All tips to go to staff as government plans overhaul of tipping practices
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Tortilla, the largest fast-casual Mexican restaurant group in the UK, is to float on AIM (Alternative Investment Market). The company has 62 sites worldwide, comprising 50 sites in the UK operated by the group, two sites franchised to Select Service Partners UK in the UK, and ten franchised sites in the Middle East. Emma Woods has joined the Tortilla board of directors as non-executive chairwoman and Laurence Keen as a non-executive director. The company stated: “Emma has extensive experience at board level in multi-site leisure businesses. She is currently a non-executive director for The Gym Group and her hospitality experience includes being the chief executive of Wagamama from December 2018 to June 2021. Laurence is currently chief financial officer of Hollywood Bowl Group. The group has established a track record of strong financial performance driven by consistent expansion of the property portfolio and like-for-like growth. From FY2019 to LTM June 2021, the group generated 250% Ebitda growth and opened eight stores. For the 12 months to June 2021 Tortilla outperformed the Coffer Peach Business Tracker by an average of 46 percentage points. The directors believe the group is strongly positioned to capitalise on further growth opportunities in the post-covid-19 pandemic landscape. The economic challenges facing the hospitality sector have resulted in a dramatically increased number of vacant units on the market with rent levels rebalancing to more sustainable levels, providing Tortilla with an unprecedented opportunity to accelerate its UK rollout strategy.
The group is targeting circa 45 new sites over the next five years including building on the success of the existing portfolio of delivery-only ‘cloud-kitchens’. The directors are also targeting further franchising and licencing opportunities.” The company added: “Tortilla has developed a reputation for its freshly prepared, customisable, value-for-money product range of burritos, tacos, and salads which enables the group to appeal to a wide demographic and helps it maintain its loyal and broad existing customer base. The directors believe that Tortilla powerfully addresses many of the key trends that consumer demand is driving across the fast-casual food segment and wider hospitality industry, including: healthy eating; freshness and high provenance; convenience – including eating out and delivery; customisation; and the continuing growing popularity of ethnic food. The group has succeeded with significant geographical spread across the UK, with almost half of the estate and four of the group’s top ten selling stores being located outside of the M25 motorway. In recent months, the group has opened stores in Chessington World of Adventures, Windsor, Edinburgh, and Exeter.
Tortilla operates a 5,500 square foot Central Production Unit in Tottenham Hale which provides the group with a robust central kitchen infrastructure, providing it with cost advantages over its direct competitors, giving it flexibility to increase the size of its estate in parallel with its growth strategy, and ensuring product and quality consistency across all of its sites. Admission is expected to take place on or around 8 October 2021.” Chief executive Richard Morris said: “We are delighted to announce Tortilla’s Intention to Float on AIM, which marks an incredibly exciting milestone in our continued growth journey. Since its launch in 2007, Tortilla has established a long-term track record of strong financial performance driven by considered expansion of the property portfolio and like-for-like growth. The business has shown itself to be extraordinarily well positioned throughout the pandemic, as the Tortilla product proposition is well-suited to the growing delivery market and we have proved the brand’s flexibility to operate across a range of locations and formats, including smaller sites and cloud kitchens.
We believe that this IPO unlocks our ability to consolidate on this momentum and enables us capitalise on significant long-term growth opportunities in the post-covid-19 pandemic landscape.” The group signed a new financing facility with Santander UK on 14 September 2021 to replace the group’s prior facilities. Santander has provided financing to Tortilla since 2012 and has remained a supportive partner throughout this period. The new Senior Facility Agreement allows the group to access up to £10 million of funds via a Revolving Credit Facility for general working purposes and will provide the group with the balance sheet flexibility to pursue its growth plans. Following Admission, the group anticipates being in a net positive cash position by the end of 2021 and therefore the facility provides significant undrawn cash headroom.
Darrell Connell, partner at sector investor Imbiba, which backs operators including Farmer J, Vagabond and Darwin & Wallace, has said if businesses can get through the next three to six months, “we could look back at it as one of the best times to invest in our sector in the past 20 to 30 years”. Speaking at Propel’s Multi-Club Conference this month, Connell said: “We flapped around in the early stages of the pandemic trying to work out what we were going to do and how we were going to do it, but we settled on we should stick to our knitting, which for us is backing what we deem the best businesses in each sub sector. We were careful how we structured deals, but in terms of the core of what we do it has remained the same. The question of covid-fad versus trend is something we debate a lot internally and there will be things that will be here to stay for the long term but I think it is too premature to opine on what they are. For us it is still about good solid businesses and when we decide to invest to make sure they have plenty of runway to get through. In terms of exits the pandemic has put two years on the back of everything. We are not a generalist investor, we focus on hospitality, so when the crisis hit, we were very much ‘we are all in, let’s push on’. We have been very active during the period – in the past 18 months alone we have made six new investments, and we have got four new investments due to complete in the next few months. When we are looking at new investments we are very cautious, but if we can get through the next three to six months, we could look back at it as one of the best times to invest in our sector in the past 20 to 30 years. I think the generalist private equity firms will see how the next three to six months pan out with covid but then I think there could be some real activity in the market. There are still some very good businesses out there. We are seeing a lot of entrepreneurs, who have had a really tough 18 months, have been sitting on their hands, and they really don’t like sitting still, and want to come out of this and get going. Saying ‘let’s open new venues, do new things, innovate’, and we are seeing a lot of that.”
Small and medium-sized operators are being faced with no choice but to pass rising prices on to consumers, warned Darren Simpson, founder of handmade burger business Nanny Bill’s. Speaking on the Next Big Thing panel at Casual Dining 2021, Simpson said he managed to keep on the majority of the staff at his five locations during lockdown. However, he admitted post-covid shortages in both staff and supplies are posing new challenges. He said: “We try to swallow as much of the cost as we can and not pass it on to the consumer, but it’s getting to the point where we hiked our prices for the first time in five years last week by 10% to 12%. We didn’t want to but we had to do it. At the moment, hiring new staff is nigh on impossible too.” For Laura Morris, co-owner and director of Yard & Coop, which runs five premium fried chicken outlets across the north west, re-training front of house staff as chefs is one solution. She believed another big challenge is turning back to being customer-focused following the euphoria of reopening sites post-lockdown. “The mentality when we first reopened was like a blitz spirit at first,” she added. “People were just excited to be back and they would overlook things like packaging being everywhere because they were excited that we were open. Now that’s changed and we have to focus on what customers want, but we’re having to hike prices for everything, which makes it difficult for everyone. It’s a really difficult trading environment, even though the trade is there.” For Mark Wogan, co-founder of pizza restaurant chain Homeslice, which runs six sites across London, it’s been all about making restaurants feel like restaurants again. He said. “Last month we took out the two-metre distancing and sanitise your hands signs as it’s become the norm for people now. People come to the restaurant as they want a restaurant experience rather than a covid-compliant experience.” The lockdowns have also brought about menu changes at Homeslice, which previously offered just Neapolitan pizzas sold by the slice. Wogan added: “We’ve made small menu changes for the first time because, having pivoted into a delivery service, we noticed just having the pieces wasn’t enough, people wanted more. We offered garlic bread for the first time, and that’s stayed on the restaurant menu.”
The future of Britain’s pubs hangs in the balance as their recovery is derailed by escalating costs, the British Institute of Innkeeping (BII) has warned the government. The trade body has written to chancellor Rishi Sunak and business secretary Kwasi Kwarteng to highlight the plight of its members with the recovery of pubs being undermined by the combination of summer trading below 2019 levels, rapidly escalating costs and increasing taxation. The BII said three key areas of ongoing support needed to be urgently addressed – a full business rates holiday for England alongside a fundamental reform of the rates system, an extension of a reduced rate of VAT and a rapid introduction of a duty cut for draught products served in pubs. A report showed 84% of members’ pubs’ summer trading was below 2019 levels, with 54% trading below 75% of pre-pandemic levels. The BII said the impact of closure and severe restrictions over the past 12 months has left pubs with an average pandemic specific debt of more than £50,000, which will now take more than four years to pay back. One in four also having insufficient funds to keep up with outgoing costs. Already, one in two operators will not invest any money into their businesses in the next 12 months due to both lack of funds and levels of existing debt, the BII said. Meanwhile, 76% of its members are paying higher wages to attract and retain staff with 70% of these paying at least almost three times the rate of inflation. Two in three pubs are seeing more than 10% increases in food costs, one in three are seeing more than 10% increases in drinks costs and one in two have utility costs increasing more than 10% Operational challenges are also significant with 61% not being able to recruit enough staff to keep up with their workload, 33% experiencing no-shows and supply issues, leaving 72% of pubs running out of core lines in their food and drink offering. BII chief executive Steven Alton (pictured) said: “This insight from our membership clearly shows further investment will be required by government to safeguard the future of our nations’ pubs and enable them to be at the heart of the economic recovery. If government does not recognise the support that is desperately needed by our fragile small businesses in the coming weeks and months, there is a very real danger of widespread business failure in our sector.”
Clive Watson, chairman of City Pub Group, owner and operator of circa 50 premium pubs across southern England and Wales, has said he would rather have the challenge of employing staff than furloughing staff. On the back of the group’s interim results, he also called on the government to introduce temporary worker visas to plug the gaps in the labour market. Talking to Propel about the staffing issue, Watson said: “It is not easy, there are vacancies of about 7% to 8%, but in a funny sort of way it doesn’t feel as bad as July, when we were getting pinged all over the place, having to close pubs and send staff home. I’d rather have the challenge of employing staff than furloughing staff. It is an ongoing challenge – you have to make sure that you are seen by your staff as a responsible, progressive and inclusive employer and that’s what we have always tried to do. While this is very frustrating, we believe the end of the furlough scheme in September will increase the pool of labour able to work in our industry and the returning students should also help with staffing. It would seem sensible for, and we call upon the government to, introduce a two to three-year working visa to European nationals so people can come to the UK, work, study and return home extolling the virtues of the British pub. This, we believe, will also encourage much needed tourism, which is essential in helping our sector to get back on its feet.” Watson said he believed “UK plc is heading for 5%-plus inflation”. He added: “We are going to be pushing our prices up to overcome those inflationary increases. I think staff salaries are going to go up, so hopefully our prices won’t be above inflation and those people getting 5% pay rises won’t be concerned by us putting our prices up by 5% or a little more. My job is to make sure we cover the inflationary costs the best way we can – we can’t keep taking costs out of the business. The best way to do that is to put prices up at the pump level. We were running 46 businesses, each had its own menu and drinks list. It is not just streamlining suppliers, it is also making the business less complex, which makes it operational easier to run. We also now have more room revenue as a percentage of sales, which helps the sales mix and margins. For us we weren’t at optimal efficiency going into covid and a lot of things we have done to change that we should have done before.”
Mitchells & Butlers has reported that sales have been volatile since re-opening but have generally strengthened, particularly since the easing of restrictions on ‘Freedom Day’ in England on 19 July. The company stated: “In the 18 weeks since full indoor trading reopened on 17 May like-for-like sales have been 97% of pre-covid levels, following an improvement since the last update in the most recent eight weeks to 104%. Trading continues to be stronger in suburban and food-led brands, particularly at the more premium end of the market. Total sales year to date, including 18 weeks of enforced closure, are at 45% of pre-covid levels.” Chief executive Phil Urban said: “We are encouraged by the improvement in sales performance following the easing of restrictions. However, we are still seeing volatility and a contrast between sales performance at food led and wet led brands, highlighting the continuing uncertainty. Our diverse estate, balanced across a wide range of offers, puts us in a strong position coming out of the pandemic. We are looking forward to the new financial year, with a renewed focus on our capital plan and generating both sales and efficiencies through our Ignite improvement programme.”
Fuller’s has reported that since fully reopening the estate in July, the company has traded at a steadily increasing level across its estate. In an AGM trading update, the company stated: “Managed like-for-like sales for the seven weeks to 18 September 2021 stand at 86% of 2019 levels, and we look forward to the further benefits of increasing footfall in the City and a continued return to office working.” Chief executive Simon Emeny (pictured) said: “While we are not immune to some of the well-documented challenges facing the wider hospitality industry such as recruitment, the pandemic has further highlighted the attraction and resilience of our well-balanced, premium estate. Our rural pubs and hotels have benefited from the increase in domestic tourism during the summer months and we are now beginning to see a return of customers to our Central London pubs, which is a great sign as we head into a busy trading period. Life is gradually returning to normal, and the benefit of the continued investment in our pubs and hotels during lockdown is becoming evident. In particular, the winterisation projects that have been delivered across the estate will increase capacity and maximise the opportunity from our gardens and outside areas later into the winter months and early spring. Our Tenants have also invested in their pubs and this strategically important part of our business continues to perform well, underpinned by our successful recruitment and retention of great, entrepreneurial businesspeople with ambition and drive. It’s been a tough 18 months for everyone in hospitality – we are confident in our strategy and proud of our pubs and people. Our long-term vision has not changed, we have an excellent, well-invested estate, a strong balance sheet, and we look forward to the coming months with confidence and optimism.”
The City Pub Group has reported trading on an upward trajectory with sales since the reopening of indoor trading on 17 May at above 90% of 2019 levels, with further improved trade in city centre sites since the beginning of September as return to work gathers pace. The company reported two new sites have been acquired signalling confidence in expansion. It said accommodation performed strongly over the summer benefitting from “staycations”. Ebitda was a break-even in the 26 weeks to 27 June despite the majority of period under covid-19 restrictions. Revenue was £8.9 million (H1 2020: £12.1 million). The company reported it streamlined its supply chain, reduced menu complexity and re-negotiated central contracts. Clive Watson, executive chairman of The City Pub Group, said: “We have traded well since May and are emerging strongly with a streamlined and more profitable business. We have continued to implement a relentless focus on cost control and we are capturing cost savings identified and negotiated over the last year. We are emerging from the pandemic in a good shape, well prepared for the challenges facing our industry. We have maintained and enhanced a number of our pubs and benefitted during staycation summer from our estate of more than 200 letting rooms. With our good trading and strong balance sheet we have begun to look to expand again recently making two significant acquisitions. Our ambition is for the estate to be in excess of a 100 pubs. We have the right team, a business that is in great shape, a very high quality bespoke largely freehold estate and plenty of opportunity to grow our business.”
Cinema operator Everyman has reported that since capacity restrictions were lifted on 21 July, admissions growth has risen to 80% of 2019 levels (as at 16 September), despite being against a particularly strong comparative film slate. The business said that admissions between re-opening on 17 May and the period end were ahead of management expectations, at 66% of 2019 levels. It said that a “very strong film slate in Q4” is expected to drive further admissions growth. The company said that average ticket price had increased by 5% due to ticket type mix and modest inflation-related increases. At the same time, average food and beverage spend was £8.88, up 37% on the same period last year, driven by roll out of hand-held ordering units and kitchen upgrades. It currently operates an estate of 35 sites and 117 screens, with a committed pipeline for 2021/22 of six new venues, with Borough Market due to open in December 2021. In the 26 weeks ended 1 July 2021, the company reported revenue of £7.7m (H1 2020: £15.0m), impacted by covid-19 related temporary closure for the first 20 weeks of 2021. Adjusted Ebitda loss for the period stood at £1.4m (H1 2020: £0.5m profit), significantly impacted by the closures, with an operating loss of £7.7m (H1 2020: £12.3m loss). Alex Scrimgeour, chief executive of Everyman, said: “We have been encouraged with trading since re-opening on 17 May and are looking forward to a strong film slate in the last quarter of 2021. It has been a pleasure to welcome back our staff and see our customers enjoying all the aspects of the great night out that Everyman delivers. Our customers and in particular our members remain highly engaged, demonstrating that we have maintained exceptional brand loyalty throughout the period by keeping a constant dialogue with them. Despite some challenges remaining ahead, we are confident in our business model and that customers will continue to return to Everyman in ever increasing numbers over time. We have had significant support from all our key stakeholders for which we are very grateful. We remain confident in the Everyman brand and our ability to navigate out of recovery and back to growth.”
Elliott Shuttleworth, co-founder and chief executive of Boom: Battle Bar, the adventure bar concept from the team behind adventure park franchise Flip Out, has said the pandemic has acted as a catalyst for growth for the business, which has 23 sites in its pipeline for the next 12 months. Speaking at Propel’s Multi-Club Conference this month, Shuttleworth said: “The pandemic has afforded us the opportunities to grow quickly. It has been a catalyst for us, the challenge has been finding franchisees in the current climate. Most of our sites are franchise sites so pairing the right franchisee to the right site has been a challenge because people are nervous about the industry. But the pandemic has probably sped up our plans tenfold. We were getting calls from landlords who had 10,000 square foot spaces but we didn’t have the right offer to take up that opportunity, so it was kind of by accident and design we came up with Boom: Battle Bar. With the concept we were looking for something that was a sustainable model, flexible, experience-led and in a growing industry. Flip Out was sold to us as a modular concept, but it isn’t, so when we created Boom we made sure it was. Games and activities can be interchangeable. Post reopening, we have opened in Cardiff, Eastbourne, Lakeside, Liverpool and Norwich. In the next 12 months, we have 23 sites coming on board. Cardiff is one of our top performing sites. Just as the restrictions were lifted in Wales, when it was raining every day, people there would still go and sit in our beer garden. That site was averaging £120,000 a week in sales in the first eight weeks post-pandemic. Eastbourne is a lot smaller, but the sales dynamics are still good and it has started really strongly out of the blocks and is doing about £45,000 a week.” The group’s openings will include a £2m flagship site in London’s Oxford Street, and sites in the O2, Newcastle, Manchester, Bath, Bristol, Edinburgh, Glasgow, Chelmsford, Reading and Oxford. Shuttleworth said the business was experiencing a “very different model of return custom” versus Flip Out. He said: “In Flip Out people are visiting on average 1.2 times a year, whereas in Boom we are seeing 40% of our customers return within three months helped by the range of games we put on.” He also said that “fundamental culture shifts” had led to roughly 50% of the company’s drinks sales being non-alcoholic.
Pret A Manger has set out plans to double the size of its business within the next five years, backed by a new £100m net investment from current backer JAB Holdings and co-founder Sinclair Beecham. The company said the plans, which include expanding into new international markets, growing its shop estate and investing in new digital capabilities, are the next phase of its transformation plan – a plan that shifts the business from “following the skyscraper”, to bringing Pret to more people across the UK and beyond. The new investment by JAB and Beecham come on top of the initial £185m net investment both made to support Pret through the pandemic. The business will expand its shop estate in the UK, with more than 200 shops due to be opened in the next two years, largely located in regional and suburban areas, and including circa 100 franchise sites. As previously revealed by Propel, the first major franchise partnership was signed with The Chesterford Group over the summer, with further agreements with another four franchisees expected later this year. The company said many of the new shops will be located in transport hubs and motorway service stations, further building on Pret’s existing partnership with independent forecourt operator, MFG, and motorway services operator Moto. As Pret expands, the company said it will roll out a recruitment programme, aiming to hire at least 3,000 team members and baristas by the end of 2023. This follows news last week Pret was increasing pay by at least 5% for its UK shop team members, in addition to the £1 mystery shopper bonus and free food on shift. The number of employees now working across the business has grown 28% since the start of 2021, with more than 6,000 employees in the UK alone. In accounts filed this week at Companies House, Pret will report its full-year revenue for 2020 was £299m, down from £708m in 2019. Pret’s operating loss for the year before tax and total comprehensive income was £256.5m during the same period. Over the last month however, the business said its recovery had gathered pace, with trade now “approaching pre-pandemic levels, once again making profit and a major recruitment drive underway”. The business said its regional shops were performing at their “strongest ever levels”, and London City shops had recovered to more than 72% of pre-pandemic weekly sales. A year ago this month Pret launched the UK’s first coffee subscription service, with customers able to enjoy up to five hot drinks every day for £20 a month. The move came alongside new retail partnerships with Tesco, Sainsbury’s, Amazon and other leading retailers to sell bake-at-home frozen croissants, granola, ketchup and coffee for customers to enjoy at home. The business said as it continues its transformation, it will continue to invest in its customer loyalty programme, while also putting a renewed focus on menu development and product innovation. Pret chief executive Pano Christou said: “Last year we were in the eye of the storm during the height of the pandemic. Now we have the chance to build a bright new future for Pret. What the pandemic has shown us is that even at the darkest moments, more people want to experience Pret – whether that’s customers outside of London and other big cities, new franchise partners who want to work with us here and overseas, investors in our business, or people who want to grow their careers here and be part of what we’re trying to build. It’s been an incredibly tough two years, but we have a big opportunity ahead. Last year, we delivered more change than in 30 years of Pret’s history. As we move into the next phase of our transformation, we want to keep the same pace of innovation, but use it to drive new growth. I would like to thank all the Pret team as we would not be in this position without their efforts through covid, as well as a special thank you to our loyal customers who have remained so supportive of our business over the past two years. We’re excited through our business transformation plan we can continue to serve both existing and new customers in more ways than ever before including through our coffee subscription, Pret-at-home ranges and our expansion into new regions. We also extend our gratitude to JAB and Sinclair Beecham, our founder, for supporting the Pret team and I know everyone involved with Pret is excited for what the future holds.”
Christou (pictured) told Propel that staffing was a key challenge for the industry. In June to September 2019, Pret recruited 900 people. This year between June and September it recruited 2,000 and “we are still recruiting”. He said: “As the sales have stepped up, recruitment has stepped up. We are still looking to bring more people in, it is a challenge, but our recruitment teams are doing a terrific job. The way I look at it is Pret is a top quartile payer, we don’t pay by the hour, but by age. We are not a zero-hour contract employer. We have got the mystery shopper bonus, we have a great discount programme and are moving that back up from 25% to 50%. Equally as we look to grow Pret, it is a great place to grow a career – 85% of our managers started as team members. Unemployment is high, you have two million people who will come off furlough at the end of the month, so I think we need to get through that, but once there is no one on furlough and unemployment gets to below 3%, which I sense will be in a year or so, I think that will also become a different challenge. We will continue to evolve the Pret model to ensure we pay our people well. Equally we are looking at aspects of technology to deal with that over time. It is multi-faceted, our approach to this, but the challenges we have now, I enjoy more than the ones we had a year ago.”
Growth ambitions: Christou said: “Pret before didn’t do franchising, we didn’t work with partners or sell to supermarkets. These are areas we have looked at through covid, and as our core business is coming back on its feet, these new channels are continuing to grow. We have five well-experienced franchise individuals, who have run franchise businesses for many years who want to work with Pret and grow with Pret, and see the opportunity for growth, and we will learn a lot from them as well. We have Moto and MSG to grow with, as well as our own expansion plans for our company-owned shops. Yes, the City has been hit hard, yes it is slowest to recover, it is recovering, but will it get back to where it was in 2019? My sense is probably not, but shopping centres, suburban locations, retail parks have done really well for Pret and we don’t have many businesses in those areas at present. We had 400 stores in the UK and there are businesses that have 2,000-plus here so you have got to think that the brand can continue to grow in the UK. It is not solely a brand that appeals to white collar workers, it is one I believe that appeals to many different people, and there is something for all in Pret.” Christou said covid had “definitely sped up more opportunity” for Pret in terms of expansion. He said: “When your feet are to the fire and looking at opportunities to get the business back up on its feet, you look wide and hard at what opportunities are there. We have been blown away by the interest from potential franchise operators for example. We had 410 stores at the end of 2019, and we have 390 now. We have opened ten this year and will probably open another 20 before the end of the year. We have already got a line of sight on 100 locations pretty much firmed up.”
New international markets: Christou said he was “not at liberty to say what countries we are looking to go into right now”. He said: “But what I can say is that conversations have evolved quite a bit with people in Europe, Asia and the Middle East. We have developed a great business over the past ten years in France, it has grown significantly pre-covid and the team there has done a great job building the brand, and developing what I see as a world class supply chain. For our business the biggest challenge is developing a supply chain. We have a fresh produce supply chain, it is complex to develop, so for us it is looking at adjacent markets. That will be the easiest way to do it, to translate the brand across borders rather than going far and wide.”
Support: Co-founder Sinclair Beecham has always maintained a small shareholding and came forward when the business put in the initial £185m investment during the pandemic. Christou said: “He is a big believer in the brand. As a relatively new chief executive (Christou was promoted into the role three months before the first lockdown), he has been one of the individuals around me that have the insight, wisdom and experience to be supportive to me and the team. As have JAB.”
Vending: Earlier this summer, Propel revealed Pret was thought to be eyeing a launch into the vending machine category, after trademarking the name, Pret Express. Christou said: “I wouldn’t want to comment on that right now.”
Veggie Pret: For Christou Veggie Pret will be a long-term part of Pret. He said: “It is a great brand, but we are not looking to push it that far in terms of growing it right now. We are maintaining the shops that we have with Veggie Pret. As we get through covid, and we are still on the recovery curve, as we pull through that and get to what I would call a ‘business as usual rhythm’ then we will start to assess how we take that forward. Having Veggie Pret gets us to how we continue to innovate around plant-based food.”
Digital: From Christou’s perspective there is still “a lot more we need to do around digital and technology”. He said: “We launched the coffee subscription model here a year ago, and in the US last week, and we are looking to launch it into our other markets in the next few months or so. We are looking to do things such as loyalty programmes and there are other things we are looking at. But I think we have another year or so of further investment on technology to get us to where I think we need to be. We were quite late developers in this space.”
Pret features in Propel’s Turnover & Profits Blue Book, which has just been updated for Premium subscribers. Pret has turned over an average of £586m in the past five years. The Blue Book, which is produced in association with Mapal Group, provides a five-year overview of turnover and profit, ranks 410 companies according to turnover, pre-tax profit and profit conversion. It also provides details of directors’ earnings and highest paid directors. 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 regular single subscription rate of £395 plus VAT for operators and £495 plus VAT for suppliers remains the same.
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Optimism over future trading has improved significantly among restaurant, pub and bar leaders, according to the third-quarter Business Confidence Survey from CGA and Fourth. Of the 200 business leaders surveyed, 69% said they are now trading at profit, with almost 40% trading ahead of expectations. Their confidence level has dropped by 13% from the research consultancy’s second-quarter survey – when the reopening of hospitality venues for the first time in 2021 inflated optimism – but is the second-highest figure since the May 2018 edition of the poll. However, many of those polled called for further government help – including an extension on VAT reduction (84%), reform of business rates (81%) and business rates relief for 2022-23 (81%) – and more than two thirds (71%) support measures to address labour shortages in hospitality and the supply chain. CGA director Karl Chessell said: “It’s encouraging to see such strong levels of confidence in hospitality leadership, especially given the turmoil of the last 18 months. Many operators enter the autumn on the back of strong August sales, and momentum is building in consumer confidence and spending. But the damage covid-19 has wreaked on the sector will be felt for years to come, and with debt repayments and tax rises ahead, profits are going to be needed for months to come if businesses’ finances are to be secured. Firms remain in need of support, but with the right backing, hospitality is well placed to power the UK’s economy as it builds back from the pandemic.” The survey also highlights the integral role of technology in hospitality’s restart, with 47% improving their view of it and 65% believing new digital solutions are here to stay.
MasterChef judge Gregg Wallace has linked up with Just Eat to support the delivery service’s restaurant partners in offering healthier dishes. Along with nutritionist Charlotte Radcliffe, Wallace visited ten Birmingham restaurants taking part in a three-month pilot project. They will be trialling tailored changes to their menus, including adding healthier items and more effectively marketing the healthiest dishes to customers. The restaurants will also receive a free trial of Nutritics, a new tool used to calculate the nutritional value of menu items, for the trial period. At the end of the project, Just Eat will analyse restaurant and customer feedback and develop a broader support programme for its entire 58,000-strong UK restaurant partner base. Just Eat UK managing director Andrew Kenny said: “Consumers are increasingly looking to enjoy takeaways as part of a healthy balanced diet, but research shows fewer than a third think they can do so currently. We are using our reach to help our restaurant partners tap into and further drive this demand, and this programme is just the first step for us as we look to create sustainable change across the industry.” Wallace added: “As someone who has recently transformed my own diet, I know takeaways can be enjoyed as part of a healthy lifestyle, but it’s not always easy to find those options. Customers need to be able to find a healthy option every time they order in, and most restaurants we visited were already actively taking steps, but there’s always more that can be done.” The participating restaurants are: Rubery Fish Bar, Food Republic, Caspian Pizza, Sophie’s Pizza and Pasta, Slice of New York, Shazan’z Kebab House, Rumana’s, Big John’s, Mahfil Restaurant and Chop & Wok.
The City Pub Group, the Clive Watson-led, owner and operator of premium pubs across southern England and Wales, is to open its first site in Bury St Edmunds. The 48-strong business has secured the former Café Rouge site in the town’s Abbeygate Street. According to Fleurets, which marketed the site, the property received multiple bids from both local and national operators. City Pub Group plans on fully refurbishing the property and opening soon. The business already operates sites in Cambridge and Norwich as well as the Hoste Arms, on the north Norfolk coast. Simon Jackaman, of Fleurets, who handled the letting on behalf of the landlord, said: “This is one of the most exciting lettings to be concluded this year. The new tenant is a fantastic operator and this opening will be very special for Bury St Edmunds adding to the existing mix of pubs, bars and restaurants this wonderful town has to offer”. In June, City Pub Group, which has a further four development sites, reported trading since the reopening of pubs on 12 April had been encouraging at 90% of 2019 levels for the 42 pubs it had reopened to date. Earlier this summer, it purchased the freehold of the Roundhouse in Wandsworth Common, where it only had four years left on the lease, for a total consideration of £1.1m.
The tourism and recreation sector, which includes pubs and restaurants, posted the sharpest month-on-month rise in output in August. The sector benefited from the popularity of UK-based breaks during peak holiday season and the change to covid-19 restrictions, which reduced the need for fully vaccinated employees to self-isolate, according to the latest Lloyds Bank UK Recovery Tracker. The tourism and recreation sector saw its growth rate rise to 61.7 in August versus 55.3 in July. The output of food and drink manufacturers returned to growth, after contracting in July (53.7 in August versus 45.6 in July), due to firms experiencing increased orders from the hospitality sector and fewer employees needing to self-isolate. A reading above 50 signals output is rising, while a reading below 50 indicates output is contracting. But the number of UK sectors reporting output growth fell to a six-month low in August, as the impact of labour shortages intensified. Nine of the 14 UK sectors monitored by the Tracker saw output rise during August, down from 12 in July and the lowest number since February when the UK was still in lockdown. However, the number of UK sectors that recorded stronger output growth month-on-month increased from four to five during August due to the strong performance of consumer-facing services businesses. Meanwhile, input cost inflation eased for the first time since January. Reduced price pressures were seen in eight of the 14 sectors monitored by the Tracker during August, up from seven in July and just four in June. However, the overall rate of cost inflation was still the third highest in the Tracker’s history, as UK firms continued to experience materials shortages and higher wage costs driven by recruitment challenges.
All-day market concept Farmer J, which is backed by Imbiba, has secured its first site in London’s West End. Propel understands the Jonathan Recanati-led, five-strong, business has secured the former EAT site in Regent Street for an opening later this year. The company recently doubled up in Canary Wharf, with an opening in Jubilee Place (pictured). It already operates a site in Canada Place. Earlier this summer, Propel revealed Farmer J had secured the Wasabi site at Paternoster Square for an opening later this year. It is thought the business is also close to securing a site in London Bridge. Recanati told Propel in July the business had always been developed with expansion outside central London in mind and the group was looking to build its pipeline further. He said the resilience of the business during the crisis had given it the confidence to explore further expansion opportunities. Richard Willcox, at Etch, acted on the Regent Street deal for Farmer J.
Wagamama, The Restaurant Group (TRG)-owned brand, has secured its first site in Florida. The company, which expects to open three to four new US sites in FY22 under the joint venture partnership it entered last year, will open a site in Water Street in downtown Tampa. The new 4,200 square foot restaurant will be at 1050 Water Street and will open in early 2022. In August, the company secured its first site in Georgia, when it agreed to take a unit in the newly-built Star Metals District in West Midtown, Atlanta. Wagamama made its US debut in April 2007 and currently operates three sites in both Boston and New York. Last February, Wagamama entered a new partnership with Conversion Venture Capital (CVC2) as financial partners and Robert Cornog Jnr and Richard Flaherty as operating partners, as part of a joint venture to aid its growth in the US. Under the terms of the agreement Cornog Jnr and Flaherty, who most recently led Punch Bowl Social, one of the “hottest” concepts in US, assumed majority ownership and lead operations of Wagamama’s existing US business as part of a 20:80 joint venture partnership, with TRG as minority partner. While the joint venture board will decide the scale of the expansion plans, Wagamama expected the new partnership to be opening between 30 and 40 restaurants over a five to six-year time period. TRG retains the option to repurchase the remaining 80% of the business starting in 2026.
London-based, cafe and deli concept Megan’s has announced plans to expand to 22 sites by the end of next year, which would almost double the size of its estate. The brand currently has 13 sites, with Dulwich Village expected to become its 14th in November, and further opening are planned in Richmond and Marlow by the end of 2021. To help with this growth, the group is looking to employ 200 more staff and recently appointed two new directors. Former Wagamama and Mitchells & Butlers operations director Christobell Harrington-Jones and ex-Cote Brasserie head of people Adam Truelove both joined the board in August. Megan’s chairman Rod McKie said: “With such a talented team in place, we are excited to be expanding the Megan’s quality cafes to more local neighbourhoods over the ensuing months.” One of the sites Megan’s will open at next year is the former Laura Ashley store in Church Street, Weybridge, while it also plans to open a second Chelsea outlet alongside its Kings Road one, opposite Chelsea & Westminster Hospital. Earlier this year, the group opened new venues at the former PizzaExpress site in Wandsworth Old Town, the ex-Le Pain Quotidien site in Chiswick High Road and a derelict 1930s cafe in Clapham Common.
Cafe bar operator Loungers has lined up an opening in Maidenhead before the end of the year. The Nick Collins-led (pictured), 180-strong, business will open the Bardo Lounge at Shanly Homes’ Waterside Quarter development in the town, in December. The addition of Bardo Lounge to the scheme follows the opening of Coppa Club nearby and artisan cafe Bakedd in the Berkshire town. Loungers reached the 180-site mark last week with two openings. The company opened a site for its Cosy Club brand in Chelmsford, followed by the opening of Claro Lounge in Ripon, North Yorkshire. Loungers has further Lounge openings lined up in Basildon, Colchester, High Wycombe and Ealing, while it also plans to open a Cosy Club site in Chester.
David Chapman, UKHospitality executive director for Wales, has blasted the Welsh government’s decision to give the thumbs-up to covid passes, warning they could be “the last straw” for some operators. From Monday, 11 October, people in Wales will need to show a pass proving they have been fully vaccinated, or had a negative covid test, to attend clubs and large-scale events. This approach, which allows people to use a negative lateral flow test to gain entry, differs from the covid passports that will be introduced in Scotland from Friday, 1 October. But Chapman, who called the move “incredibly disappointing”, said: “This decision comes despite several weeks of meetings in which UKHospitality Cymru has repeatedly made the case against covid passports because of compliance difficulties over definitions of business, concerns over conflicts with customers and a range of other implementational problems, all while the industry struggles to maintain viability and is trying to cope with desperate short staffing. Those affected businesses, already in a fragile state following repeated lockdowns and periods of onerous trading restrictions, now find themselves facing further economic and resourcing pressures. It is likely this extra burden will prove the last straw for some operators, who will be forced to finally close, resulting in job losses.” Emma McClarkin, chief Executive of the Welsh Beer & Pub Association, added: “Welsh brewers and pubs are at a critical stage in their recovery, so an early indication that covid certification will not apply to pubs is vital. Layering restrictions back on could mean businesses not surviving to the end of the year, resulting in the loss of jobs, homes and the heart of communities.” The Night Time Industries Association Cymru added: “We are disappointed the Welsh government has felt it must mandate covid passports at this stage, albeit a more liberal implementation with the inclusion of testing. We still feel these measures will have a negative impact on businesses and will create considerable market distortion.” Although England will now not go down the vaccine passport route, Downing Street warned they could be introduced if data suggests they are needed to prevent unsustainable pressure on the NHS over the winter months.
StarStock’s online marketplace, launched last month as a one-stop shop for independent hospitality operators to order directly from major drinks brands, has agreed a partnership with supermarket giant Morrisons. Pubs, bars and restaurants across the UK will now have direct access to 1,500 products from Morrisons’ Market Street counters, its own brand range and branded items. The agreement signals Morrisons’ first move into the pub, restaurant and hotels foodservice sector, using StarStock’s new ecommerce platform to give operators direct access to its range. Sam Ulph, StarStock Group founder and chief executive, said: “We are fully committed to making StarStock the platform of choice for pub, bar and restaurant operators when purchasing their food and drinks range. For too long, these businesses have been restricted by how and when they can order food and it’s time to shake this up. We’re thrilled to be working with Morrisons to give on-trade businesses access to high-quality, competitively priced food, as they continue to bounce back from what has been a devastating 18 months for the sector. The StarStock platform brings some long overdue modernisation to the hospitality supply chain as, through ground-breaking partnerships like the one we now have in place with Morrisons, it enables operators to order fresh food directly, at a time that suits them, creating a next-gen marketplace for the on-trade sector.” James Badger, online and wholesale director at Morrisons, added: “We’re excited to be working with StarStock and serving pubs, restaurants and hotels across the country through our wholesale business.”
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