 2018. The group delivered a strong financial performance in 2017, with underlying operating profit increasing by 27.0% (on a constant currency basis) to £162.9m, and with a constant currency increase, excluding TFS, in the operating margin of 50 basis points. The consolidation of TFS added a further 30 bps, bringing the group margin to 6.8%. Total revenue increased by 11.7% on a constant currency basis, including like-for-like sales growth of 3.1%, net contract gains of 6.0% and a negative impact of 0.3% from the additional leap year day in 2016. TFS contributed a further 2.9% to revenue. Like-for-like growth in the air sector has again been stronger than the rail sector, driven by increasing passenger numbers in most of our markets. Net contract gains were 6.0% in the full year, an encouraging increase from last year’s gains of 1.7%. Over the year we saw very strong contributions from North America and the Rest of the World, reporting net gains of c. 23% and 18% respectively. Significant new unit openings in airports at Chicago Midway and JFK T7 in North America, and in Hong Kong and China in the Rest of the World, have contributed to this strong performance. We continue to focus on retaining profitable contracts and our contract renewal rate in 2017 was in line with historical levels. During the year we won a number of significant new contracts, including at airports in Seattle, Los Angeles and Boston in North America, and in Cebu in the Philippines. We expect to begin operating these contracts progressively over the next two years. The strong operating margin improvement of 50 basis points reflects the like-for-like sales growth and further encouraging progress on our strategic initiatives. This result was slightly ahead of our expectations, due to the stronger like-for-like sales growth in the second half and the fact that some unit redevelopments (and corresponding closure periods and pre-opening costs) which were expected to take place in the second half have been deferred into the new financial year. We delivered strong free cash flow of £89.0m, after investing £115.0m in capital expenditure (excluding capital contributions), which was a £19.1m increase on the prior year. The increase in capital expenditure reflects the growth in net gains. Reported net debt fell from £317.4m to £262.2m. The reduction in net debt was driven by the free cash flow of £89.0m, net of the dividend payment of £29.0m.”

Other News:

Simon Townsend, CEO of ei groupEi Group chief executive Simon Townsend (pictured) has told Propel the diverse offer within its managed experts portfolio is giving the company the platform it needs to help deal with ongoing economic challenges. Townsend also said it would focus on expanding its managed experts estate with its existing partners – but has not ruled out further companies joining the fold. The company has just unveiled its ninth partnership, this time with Kent-based Hush Heath Estate, and now operates 32 sites in total. It is looking to double the size of the estate by September, with 100 sites targeted by 2020. Townsend said: “We have a real diverse and eclectic mix of partners, all bringing a large variety of concepts and expertise to our business. As we face a number of cost headwinds such as increasing business rates and inflation as well as a drop in consumer confidence, our managed partnerships has given us a range of options in our business. Together with continuing to invest in our pubs, it means we are in a good place to face up to those challenges.” He added: “There is a lot of interest when it comes to potential joint ventures and we continue to talk to companies. While it’s possible there may be others, we are concentrating on adding the sites with each of our current partners. It’s a small but very important part of the business. Hush Heath specialises in pubs with rooms and its boutique bedroom offering is something else that will benefit our business.” Townsend said the company would invest about £80m in the estate this year – in line with previous years. He added the company would continue its current rate of disposals as outlined in its five-year strategy in 2015. It means another 200 pubs are set to be sold as the company continues to dispose of sites that Townsend said did not “have a long-term future as we improve the quality of the estate”. The company currently has about 4,000 pubs in its leased and tenanted business.

The unit Brazilian-Japanese fusion chain Temakinho has secured at One Tower Bridge is “one of a number” the brand is looking at across London as it looks to roll-out international expansion plans. The company has taken a 2,777 square foot unit on a 20-year lease for its second site in the capital, with the restaurant due to open in mid-2018. Temakinho made its UK debut in Soho last year and specialises in fresh, sustainable seafood, temakis and caipirinhas. The company was founded in 2012 by the Maroli family and operates six restaurants in Italy and one in Ibiza. Sammy Weinbaum, head of acquisitions at CDG Leisure, which brokered the deal, said: “Diners at the One Tower Bridge branch will enjoy a meal against a spectacular backdrop of some of London’s most iconic sites. This expansion is the first in a number of sites the restaurant is looking at in the city.” Temakinho will join other restaurant brands at the One Tower Bridge scheme, including Gunpowder, Ivy Cafe and Rosa’s Thai Cafe. Prosecco House, London’s first bar dedicated to prosecco, will also open at the development in February.

Courtney House in Cardiff, which will be home to SA Brain's new breweryBrewer and retailer SA Brain is set to move into a new brewery and support centre in Cardiff as its historic site in the centre of the city is readied for redevelopment. Contracts have been exchanged on Courtney House in the Pacific Business Park, which is 1.5 miles from the city centre. The head office and support centre functions are expected to move to Courtney House in May or June 2018, by which time SA Brain hopes to have completed most of the building works for the new brewery, with production expected to begin in early 2019. SA Brain chairman John Rhys said: “We are delighted to have secured our new home, which represents an exciting new chapter in our 135-year history of brewing and hospitality retailing from our Cardiff base.” Chief executive Scott Waddington added: “Courtney House offers us the ideal facility to construct a modern, fit-for-purpose brewery in addition to developing the first floor into a high-quality office space.” Earlier this week, Propel revealed plans to redevelop SA Brain’s current brewery in Crawshay Street are in an advanced stage, with the site likely to include a 200-bedroom hotel, multi-storey car park and 12-storey office block. Rhys said: “We also envisage developing a new venue within the existing brewhouse building alongside the famous Brains chimney at Crawshay Street, which would encompass a pub, micro-brewery and visitor attraction.” Cushman & Wakefield advised SA Brain on the relocation.

Restaurateur Linda Lee is to launch a Korean “table and market” concept in Soho next month. Mee Market will open in Archer Street on Monday, 4 December in partnership with Code Hospitality. The venue will be split over two levels, offering a poké rice and salad bar, a hot counter for stews, hot pots and side dishes, and selling Korean and Asian-inspired dry foods, including a customised rice dispenser. Fresh vegetables will also be available to buy alongside items from a frozen Asian food section. The venue will also offer signature dishes from Lee’s fine dining restaurant Koba and street food brand On the Bab, alongside root and green teas and recipe cards for customers who will be able to purchase the ingredients on-site. Downstairs, the venue will offer branded homeware, accessories and stationery, as well as an 18-cover dining space. Lee said: “I want to offer Londoners a great grab-and-go Korean and Asian food option, and with Mee Market they will have a choice of takeaway options as well as dried ingredients and recipe cards to cook dishes at home.” Lee launched Koba in 2005 in Fitzrovia before opening Japanese restaurant Nizuni nearby and Nizuni Go in Marylebone. Deciding to focus on the cuisine of her native Korea she launched On The Bab, which currently has four London sites.

Living Ventures chief executive Jeremy Roberts (centre) with Manchester House head chef Nathaniel Tofan (right) and Aiden Byrne (left), who is leaving for D&D LondonChef Aiden Byrne is to leave Living Ventures to join restaurant group D&D London, where he will head up the company’s new Manchester venture. Byrne stepped back from Manchester House, his city centre collaboration with Living Ventures, following the appointment of long-term prodigy Nathaniel Tofan as head chef earlier this year. He has been working in an executive role overseeing other brands in the Living Ventures portfolio but will leave in January to be head chef at 20 Stories – the 300-cover restaurant D&D London is opening at the top of newly built 1 Spinningfields. Byrne – once the youngest chef to achieve a Michelin star when he was awarded the honour at 22 – had been with Manchester House since its launch in 2013. Byrne said: “I feel the time is right for Nat to get the recognition he deserves at Manchester House. He has been running the show for a long time since I widened my role within Living Ventures and been by my side since the day we opened, so is more than ready to put his own mark on the menu. I know the business is in safe hands and I can’t wait to see what he comes up with! I’ve had a great time at Manchester House and am very proud of what we’ve achieved.” Living Ventures chief executive Jeremy Roberts added: “We’re sorry to see Aiden leaving us and I want to take this opportunity to thank him publicly for his enormous contribution in establishing Manchester House on the culinary landscape of the city. We wish him every success for the future. Living Ventures has a history of developing young talented people within the company and we’re excited to see Nat achieve his potential.”

West Berkshire Brewery has started production at its new £6m siteWest Berkshire Brewery has started production at its new £6m brewery. The three-vessel, 60HL brewhouse features an automated packaging line that allows West Berkshire Brewery to offer contract packaging to other brewers. The minimum run will be 30HL or 9,090 330ml bottles, allowing brewers to prototype new beers and customers such as restaurant chains and supermarkets to launch their own beer brands. The company said the outsourced packaging business alone could generate £1.3m of new revenue in the first year alone. Chairman David Bruce said: “This is a big moment for us. It is the culmination of a three-year project that has seen us plan, fund and build a cutting-edge, custom-built brewery complete with extraordinarily sophisticated packaging lines.” The brewery has been built next to its previous site in Yattendon and features a 200-capacity visitor centre, bar, cafe and shop. West Berkshire Brewery owns The Depot pub in Islington and earlier this month had an offer accepted on another north London pub and exchanged contracts to acquire the Old Suffolk Punch pub in Fulham Palace Road, west London. The company plans to operate ten pubs by 2022.

The Highway Inn in Burford High Street, which has been acquired by former Cote recruitment director Scott WilliamsonFormer Cote recruitment director Scott Williamson has acquired a pub in the Cotswolds. Williamson and business partner Ian Apsley have bought The Highway Inn in Burford High Street in a deal brokered by agents Colliers International. The grade II-listed pub includes a 40-cover restaurant, a three-bedroom owners’ flat and ten letting rooms. There is also a private dining room seating 25 diners and outside space to accommodate a further 40. Williamson said: “The Highway has massive potential and, as there is plenty of competition, we will focus on where we can add value. I will run the day-to-day operations. It’s a big lifestyle change from working in Surrey and London but Burford is in the heart of one of the most beautiful parts of the world.” Williamson worked at Cote for more than eight years and has also worked for Carluccio’s and, most recently, as HR manager at Japanese restaurant brand Sticks ‘n’ Sushi.

The basement restaurant at Linden Stores in Highbury Corner, which is being launched by Oklava co-founder Laura Christie and partner Chris BousteadLaura Christie, co-founder of Turkish restaurant concept Oklava, is launching a neighbourhood wine shop and restaurant in north London next week. Christie and partner Chris Boustead, one half of seasonal British pop-up Boustead & Bidois, will open Linden Stores in Highbury Corner at a site formerly occupied by fishmonger and restaurant Prawn on the Lawn. The basement restaurant in St Paul’s Road will have a wine list selected by Christie accompanied by seasonal British dishes inspired by Boustead’s childhood in Yorkshire. The shop will also stock a selection of wine. Linden Stores, which is named after the road where Boustead grew up in Scarborough, will open on Wednesday, 29 November. Christie launched Oklava with Turkish chef Selin Kiazim in Shoreditch in 2015.

Charlotte Group head of operations and people Alex GhallebWest London-based operator Charlotte’s Group has appointed Alex Ghalleb as head of operations and people. Ghalleb was previously director of operations at east London cafe bar and restaurant group Grind & Co, where he grew the business from three sites to ten in two years. Prior to that, Ghalleb was general manager at Soho House Group, overseeing the opening of Hoxton Grill, Soho Berlin and launching the Pizza East brand. He said: “I love food, drink and people and have totally bought into the brand and team. We have a shared vision to create the best food and drink experience in west London.” Charlotte’s Group owner Alex Wrethman added: “I am delighted the time has finally come to welcome Alex to Charlotte’s Group. I’ve known him for many years and he was number one on my hit list for a long time. His varied experience at Soho House and Grind, coupled with his relentless and infectious passion for great hospitality, will be crucial to us as we grow and drive the very highest standards Charlotte’s guests have come to expect.” Meanwhile, Lee Streeton has been appointed head chef of the company’s latest venue – Charlotte’s W5 in Ealing. Streeton was previously head chef at 45 Jermyn Street within Fortnum & Mason. Charlotte’s Group also operates Charlotte’s Place in Ealing Common and Charlotte’s Bistro in Chiswick.

White Brasserie Bar Co general viewThe White Brasserie Company has revealed more details about its first pub in Oxfordshire, which will open in Thame next month as its 16th site. The 140-cover Black Horse Hotel will reopen on Monday, 18 December featuring a bar, snug and a garden room backing on to a courtyard garden with space for another 40 diners. A brasserie-style dining area – The Coach House – will feature exposed beams, dark oak floors, and giant iron chandeliers. The seasonally changing menu will feature classic British pub dishes and French brasserie favourites. An extensive wine list will include European and New World wines alongside craft beer and artisan British spirits. The former coaching inn dates to the 16th century and original period features such as wood panelling and stone paving have been retained. The White Brasserie Company and Brasserie Blanc are part of Brasserie Bar Co, of which chef Raymond Blanc is a director. Brasserie Bar Co chief executive Mark Derry said: “This represents another step in our growing portfolio and we look forward to welcoming guests into The Black Horse in December.”

Former Caledonian managing director Stephen Crawley is back in brewing having masterminded the development of a new brewery, distillery and retail space in LiverpoolFormer Caledonian managing director Stephen Crawley (pictured), who resurrected renowned brewer Higsons, is back in brewing having masterminded the development of a new brewery, distillery and retail space in his home town of Liverpool. The multimillion-pound investment has seen a former run-down warehouse in the Baltic Triangle area transformed into a state-of-the-art space named H1780 that will open next month. It will produce about 9,000 hectolitres a year, reviving the Higsons beer and Love Lane brands. The beers, synonymous with Liverpool for more than 200 years, have been on Crawley’s radar for some time. Last year, he acquired the Higsons brand and at the same time purchased the Liverpool Craft Beer Company, makers of Love Lane beers at the Bridgewater site. His vision for the space gained momentum as he drew experience from his time at Caledonian, from which he stepped down in December 2013. As a result, the project has expanded into a site offering a brewery, distillery, three bars, a kitchen and events space. Crawley said: “We will not use the original Higson’s recipes but create an exciting range of new beers to better reflect the taste profiles expected from premium craft beers as well as building on the success of the Love Lane brands. The introduction of our gin distillery and launch of our Ginsmiths of Liverpool brand is equally exciting, with some exceptional flavour profiles pulled from the historic trading links for which Liverpool was famous. The project has been inspiring. We’re proud of the past and excited by the future.”

Goodbody leisure analyst Brian Devitt has said Mitchells & Butlers (M&B) is “performing well” but added he was mindful of what 2018 could bring. Issuing a ‘Hold’ note on the shares with a target price of 270p ahead of the company’s full-year results on Thursday (23 November), Devitt said: “The group released a pre-close trading statement in September in which it reported like-for-like sales growth of 2.1%. For FY17, we forecast revenue of £2,142m, Ebit of £310m and year-end net debt of £1,740m. Given FY17 like-for-like trends are more or less known, we will be focusing on trading since year-end (we forecast 3% like-for-like sales growth in FY18). We will also be looking for any broader comments on the outlook and competitive intensity, particularly given how management noted aggressive competitor discounting at the interims in May. Lastly, we will be monitoring any changes to the group’s cost expectations given recent volatile foodservice input costs. M&B has continued to deliver like-for-like sales improvements over the past 18 months, with the business benefiting from the estate refurbishment programme. The turnaround in performance has been impressive and the share price appears to have reflected this recently. However, one cannot ignore the fact the eating/drinking out sector is likely to enter a particularly challenging year in 2018, with slowing market growth and increased competition. Furthermore, another round of cost headwinds means strong sales growth will be needed to maintain profitability. We retain our 270p target price (circa 2% upside) and retain our ‘Hold’ recommendation.”

Beer line cleaner business FullClear has increased the equity offer in its £250,000 fund-raise on crowdfunding platform Crowdcube to help fund its next stage of growth. The company, whose customers include Admiral Taverns, Hawthorn Leisure and Tokyo Industries, is now offering a 12.82% equity stake in return for the investment instead of the original 9.09%. So far, 104 investors have pledged £90,610 with 18 days remaining. The largest investment to date is £10,000. The company stated: “After ongoing discussions with several larger potential investors, we have decided to reduce the valuation of the business. The new pre-evaluation now stands at £1.7m allowing for a 12.82% equity exchange for £250,000. We feel the reduction is a more accurate representation of where the business is at currently having taken into consideration the roll-out status of key accounts and platform development.” FullClear is a scientifically formulated beer line-cleaning solution that is non-corrosive, non-toxic and non-hazardous, proven to allow for safe, monthly beer line cleaning, the company said. It will use the investment to further its expansion in the UK and globally alongside building its sales and marketing capabilities. It also has an exclusive partnership with beer quality and waste management systems company Vianet, allowing operators “total oversight over their line-cleaning processes”.

Richard Bailey, chief executive of north west brewer and retailer Daniel Thwaites, has increased his shareholding in the company. Bailey has bought 30,000 shares at a price of £1.48 per share to take his total number of shares in the company to 612,328. The percentage of issued share capital he owns stands at 1.040%. Meanwhile, non-executive director Nick Mackenzie has bought 13,500 shares at £1.48 per share to take his total number of shares to 38,500. The percentage of issued share capital he owns is 0.065%. The dealings mean the total percentage of issued share capital held by company directors now stands at 44.72%.

Tim Hortons debut UK shopping centre site – at Silverburn in GlasgowTim Hortons, the Canadian cafe and bake shop owned by Restaurant Brands, has opened its first UK shopping centre site, in Glasgow. SK Group, which is leading the UK roll-out of Tim Hortons, has launched the outlet at Silverburn Shopping Centre – its second venue in the city and third to date. The 2,368 square foot restaurant is located in the Wintergarden, next to Patisserie Valerie. The new outlet offers Tim Hortons’ signature coffee, espresso-based drinks, hot chocolate, French vanilla and classic frozen Iced Capp, as well as baked goods and breakfast and lunch offerings. Kevin Hydes, chief finance and commercial officer of the Tim Hortons franchise in Great Britain, said: “Opening our debut restaurant in a dedicated retail destination marks a key point in our expansion across the UK and we are thrilled we chose Silverburn as the location.” Tim Hortons made its UK debut in Glasgow’s Argyle Street in June, while its second outlet launched in Cardiff last week. Further sites are planned in the coming months as Tim Hortons looks to build a minimum of 100 outlets in Britain.

Peel Hunt leisure analyst Douglas Jack has said Ei Group’s full-year results were in line with expectations following a strong second-half performance. Issuing a ‘Buy’ note on the shares with a target price of 165p, Jack said: “Pub partnership’s like-for-like net income grew by 2.3% in 2017 versus a 2.1% comparable. Average net income per pub rose by 5.0% to £79,600. Licensees benefited from 60% of capex being growth-orientated (57% in 2016), generating an average return on investment of 21%. Unplanned business failures affected 1.3% of the estate in 2017 versus 1.6% in 2016, and 7.3% in 2009. Ei Group has further improved licensee support. Its arrangement with Booker Wholesale has helped 4,000 publicans boost their food offering (on good buying terms but only if they have stayed tied). Online, it has launched a recruitment tool and added new regionally focused pages as well as an applicant dashboard. The managed estate’s expansion is broadly on target, with 48 Bermondsey, 30 Managed Investments and 178 Craft Union sites at year-end (30 September). In the managed estate, like-for-like sales grew by 2.4%. Commercial lease expansion (at 331 sites) is behind, pleasingly due to fewer Market Rent Only (MRO) option conversions. Due to this trend, the company now expects 600 to 700 rather than 1,000 commercial leases in 2020E. Anticipating average commercial lease profitability being higher as a result, Ei Group still believes this estate can convert into a real estate investment trust (after 2020E). There were just ten MROs and a further 60 MRO claims with the adjudicator as at 30 September, materially below our original forecast of 80 MRO conversions. For the 112 pubs where an MRO offer was issued, resulting in 102 mutually agreed tied deals and ten mutually agreed free-of tie deals, overall like-for-like net income was unchanged in 2017. Disposal activity remains strong and accretive. In 2017, 224 pubs were sold, comprising 190 at ten times Ebitda or 295,000 per pub; 16 higher-value assets at more than 20 times Ebitda; and 18 commercial lease sites on 15 times Ebitda. We are holding our forecasts, which assume 0.5% growth in like-for-like net income and 2.8% growth in average tenanted pub profitability and after tail-end disposals. Trading expectations should be supported by a bounce-back in pub sector trading in October (when the Coffer Peach Business Tracker rose 1.4% for managed pubs and fell by 1.5% for managed restaurants). In 2018E, we forecast Ebitda falling by 0.6%, outpaced by net debt falling by 5% (before share buybacks), creating 17% growth in equity value. The company has sufficient debt facilities to repay the £100m 2018 corporate bond (6.5% coupon) and can now restart its share buyback programme (worth £20m in 2018E).”

London Beer Factory has launched The Barrel Project in BermondseyThe London Beer Factory has launched a barrel-ageing programme and taproom in Bermondsey. The company has taken over an arch in Druid Street and acquired 180 reconditioned Bordeaux wine barrels. Its aim during the next six to nine months is to fill them with different beers using various strains of yeast and bacteria as well as producing its own Lambic-style beer. The Barrel Project will also open as a taproom on Fridays and Saturdays, where a selection of The London Beer Factory’s latest brews will be available as well as other barrel-aged beers. The Barrel Project has capacity for up to 150 people.

Birmingham-based cider-maker Aston Manor is celebrating a record harvest. After several years of investment, the company has added 400,000 trees to the landscape with the new orchards bearing fruit for the first time. Based on yield projections of about 20 tonnes of apples per acre every year, Aston Manor said it would pay more than £55m to farmers and growers for this planting scheme alone as part of its 25-year commitment to producers in Herefordshire and Worcestershire. Chief executive Gordon Johncox said: “We embarked on this planting scheme because of the confidence we had in our products, our growers and our future prospects. Although we won’t break even on each tree planted for eight or nine years, we are committed to our growers and to the sustainability of the rural economy.” In August, Aston Manor reported its five-year investment plan, totalling more than £30m, had supported increased sales for Aston Manor Cider as it announced turnover of almost £113m in 2016 – a 4% increase on 2015 – and Ebitda for the year amounting to £8.2m.

Hawthorn Leisure has won two accolades in the West Midlands Finance Awards 2017. The Birmingham-based company clinched the small business of the year and finance team of the year titles. Hawthorn has achieved three consecutive years of growth since being founded in 2013 and achieved a 10.1% increase in Ebitda to £9.0m for the year ending 25 December 2016. Led by finance director Matt Ward, the company successfully implemented a change in supply chain arrangements with Marston’s and C&C Group in the year as well as refinancing £89.5m of shareholder debt. Chief executive Gerry Carroll said: “Our flexible approach to doing business based on a strategy built around people, property, proposition and profit has worked for us. It is fantastic to be recognised not just from within our own industry but from a peer group across all industries, judged purely on delivery and results.” Hawthorn Leisure was formed with three acquisitions and now operates 53 managed and 259 tenanted pubs across England, Scotland and Wales.

Sussex-based brewer and retailer Dark Star has opened funding applications for its foundation for 2018. The Dark Star Foundation was launched in 2012 to assist charities, fund community projects and support fund-raising in pubs. Dark Star managing director James Cuthbertson said: “As well as supporting charities and helping community projects, we are looking to help pubs in their fund-raising efforts. For example, if a pub needs to buy or hire a marquee so they can run outside charity functions, then we want to hear from them. I guess the pub element of our foundation is to help pubs raise more money and further integrate them into their communities.” The company raises foundation funds via brewery tours, collection pots in pubs, and its annual beer and music event Hopfest. Earlier this month the brewer launched a set of beer mats in conjunction with PubAid to remind customers UK pubs raise more than £100m every year for charity. Funding applications will close on 26 January 2018, with funds distributed the following month. For details, visit www.darkstarbrewing.co.uk/foundation

Ei Group, the largest owner and operator of pubs in the UK, has reported like-for-like net income up 2.3% (2016: up 2.1%) for the year ended 30 September 2017. It reported net asset value up 5% to £3.13 per share (2016: £2.96 per share) underpinned by like-for-like net income growth, asset appreciation, cash generation and net debt reduction. Underlying Ebitda was £287m (2016: £292m), in line with expectations and reflecting the impact of planned disposals. Underlying profit before tax was £121m (2016: £122m) as interest savings from reduced debt broadly offsets reduction in Ebitda. Average net income per pub was up 5.0% to £79,600 (2016: £75,800). It reported it now has a high quality portfolio of 331 (2016: 273) properties generating net annualised rental income of £23m on assets valued at £271m, representing a yield of 8.4%. In its managed operations it reported performance on track with 226 (2016: 99) pubs trading within its 100% owned managed operations with 48 (2016: 28) trading within its Bermondsey operation and 178 (2016: 71) within its drinks-led Craft Union operation. Within its managed “joint venture” investments it reported “good progress” with 30 (2016: eight) pubs trading within its managed investments business with nine specialist partners. Simon Townsend, chief executive, said: “We are making good progress against the strategy we set out in May 2015, which represents the most effective means to unlock embedded value within our estate. We are delighted with the continued growth momentum in our leased and tenanted business, achieved within the regulatory framework of the Pubs Code. At the same time we are developing a quality commercial property portfolio and our managed operations and investments businesses are going from strength to strength. We are delivering on our plans for the transformation of the group and are now beginning to accelerate the execution of these plans as our financial metrics and balance sheet continue to strengthen. We are mindful of current economic and political uncertainty and the inflationary cost headwinds faced by our industry, notably the rising minimum wage and above inflation increases in business rates, but our flexible business model and robust financial position leave us well placed to succeed despite these conditions. The current financial year has started well and we are on track with our plans. We aim to deliver positive like-for-like net income growth in our leased and tenanted and commercial estates for the year ahead, and we are encouraged by the trading performance of our expanding portfolio of managed houses. As we enter the third year of our strategic implementation we are increasingly confident in the progress made with our operating divisions making good headway, our balance sheet and finances robust and our route to shareholder returns clear. This continued successful implementation of our strategy gives us the opportunity to announce a further £20m share buyback programme, consistent with our commitment to deliver long-term growth in shareholder value.”

Ei Managed Investments, the Ei Group business that invests alongside industry-leading managed house operators, has launched its ninth venture, Hush Heath Inns – a partnership with Hush Heath Estate. Hush Heath Inns’ first site will be The Ship Inn, in Rye, East Sussex. The site currently has ten bedrooms and will remain open until a refurbishment begins early in 2018. The Ship Inn, and future sites, will reflect the individual character of the location with Hush Heath wines and ciders featuring prominently throughout. As a hospitality business born out of its award-winning winery in Staplehurst, Kent, Hush Heath Estate has four pubs that “champion the county’s best food and drink”. Three of the pubs also offer boutique hotel rooms. The Balfour-Lynn family planted the first vines in 2002 and Hush Heath Estate has evolved to produce sparkling wines, still wines and ciders. The Balfour-Lynn family has appointed a new commercial director to support this venture; Ed Gardner was previously managing director of Corney & Barrow Bars. Nathan Wall, operations director for Ei Managed Investments, said: “Hush Heath Inns is an exciting venture for us in being a ‘pubs with rooms’ business and another venture outside of London.” Hush Heath Estate is a unique hospitality proposition with its focus around the winery and we look forward to working with the team.” Gardner added: “We are absolutely delighted to be working with Ei Managed Investments and taking on the Ship Inn, Rye. Ei Managed Investments, together with our leading premium English wine and cider estate is launching a broader ‘Pubs with Rooms’ business, which is a first in UK hospitality. We look forward to welcoming our guests who will be able to enjoy the finest local food and drink in a beautiful Sussex pub.” Ei Managed Investments other partners include Rupert Clevely, with Hippo Inns, Karen Jones, with Frontier Pubs, and Peter Borg-Neal, with Hunky Dory Pubs. Managed Investments has grown rapidly since its launch in May 2015 and there are now 32 pubs operating across the nine different ventures.

Collection of tiffinsThe Asian Catering Federation (ACF) is to introduce “tiffin clubs” featuring reusable containers as it gave a guarded welcome to government proposals to introduce a levy on single-use plastic packaging. The ACF, which represents 35,000 restaurants and takeaways in the UK, will offer to supply its members with tiffins, a set of five or six interlocking metal containers with a carry handle. Takeaways would simply charge a small deposit with their first order, which are then swapped on subsequent orders. ACF chairman Yawar Khan said: “Tiffins, which will eliminate plastic waste and keep takeaways warm, are an ideal opportunity for restaurateurs to introduce the smaller, sharing dishes, healthier options and authentic Indian dishes customers are demanding.” Chancellor Phillip Hammond is set to announce proposals for the levy in the Budget on Wednesday (22 November). However, Khan is calling for any new tax to be kept to a minimum and for assistance to tackle the severe problems the curry industry faces – staff shortages, rising business rates and a high VAT rate. He added: “The 5p tax on plastic carrier bags has been sufficient to cut their usage by 85% so a new surcharge will not need to be excessive to bring about a change in customer behaviour. Restaurants need to pass the cost on to customers, as shops do, and stop absorbing it.” The packing on a typical family takeaway order costs the restaurant owner about 25p. Busy takeaway restaurants can spend £2,000 on single-use packaging in a year. However, the UK’s takeaway and home delivery sectors will be “seriously under threat” if the government pushes ahead with a tax on single-use plastics, the Food Packaging Association (FPA) has said. FPA executive director Martin Kersh said he was disappointed the packaging and hospitality sectors hadn’t been consulted, branding the initiative a “fish and chips tax”.

The founder of east London-based pub company Electric Star has told Propel he plans to start expanding to other parts of the capital as he looks to double the size of the estate. Rob Star has opened his fifth site, and largest to date – the Heathcote and Star – in Leytonstone. Now he is looking at further expansion with two sites earmarked for addition to the portfolio in 2018. Star said: “We are looking for sites and have one in the pipeline at the moment. That will be our first in 2018 and we’re looking to do a second one next year as well. At the moment we can self-fund one site per year so we may look to some bank funding to help us. I’m looking to grow to ten to 12 sites over the next five years. So far we’ve been in the north east London corner and I would be keen to go to south east London. We don’t want to spread too thinly as having the pubs so close geographically allows us to share staff between our pubs as well as making it easier to manage on the operational side.” The Heathcote and Star features a games room with pool and table tennis tables. As with its other sites, street food brand We Serve Humans is creating dishes for the venue, while the outdoor terrace features an open fire pit. Star plans to add bedrooms to the site next year once he has got the pub “bedded in” and said it could become an important revenue stream for the company. He added: “Rents have been steadily increasing in the past three years so you need to maximise your assets as best as you can and rooms is certainly one way we can do that.” Having opened The Star of Bethnal Green in 2008, the company has since added The Star of Kings in Islington, The Star by Hackney Downs, The Jackdaw and Star in Homerton, and the Leyton Star in Leyton to its portfolio.

Castle Rock Brewery, the Nottingham-based brewer and pub company, is to open its first micro-pub and wine cellar for its 25th site. The company will open the venue in Carrington Street and retain the name of the sweet shop that graced its location – The Barley Twist. Opening on Tuesday, 12 December, the site will specialise in keg and craft beer, real ale, bottled British beer and an extensive wine list. With no food operation, there will be space for an off-licence, beer and brewing memorabilia, and the sale of Castle Rock merchandise. The Barley Twist has been leased by The Beer Consortium, an Enterprise Investment Scheme run under the chairmanship of Geoff Newton. Other pubs in this group include The Embankment at Trent Bridge and The Fox & Grapes in the city’s Sneinton Market, which are operated and managed by Castle Rock Brewery. The Barley Twist will include a wine cellar bar and new frontage paying homage to the building’s legacy. The property is part of the Portland Hotel, itself undergoing improvement works. Newton said: “Interestingly, although the hotel was a temperance house it was built by the Hicking family who were wine merchants by trade. There will be no place for temperance now, we intend to create a city centre micro-pub that welcomes everyone.” The venue will be managed by Yvette Marshall, who has spent the past 11 years in charge of the nearby Canalhouse. The first customers will be Sue and Alan Fielding, Arnold Market traders and former proprietors of The Barley Twist sweet shop.

Plant-based brand By Chloe, which operates seven sites in the US, is to open its first site outside America, in Covent Garden in January. The fast casual brand will open the restaurant in Russell Street seating 70 diners and offering a takeaway service. By Chloe has partnered with TGP International to bring the brand to the UK, Europe and the Middle East, with two further sites in the pipeline and partners being sought for expansion across all regions. The entirely vegan menu will include quinoa taco salad, matcha kelp noodles, and vegan mac and cheese, alongside dairy-free ice cream, baked goods, sandwiches, salads and soup. The brand launched in New York City in 2015 and has grown to four locations in New York, one in Los Angeles and two in Boston, as well as a standalone bakery, Sweets By Chloe. There are further US openings planned this year in New York and New England. TGP International managing director Simon Wright said: “With the brand being so established in New York, we saw London as the perfect market for its expansion.” By Chloe is an operating partner of New York-based group ESquared Hospitality, which co-founded the concept with chef Chloe Coscarelli.

Tasty, the 65-strong restaurant chain and owner of the Wildwood and Dim T brands, has signed with EPOS-linked guest feedback service Feed It Back to accelerate its digital transformation. Tasty said it wants to deepen and make better use of its guest insight as part of a move to leverage new technology and big data for rapid operational improvement. Chief financial officer Tim Cundy said: “We have previously taken a traditional approach to guest insight, focusing on mystery visits, but we have seen new platforms emerge that provide far deeper insight by combining multiple key data sources to provide a holistic view of each guest interaction. Feed It Back is a perfect example of this. We want to give our guests a voice and gather deep insight without interrupting their time with us, then use real-time insight to make better decisions faster. This will support us in differentiating our offering in a competitive market place. To achieve this, our new guest insight will be integrated with our EPOS system and our loyalty programme. We will also leverage Feed It Back’s integrated social review management and guest recovery products.”

Metro Bank has reported it lent almost £30m to sector companies in the third quarter. More than £12m was lent to pubs through three deals to support the successful exit of shareholders, facilitate pub refurbishments and enable an operator to acquire a central London freehold it already operates. Meanwhile, Metro Bank lent £3m to a restaurant group to support growth and, in the hotel sector, more than £14m of debt finance was issued to support acquisitions, refinances and rebrandings.

Artist impression of brewDog's new sour beer facility The OverworksScottish brewer and retailer BrewDog has revealed more details about its new dedicated sour beer facility, The Overworks, as its Equity for Punks V crowdfunding campaign passed the £5m mark. The company said the necessary materials and equipment were currently being fitted into the completed building. About £3m of the money raised by Equity for Punks V will be used to equip the facility, which will produce an array of sour and spontaneously fermented beers. Specialist equipment, including a custom 50-hectolitre Coolship, are being primed to allow Overworks to harness airborne wild yeasts, which are integral to the brewing of sour beer styles such as lambic. The Equity for Punks campaign has so far raised £5,018,992 of its £10m target, with a stretch goal of £50m to further its global expansion. This includes building breweries in Australia and Asia, opening of 15 craft beer bars in the UK, increasing capacity in its UK brewery, and launching The Overworks. The campaign will run for an initial three months, closing on 15 January. Shares cost £23.75 each and are issued in blocks of two, with a minimum investment of two shares. BrewDog has seen its value increase by 2,765% since 2010 – much of its growth supported by Equity for Punks, which has raised more than £41m since 2009. Earlier this year, BrewDog sold a 22% stake to US private equity firm TSG Consumer Partners for £213m, giving BrewDog an enterprise value of £1bn.

Chicken sandwich concept Butchies is to open its debut bricks and mortar site, in Shoreditch next week. The restaurant will open in Rivington Street on Monday, 27 November, with founders Garrett & Emer Fitzgerald giving away fried chicken sandwiches to the first 500 customers. Split across two floors, Butchies will accommodate 45 covers and a takeaway service, with the menu featuring a range of wings, sides, salads, specials, homemade pickles and hot sauces, shakes, cocktails, wine and craft beer. The Fitzgeralds launched the concept as a street food operation at Broadway Market, going on to open a “hatch” at Camden Market, which has since closed.

Robin Rowland, CEO, YO! SushiYO! Sushi has bought Bento Sushi, North America’s second-largest sushi brand, creating a global multi-channel and multi-brand sushi platform. The acquisition values Bento at £59m ($100m Canadian dollars) and has been facilitated by Mayfair Equity Partners, which partnered with the YO! management team as part of a management buyout in 2015. Bento, founded in Toronto in 1996 by Ken Valvur, is the second-largest sushi brand in North America, and the largest in Canada trading from more than 600 locations, while supplying sushi to a further 1,700 partner sites. Bento operates across a range of formats which complement YO!’s existing proposition. These include quick-service restaurants, on-site kiosks in supermarkets and other foodservice locations, and a number of production facilities that supply sushi to grocery and institutional foodservice clients across North America. The business has achieved strong growth, delivering compound annual sales growth of 16% in the past three years. Bento and its licensees employ more than 2,000 highly trained sushi chefs and serve more than 20 million sushi portions every year. Bento’s success has been driven by Ken Valvur and Glenn Brown, Bento’s chairman and chief executive respectively, and as part of the deal they join the board of YO! and become significant shareholders in the combined group. With YO!’s international restaurant network across Europe, the Middle East and Australia, the combined business becomes one of the largest sushi companies outside Japan, providing an international, multi-brand, multi-channel offering, well placed to benefit from the continuing increase in consumer interest in healthy, provenance-rich foods. The acquisition will create synergies and enable the continued growth of both businesses, particularly in the US market. The combined businesses have recorded sales of about £175m over the past 12 months. The acquisition of Bento comes after two transformational years for YO!, in which Mayfair Equity Partners bought into the business and Robin Rowland (pictured) returned to the role of chief executive. Following a renewed focus on the brand, product, and people, including the appointment of several senior team hires, the business has seen like-for-like sales growth of 5% over the past 18 months. Eight new sites opened in the UK this year, as well as the group’s first sites in Manhattan, Paris and Sydney. Rowland said: “We’ve successfully reinvigorated the business over the last two years to ensure the foundations are in place for long-term growth. This acquisition takes YO! into the next stage of its development, and creates the first global multi-channel Japanese food purveyor. Bento’s proposition and its management team’s strong track record make it the ideal partner for YO! as we look to further grow our brand.” Brown, added: “This partnership presents Bento with an incredible opportunity to grow its platform. YO! and Bento share a similar ethos and history, and we look forward to working with the YO! team and taking advantage of opportunities to develop both brands.” Valvur said: “The combination of YO! and Bento will further enhance our group’s ability to be the partner of choice for grocery and institutional foodservice providers throughout our enlarged operating geography, and creates exciting opportunities for our valued team members on both sides of the Atlantic.”

Restaurant Marketer & Innovator, the new event in January run by Propel and Think Hospitality, is calling for nominations for its inaugural “30 Under 30” list, which looks to recognise 30 talented future leaders in marketing, innovation and strategy roles within the sector who are under 30 years of age. Propel managing director Paul Charity said: “We are looking for nominations for outstanding young marketing and innovation professionals working within the eating and drinking out sector, whether working for a brand or an agency. Our panel of experts will then draw up a 30-strong list of outstanding professionals who will be recognised at a special reception in January.” Nominations should highlight (in one page) the name, position and title of the individual; why they believe the individual deserves recognition; how the individual has demonstrated success in their career to date; and relevant achievements and/or career history. Nominations can be made by emailing awards@restaurantinnovator.com

Restaurant Marketer & Innovator LiveRestaurant Marketer & Innovator, the most comprehensive marketing conference the sector has seen, is open for bookings. Propel is staging the two-day event in partnership with Think Hospitality on Wednesday, 17 January and Thursday, 18 January at One Moorgate Place in London. The event will bring together marketers, strategists and business leaders from the foodservice sector to understand trends, share success, and define the future of the sector. A total of 40 speakers from four countries, representing more than 30 brands, will provide advice and insight. For full details, click herePrices for the two days are £525 plus VAT for operators and £795 plus VAT for suppliers. A one-day rate of £345 plus VAT is available to operators only. For more information and to book please contact either Jo Charity on 01444 810304 or jo.charity@propelinfo.com or Anne Steele on 01444 817691 or anne.steele@propelinfo.com

Star Pubs & Bars

Propel Multi Club November 2017

Propel Multi Club

1st November 2017

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