Jones – we are not worried about a recession, targets 85 Soho Houses by 2027
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Henley-based pub operator Brakspear is planning to acquire one or two sites a year for Honeycomb Houses, its recently rebadged managed division, which is on track to generate sales of £17.5m in its current financial year. Last November, the Tom Davies-led (pictured) company, which also operates a circa 110-strong tenanted division, launched Honeycomb Houses, which includes ten pubs in the Cotswolds and locations around the company’s heartland, as well as The Ghyll Manor near Horsham, which it acquired in February. Davies said the nine Honeycomb pubs currently open were trading well, with sales from them set to reach circa £17.5m this year, and profit near the £4.5m mark. The business is looking to create a collection of premium sites, with a sales mix of 50% food, 30% drink and 20% accommodation, and is targeting annual returns of 10%. In terms of acquisition opportunities, the group is targeting sites that generate £35,000-£40,000 average weekly sales as a starting point. Davies said: “It is a very competitive market, but the acquisition of Ghyll Manor proves we will look outside our traditional heartland for the right opportunity. Where we can differentiate is on the size of the business we can take on and how we can use those properties. We can look at larger sites that other operators might shy away from.” Davies said the company was planning to add a further 12 bedrooms to the 28-bedroom Ghyll Manor, which it hoped to reopen in 12 months’ time. The company recently reopened The Bull in Bell Street, Henley, following an extensive refurbishment – the first investment in its managed estate since it was last year rebranded as Honeycomb Houses.
North east-based multi-site operator Howard Eggleston is to close the London site of his Tomahawk Steakhouse brand to focus on its northern expansion, Propel has learned. Eggleston has also added further to Tomahawk Steakhouse’s pipeline after agreeing a deal for a site in Nottingham. Tomahawk Steakhouse made its London debut in December 2020 when it took over Jamie Oliver’s former Fifteen restaurant site in Hoxton. But Eggleston has decided to shut the site “due to the ongoing growth of our brand, to allow ourselves to focus on our northern expansion”. Speaking at the Propel Multi-Club Conference in March, Eggleston said: “We signed for London literally a week or two before covid, and we never would have if we knew what we now do. Landing in London with a brand nobody knew was always going to be a challenge, and the idea was to put eight or ten of them together, but we just didn’t get that opportunity.” Eggleston also said at the time he was focusing his expansion plans on his Tomahawk Steakhouse and Rio Brazilian Steakhouse concepts rather than chicken-based takeaway brand Pollo. Eggleston currently operates 17 sites over the three concepts, and in February told Propel he was in funding talks to expand his estate to more than 50 sites. The next opening for the company’s core brand will be in Chester. Eggleston plans on opening a further eight sites before July including restaurants in Saltburn, Morpeth, Harrogate, Didsbury, Sunderland and Durham, with the latter two being under the Rio Brazilian Steakhouse brand.
Simmons Bars, the London-based, Lonsdale Capital Partners-backed cocktail bar operator, has secured two new sites in the capital, including the former Pillars of Hercules pub in Soho. The Nick Campbell-led (pictured) company, which currently operates 22 sites across the capital, plans to reopen the Greek Street-based Pillars of Hercules by the end of June. At the same time, the business has secured the former @Bar site in Clapham High Street, which it is aiming to open at the end of July. Campbell told Propel: “We have three more in legals that should be completing in the next couple of weeks, so we’ve got a busy year ahead. We’re still looking for more, so whenever anything good comes up, we’ll be going for it!” Established in 2013 in Kings Cross, the group last summer expressed its ambition to expand to 30 sites over the next two years with new sites both in London and regional cities.
Award-winning chef Dominic Chapman (pictured), who was formerly head chef at Heston Blumenthal’s Michelin-starred pub The Hind’s Head, is to open a second pub in Berkshire. Chapman, who opened The Beehive in the Berkshire village of White Waltham in 2014, is to take on The Crown at Burchetts Green. Chapman said the new venue, which will open soon, would be “a little restaurant with a huge personality”, featuring “seasonal food, cosy bar, fine wine and warm hospitality”. Chapman was previously head chef at The Royal Oak Paley Street, Berkshire, where he earned a Michelin star, three AA rosettes and was named The Good Food Guide’s Best Pub Chef.
Boutique bowling company Lane7 has lined up three openings, with five more in legals, as it embarks on a rapid expansion plan. Work has begun on the former Fat Bhudda site in Durham’s Walkergate Leisure Park, which the company secured in February, with another two sites confirmed to follow later this year. The Darlington-based company said it has seen a “huge growth in sales post-covid” and will be investing the cash back into the business “in the form of a rapid expansion plan”. It has set its sights on a range of major cities across the country. The privately owned brand has also invested heavily in its currently 11-strong estate, with the addition of a crazy golf course in Edinburgh plus additional bowling lanes across a range of sites. The £1.5m Durham location will include bowling lanes, cricket batting cages, darts, beer pong, basketball hoops and arcades, as well as a large bar and an outdoor seating area. Chief executive Tim Wilks said: “We came out of lockdown with an aggressive expansion plan, and it’s paid off. The sales reflect the investment we’ve made, and we continue to attract new customers in every location. Durham is the first of many new locations to come – it’s a great spot, and the anticipation from the city is an indicator that it’ll be another success for our team.” The company will also roll out its sister brand, Level X, this summer, as reported by Propel in January. The concept, which sees Lane7 enter the family entertainment centre market, has been trialled in the company’s South Shields venue, with plans to expand it nationwide.
The fish and chip industry has joined the calls for a VAT reduction, arguing it would be an “investment in the future” and not a handout. Andrew Crook, president of the National Federation of Fish Friers, told Propel: “We don’t think a temporary cut goes far enough and we are asking government for a long-term strategy for hospitality. We are seeing businesses fail at an increasing rate, some of these were maybe in trouble already but the current VAT system means the pressure is on a lodge proportion of my members who provide quality jobs and training, invest in their businesses and operate in an ethically and environmentally sound manner. All of these things put more financial burden on these businesses than others who do not and without change these business that lead my industry are the ones at most risk. With the VAT reduction during the pandemic, I think the government saw it as a handout but we would urge it to look at a reduction as an investment in the future. It’s not a handout we want, we want a fairer system that supports the very businesses we need for the future. We want to help the economy grow and the government’s levelling up agenda, and the hospitality sector can play an important role in that. Our businesses are not just jobs, it’s a way of life and all of the work we have done over the years to modernise and professionalise our iconic but fragmented industry is now at risk.” Emma McClarkin, chief executive of the British Beer & Pub Association, added: “This is a make-or-break moment for our industry as we emerge from the pandemic, but with costs of everything from energy to food and drink soaring around us, it’s becoming increasingly difficult for businesses to get back on their feet. We need the government to take action to save businesses before it’s too late.”
Tourism and recreation businesses, which includes pubs and restaurants, continued to benefit from the relaxation of covid-19 restrictions in April, according to the Lloyds Bank UK Sector Tracker. The sector posted its third consecutive month of output growth, with firms recording the second fastest rate of growth (65.0) of all 14 UK sectors monitored by the tracker in April. However, there were early indications that inflation has started to erode purchasing power and dampen consumer demand, threatening the outlook for the sector. The sector’s pace of output growth slowed month-on-month as firms reported a moderation in new business activity for the second month in a row (56.6 in April versus 63.6 in March and 64.5 in February). A reading above 50 on the tracker indicates expansion, while a reading below 50 indicates contraction. Tourism and leisure firms reported an unprecedented rise in input costs in April, driven by higher transportation, material, energy and salary expenditure. The sector registered 91.4 on the tracker’s input price index – the sharpest rate of cost inflation in 24 years of the tracker’s underlying data. Against this backdrop, almost two-thirds (63%) of firms raised prices charged to customers, leading the sector to post a record 72.9 on the tracker’s prices charged index. The gap between the tracker’s input price and prices charged indices narrowed to 18.5 points (versus 18.8 in March), suggesting that margin pressures eased slightly. However, the difference remained more than twice the pre-pandemic average, underlining a continued squeeze on profitability.
UKHospitality has urged the government to introduce an online sales tax to help reduce business rates for hospitality, but said it must ensure it avoids “double-taxation”. Downing Street is holding a consultation on introducing an online sales tax, which would help level the field for property-based industries such as hospitality. The trade body also called for such a tax to be earmarked to provide a targeted reduction to business rates for high street businesses, which it said remains one of the biggest barriers to recovery for operators looking to rebuild following the pandemic. It said an online sales tax must also have exemptions for services that are ordered online but involve delivery from a physical presence, such as hotel bookings and restaurant deliveries, to avoid a stealth “double-taxation”. And while UKHospitality said such a tax should be based on revenue through relevant online sales, it said it must be designed with an allowance below which no tax is levied. It also called for rates reductions to be achieved via a reduced multiplier for all relevant businesses and not focused solely on smaller businesses. UKHospitality chief executive, Kate Nicholls (pictured), said: “The government must ensure it avoids double taxation for businesses that deliver product on-premise, such as pubs, restaurants and hotels. The taxation system has lagged way behind the changes to the modern economy, and while we have long known that business rates is arcane and outdated, there is also an absence of an equitable system of justifiably bringing the digital economy into taxation.” Emma McClarkin, chief executive of the British Beer and Pub Association, added: “Our current taxation system is not working for breweries and pubs. We are overtaxed and paying higher business rates than most other sectors, while online retailers reap the benefits of low taxation and a booming trade.”
Delivery sales at Britain’s leading managed restaurant and pub groups in April were 357% higher than the pre-covid levels of April 2019, the latest edition of the CGA & Slerp Hospitality at Home Tracker showed. Takeaway and click-and-collect sales have also increased over the last three years, though by a much more modest rate of 26%. Combined sales of deliveries and takeaways were 114% higher than in April 2019. They accounted for around 24p in every pound spent with the managed groups participating in the tracker. However, sales have plateaued in 2022, as covid-19 restrictions eased and consumer confidence about eating-out improved. The tracker showed April’s delivery and takeaway sales were 34% below the levels of April 2021, when Britain was emerging from strict covid-19 restrictions and venues were starting to reopen. Karl Chessell, CGA’s business unit director – hospitality operators and food, EMEA, said: “While growth in sales have slowed from the peaks of covid-19 lockdowns, these figures show how deliveries have become entrenched in consumers’ habits, as they now account for almost a quarter of all spending with managed groups. Our tracker also indicates that deliveries are steadily eating into the takeaway and click-and-collect sector as consumers opt for the convenience of food and drink delivered straight to their door.”
Revolution Bars Group, which operates 67 bars trading mainly under the Revolution and Revolución de Cuba brands, is to make a return to Preston, Propel has learned. The business, led by Rob Pitcher, has secured the former Fishers premises in Fishergate, which was previously occupied by brewer and retailer Greene King. Revolution Bars Group is aiming to open the 600-capacity venue, which will operate under its eponymous brand, at the end of June, creating 50 jobs. It marks a return to the city for the group after an eight-year absence. Pitcher told Propel: “We are delighted to be bringing the Revolution brand back to Preston and can’t wait to bring our special mix of handcrafted cocktails, delicious food and the biggest party nights.” In February, Propel revealed Revolution Bars Group would open its first new site in four years with an opening in Exeter. The former Las Iguanas premises in Queen Street is set to reopen as a Revolution in June. Meanwhile, the group is set to give its Revolution site in Oxford Road, Manchester, a £144,000 makeover. It was the first Revolution to open, in 1966.
Andrew Andrea (pictured), chief executive of Marston’s, has told Propel the company’s 76-strong Two for One value food pub format has been the company’s worst performer coming out of the pandemic. Marston’s announced on Wednesday (18 May) it was transitioning away from the value food segment – Two for One brand – by the end of September. It reiterated that it was focused on three segments – Community, Revere and Signature, and the conversion of its estate to these categories over the next four years. Andrea said: “Two for One has been our worst performing format coming out of the pandemic and continues to be so, lagging by around 10% like-for-like. Oddly, given it was our deepest value proposition we have the most complaints on price and the two for one format. What we trialled was half a dozen pubs, three where we did some capex and three where we removed the Two for One signage and put a single-price point menu in – with the same dishes. Spend per head went up and customer satisfaction went up. In one pub I went to, a customer told me ‘I came here because it is no longer called Two for One’. So, something that served us really well in the past, and required big volumes to make money, now seems to be delivering a better proposition. In essence we pulled the Two for One signage off, which is getting replaced with Great Local pubs signage, and moved to a single price point menu. On top of the positive customer feedback, team members have also been positive, the chefs like it because they don’t have to deliver as many covers to deliver the same level of profitability. So, we have got team engagement and customer engagement.” In terms of prices across the business, Andrea said they had gone up on average by 8% alongside the reintroduction of the 20% rate of VAT, but he had not seen any examples of people trading down yet. He said: “I’m seeing nothing saying people want to socialise less. You might have thought people would trade down, but people are still buying the same product.”
JD Wetherspoon founder and chairman Tim Martin (pictured) and Neil Manhas, managing director at Pizza Hut UK and Ireland, are among industry leaders who have called on the government to cut VAT to help curb inflation. Inflation hit a 40-year high of 9% last month, driven by the jump in electricity and gas prices as the higher energy price cap came into effect. Martin said: “The government’s decision to return VAT to 20% in April has affected the entire hospitality industry and is a contributory factor in the rise in inflation. It does not make economic sense that food bought in pubs, restaurants and cafes attracts VAT of 20%, when food is VAT-free in supermarkets. The argument is even more valid now as the increase in VAT from 12.5% back to 20% in April has been one of the factors in the increased rate of inflation.” Greater Manchester’s night-time economy advisor Sacha Lord added: “The economic impacts of the past 24 months, from Brexit, the covid pandemic and the terrible atrocities in Ukraine, have not only exacerbated weaknesses, but have put the true instability of our economy on stark display. Businesses across the board are struggling and I know many who are making tough decisions on how and whether to survive. Some in hospitality are seeing energy bills rise to six, seven and eight thousand pounds per month, and this level of payout for businesses recovering post-pandemic, is simply unsustainable. I echo others in industry in calling on the government to implement a temporary reduction in VAT on business energy bills from 20% to 5%.” Manhas said: “These inflation figures call for more detail on how the government plans to tackle inflation and ease economic pressures on the hospitality industry, as we await a likely double-digit inflationary pressure across most aspects of our supply chain. As a global business, we can withstand the challenge ahead, however, small and independent businesses will struggle if support isn’t provided today. The key to resolving our economic difficulties is achieving nationwide growth, and hospitality is instrumental to this.”
Phil Urban (pictured), chief executive of Mitchells & Butlers (M&B), has told Propel the business is focusing on the things it can control – such as building volume and market share – and believes the sector’s customer base still has a way to go to get back to pre-pandemic levels. Despite rising costs, which M&B forecasts this year will be up about 11.5% on 2019 levels, Urban said the business would not be raising prices “above what it normally does when launching new menus” as he believed such short-term decisions would have a long-term impact. Speaking following the company’s interim results, Urban said: “There’s still a lot of our previous customer base to come back, particularly among the older generation. It’s gradually coming back – day by day it appears to be getting better and city centres are getting stronger. But we’re not blind and there’s going to be some impact from the cost-of-living crisis. But I do believe that a lot of these rising costs are temporary. I’m not saying gas and electric prices for example are going to return to exactly their previous levels, but costs will start to come down. Therefore, we want to avoid making any short-term decisions that could have a major impact. We put up prices last month by 3% when we launched new menus – and that’s something we would do anyway. Discounting is an option to drive footfall, but we won’t use them for the sake of it. All the promotions we now do generate a profit so we’re very careful about how we use that lever. If you do it all the time, then it becomes like wallpaper – and we don’t want that happening. We can’t control the macro-economic factors so we’re focusing on the things we can control and that’s building volume and market share. The work we have done with Ignite over the past couple of years has really helped when it comes to controlling costs, but we will need to work a bit harder in the current climate.” Urban also believes there is further room for growth in delivery and takeaway, where sales are estimated to rise to about £45m this year. “If you look at our highest-performing sites in that area and the lowest-performing ones, there is quite a gulf,” he said. “A lot of that seems to be down to whether the staff are on board with the idea, so we’re doing work around that, which we believe in turn will have a positive impact on the performance of those sites at the lower end. We’re also looking at doing our own delivery.” Urban said the business was continuing to invest in its Premium estate, including “Project Mandarin” at its Premium Country Dining sites. He said the refurbishments were “raising the bar that little bit higher” and were leading to customers spending longer and more in the venues. Part of the project includes introducing Browns into more suburban areas, which, as previously reported by Propel, will start this summer, with the conversion of the Vintage Inns site in Beaconsfield, Buckinghamshire. Urban said staffing continues to remain a challenge, especially on the south coast and cities such as Oxford, but the business currently has a full complement of staff. Looking ahead, Urban said: “I’m optimistic. Our balance sheet and estate has never been stronger and while inflation will be a big challenge, we’re in great shape to deal with that.”
with Mark Stretton, Mark Wingett and Kevin Hydes
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Jonathan Lawson, chief executive of Liberation Group, talks to Mark Wingett
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