M&C Report group editor Paul Charity and associate editor Mark Wingett report on this week’s chat on the pub and restaurant grapevine.
Peach looks at another Winner
It’s gone a little quiet at Peach Pub Company, the high-rated gastro-operator led by Lee Cash and Hamish Stroddart, of late. Now, though, Diary hears that expansion is on the cards again. Word is that Peach is taking a lease on Enterprise Inns’ White Horse, Harpenden, Hertfordshire, which was, at one stage, run by celebrity chef Jean Christophe Novelli but has been operated by Urban & Country Leisure of late. The pub’s major claim to fame, at least in Diary’s book, is that Novelli once settled an old score by turning away food critic Michael Winner at the door - and organising for a photographer to capture the moment.
Power talking
Music entrepreneur, Enterprise lessee and Fair Pint supporter Vince Power had a tough year 2010. His Vince Power Music Group, which includes a few Enterprise leases, went through a pre-pack in January. He personally lost no less than £7.9m, before his Power Entertainment Limited (PEL) vehicle bought assets out of administration for £600,001 with a personal guarantee attached. In an unusual deal, PEL was paying in instalments. A total of £100,000 was paid before the end of February. The company was due to pay £5,000 monthly instalments between February and July before payments climbed to £10,000 per month for two months, £15,000 per month for three months, and so on to £35,000 per month in November and December 2011. A final payment of £100,001 was due in January 2012. A report filed at Companies House by administrator Shipleys showed payments of £5,000 due in May, June and July have not been received “despite various requests”. What’s happening? Now we have the answer. A second report recently filed at Companies House by administrator Shipleys states that PEL has not adhered to the payment plan. But the administrator has generously agreed that PEL, which has paid a total of £100,000 so far out of the £205,000 due by the end of January 2011, will make a series of lower payments of £5,000 over the next nine months. Meanwhile, the administrator is talking to its legal eagles over a side-deal that PEL set up with a restaurant company called Odettes that saw a leased site sold for £400,000. Except, PEL seems then to have accepted £245,000. The administrator says: “Apparently, PEL and Odettes had entered into further discussions prior to my appointment whereby the terms of the agreement would be varied and that no further appointments would be made.” As mentioned, Sipleys and its solicitors Francis Wilks and Jones are, er, “reviewing the issue”.
Collyer gives pointers on Punch
Geof Collyer re-confirmed his reputation as one of the sector’s top tier City analysts with a 60-plus page note last week that was little short of breath-taking in terms of its depth of information. Particularly good were five or six pages setting out the bewildering array of options facing Punch Taverns boss Ian Dyson as he considers the future. The note set out the heavy burden the managed side carries from the 2004 sale-and-leaseback undertaken during its days owned by private equity - and the deal to buy Spirit in 2005 when Giles Thorley was, of course, chief executive. The part of the tenanted estate that sits in the securitisation called Punch A was saddled with almost £400m of additional debt to facilitate the deal. Collyer notes: “We estimate that, but for this, Punch A’s post interest cash flows would be almost 40% higher, and it would be out of cash trap. “Not much one can do about this now, but it does suggest that Punch’s pubco model is not structurally flawed, but suffering from previous management’s failed mergers and acquisitions strategy on buying Spirit in 2005.” It’s got to be worth at least an hour’s discussion down the pub.
Jack’s strong views on reviews
Fellow analyst Douglas Jack also published his annual 100-page sector review this week. Jack, analyst for Numis Securities, has a strong view on the current trend among large tenanted pub companies to scrap rent reviews in favour of RPI leases - some say, of course, it’s an upwards only rent review by another route. Jack says: “Not only are index-linked like-for-like rent increases unlikely to be sustainable, but there is also a risk of a pick-up in the rate of business failures.” The veteran analyst also argues that “one can’t justify re-rating Enterprise when it returns to like-for-like profit growth if this is based solely on increasing rents at a time when beer volumes are falling”. And for those who may have missed the point, he adds a little later: “Enterprise Inns need to do more to prove it can generate stable like-for-like profits on a sustainable basis.” Ouch!
Roberts goes with the swing
News that John Roberts is to leave his perch as boss of Fuller’s beer division after 15 years came as a bit of a surprise to many. Roberts, though, is looking forward to his next gig - but first there’s a chance to work on his golf swing. He tells Diary: “I am proud to be leaving behind such a strong portfolio of excellent brands and a fantastic performance of the Fuller’s Beer Company. I’ve had a a wonderful time there, but as middle age (!) kicks in I feel in need of one more new career challenge before I ride into the sunset. In the meantime though, “I’m awarding myself a well-deserved ‘career break’ during which I intend to re-introduce myself to the wife and kids and improve my golf handicap.”
Potato feast
Congratulations to Craig Hennessey of Punch Taverns lease the Queens Head Inn, for being crowned 2011 British Pie Week Pub Pie Champion by M&C’s sister publication PubChef – it looks like another staple of the national diet is about to get a shot in the arm. Word reaches us that not one but two potato-based concepts are close to securing sites in the capital. Spud is mooted to open in Covent Garden this spring, whilst Leon founder John Vincent is on the verge of securing a site for his Chipper concept.
