Eat Out Top 20

21/08/2012 12:45:00

Who are the biggest pub and restaurant groups in the UK today? Clare Riley introduces the inaugural eat out top 20 ranked by turnover with commentary from Peel Hunt and Christie + Co

There’s something very satisfying about writing a list. We use them to organise our tasks at work, they remind us what we need from the supermarket and they help us manage our increasingly busy lives. Lists can provide a sense of order, contemplation and achievement and it was this sentiment that led us to launch the eat out top 20.

The list brings together the UK’s biggest pub and restaurant groups and ranks them based on turnover. It provides recognition for companies that are often over-looked in an industry obsessed with celebrating fine dining and TV chefs.

Throughout the list you’ll find turnover figures, summaries of the companies and their best practice achievements and facts you might not have previously known.

We also asked industry analysts Peel Hunt and property experts Christie + Co to look at our list and provide their thoughts on those companies who made it onto our top 20. The commentary adds a unique perspective on our industry as they highlight factors that could impact on trading figures throughout the remainder of this year and our experts reveal who’s looking to expand in a competitive market.

The pub and restaurant groups that you’re about to read all about serve millions of meals every year to the British public who have grown to love their brands. These are the businesses that have made eating out such an important part of Britain’s culture. They may not be fine dining but they’re certainly fine businesses making the right impressions.

Eat Out Top 20
01 Mitchells & Butlers 11 The Restaurant Group
02 Whitbread 12 Nando’s
03 JD Wetherspoon 13 Tragus
04 Greene King 14 Fuller, Smith & Turner
05 Spirit 15 Orchid Pub Company
06 Enterprise Inns 16 Young’s
07 Marston’s 17 Barracuda
08 Gondola Group 18 Prezzo
09 Punch Taverns 19 Shepherd Neame
10 Stonegate Pub Company 20 wagamama

20 wagamama
Annual turnover: £102m
source: Canadean

Wagamama was founded in 1992 by Alan Yau in Bloomsbury, London. In May 2011, the company began aggressive expansion with plans to open 20 sites a year with a target of 300. Wagamama is an early adopter when it comes to technology launching an iPhone app in 2010 and free WiFi across its estate in 2011. This year the chain became the first to implement augmented reality into its venues allowing customers to scan their placemats using a smartphone.

Peel Hunt’s Nick Batram: “A highly admired business and brand with an increasing international footprint.”

Christie + Co’s Simon Chaplin: “Since the acquisition by Duke Street Capital, wagamama’s expansion has been steady and much of it overseas.”

Did you know…many of wagamama’s restaurants are belowground level making 3G signal difficult to obtain - free WiFi was therefore vital for the business.

19 Shepherd Neame
Annual turnover: £121m
source: Shepherd Neame

Shepherd Neame is primarily known for producing beers, which include cask ales, bottled ales and lagers. Its products are sold under several brand names such as Bishops Finger, Amber Ale, Christmas Ale and Late Red. Its drinks portfolio also includes wines and spirits. In 2011, Shepherd Neame partnered with Brakes to launch the Best of British competition, which was open to all its chefs.

Peel Hunt’s Nick Batram: “Family controlled company preserving the best in traditional pub values in the recovering economy of the south east.”

Christie + Co’s Neil Morgan: “Shepherd Neame continues to maintain and improve its estate in the south east with selective acquisitions, remaining the dominant force in that area.”

Did you know…Shepherd Neame has teamed up with Kent Crisps to launch a unique and very British flavour – roast beef and Spitfire Ale.

18 Prezzo
Annual turnover: £124m
source: Prezzo

Prezzo first opened in Central London in 2000. There are now more than 160 restaurants across the UK and the buildings are often listed or of local interest. Growth, growth and more growth sums up Prezzo and its recent market activity. Its restaurants are mainly based in the south of England but the company has further expansion plans, creating 350 jobs by the end of this year. Managed by the Kaye family, Prezzo also operates Chimichanga, Caffe Uno and The Ultimate Burger.

Peel Hunt’s Nick Batram: “The Kaye family are one of the most successful restaurateurs in the UK and Prezzo, run by Jonathan, is no exception. Growth got a recent boost when the company acquired a number of sites from Paramount.”

Christie + Co’s Simon Chaplin: “Having acquired a clutch of sites from Paramount in 2010 the expansion of Prezzo has continued under the guidance of Jonathan Kaye. The brand strength allows them to take slightly off-pitch locations and are becoming the "local" restaurant.”

Did you know…Prezzo serves 13 different types of pizza and 10 pasta dishes – all of which can be made either classic or light.

17 Barracuda
Annual turnover: £154m
source: Canadean

Barracuda operates over 200 managed pubs and bars. It conducts its business operations under three main brands: Smith & Jones, Varsity and Cape - offering a wide range of food such as salads and gourmet burgers, besides serving a broad range of wines, beers. Coffee sales at the pub group increased by 28% after introducing the Costa brand. And in 2011, the company announced that breakfast sales had increased 125% in 12 months after extending opening hours.

Peel Hunt’s Paul Hickman: “It has regrouped its offer mainly around the Smith & Jones brand, offering a value proposition across the UK.”

Christie + Co’s Neil Morgan: “Barracuda’s refinancing discussions continue with selective investment in its estate.”

Did you know…Barracuda recently replaced Varsity’s main website by directing traffic to the Facebook page instead – within a month there was a 17% rise in Facebook fans.

16 Young’s
Annual turnover: £179m
source: Young’s

Young and Co's Brewery began life in 1890 and now has 153 managed and 88 tenanted pubs mainly located in London and the south east. Young’s offers cask ales, specialty beers and wines in its pubs. It also offers draught beers and bottled beers under Young's Bitter, Young’s Winter Warmer and Well's Bombardier. The company has just posted revenues up 25% in what the management are calling “a landmark year” adding that the business is in “very good shape”.

Peel Hunt’s Paul Hickman: “Young’s has embraced change in the last six years with dramatic effect, exiting first the brewery and then all interests in brewing, and adding Geronimo to a fast developing retail estate. Trading is strong in a high quality and well-managed estate.”

Christie + Co’s Neil Morgan: “Following the demise of the brewing connection and the acquisition of Geronimo Inns, the focus for Young’s is on building a solid managed house estate in the M25 through acquisition and careful estate management. It’s also on the lookout for pubs with rooms.”

Did you know…Young’s acquired Rupert and Jo Clevely’s Geronimo Inns in late 2010 and the business is now fully integrated.

15 Orchid Pub Company
Annual turnover: £230m
source: Orchid

The Orchid Group was founded in 2006 and operates several restaurant and pub brands including The Living Room, Pizza Kitchen Bar, and the Oriental Restaurant Group. It is a leader when it comes to CSR and morale boosting initiatives. Orchid encourages the whole company to engage with charity fundraising and makes a point of rewarding staff via The O Card providing offers and discounts for employees. In April 2012, Orchid continued to invest in sustainability with the creation of a new energy manager role and as a result its carbon footprint has dropped 6% in six months.

Peel Hunt’s Paul Hickman: “Orchid has an eclectic mix of assets include some vibrant brands. With a sound long-term backing and reputed management, the company has significant scope.”

Christie + Co’s Neil Morgan: “Orchid is now fully controlled by Deutsche Bank and continuing to invest in its existing estate.”

Did you know…In 2011, Orchid CEO Rufus Hall was invited to present at a United Nations conference on the issue of corporate social responsibility.

14 Fuller, Smith & Turner
Annual turnover: £253m
source: Fuller’s

Fuller, Smith & Turner produces beers, wines, spirits, seasonal beers and organic beers. The company also operates pubs and hotels on a leased, self-owned or managed basis. In February this year, Fuller’s acquired 15 tenanted pubs from Enterprise Inns as Jonathan Swaine became managing director of Fuller’s Inns. In March 2012, the company opened the largest pub in a British train station at the redeveloped King’s Cross. Last year, the company launched a programme to train, challenge and develop graduates. Its aim was to see graduates managing their own Fuller's pub, with a turnover in excess of £1 million, within two years.

Peel Hunt’s Paul Hickman: “Professionally managed with enduring quality, it has strong property backing in London and the south of England. London Pride is in our view the most successful ale brand in the UK.”

Christie + Co’s Neil Morgan: “Focusing on their London managed houses with selective acquisitions.”

Did you know…Fuller’s spent £4.2 million on refurbishments in 2011.

13 Tragus
Annual turnover: £277m
source: Tragus

It’s an interesting time for the Tragus Group, which has 295 sites spread across the UK, serving over 21 million meals every year. Operating under the Café Rouge, Bella Italia and Strada, free WiFi is available courtesy of O2. In April 2012, Tragus appointed John Derkach as managing director. Speaking about his new role, the former Costa Coffee boss said he would “capitalise on the exciting growth opportunities” open to Tragus.

Peel Hunt’s Nick Batram: “A recent change at the top is perhaps a sign the investors are looking to refresh things. High street trading has been tough and the question is whether there will be a radical change in brand strategy?”

Christie + Co’s Simon Chaplin: “Much of Tragus’s recent activity has been focused on re-invigorating the Café Rouge brand and some individual key sites around the country.”

Did you know…Tragus employs over 7,300 people and the company has a training and menu development centre in Finchley, north London.

12 Nando’s
Annual turnover: £317m
source: This is Money

Nando’s operates more than 230 restaurants nationwide. Its fi rst UK restaurant was opened in Ealing, London as a takeaway, but when that didn’t prove very popular, service elements were introduced and the restaurant became the brand we know and love today. Nando’s has a strong and loyal customer base with nearly a million fans on Facebook. In 2011, the restaurant chain was named Best for Students by after winning by “a landslide”. Nando’s plans to open 25 new restaurants this year as it continues to make its mark on the casual dining scene.

Peel Hunt’s Nick Batram: “Perhaps one of the most admired operators in the UK by fellow operators and consumers alike. There are no signs that the Nando's growth story is about to end, indeed, the pur chase of GBK reflects wider ambitions.”

Christie + Co’s Simon Chaplin: “With selective disposals and the acquisition of Clapham House Group, Nando's brand continues to expand. It may need to be mindful of competitive threat from the likes of Byron and Gourmet Burger Kitchen.”

Did you know… Nando’s wine list is consistently named among the best and awards include the Decanter World Wines; International Wine Challenge; and World Wine Competition.

11 The Restaurant Group
Annual turnover: £487m
source: TRG

Operating brands such as Frankie & Benny’s, Brunning & Price, Garfunkel’s and Chiquito, The Restaurant Group (TRG) has over 400 sites. TRG’s brands can be found in leisure parks near cinemas and bowling alleys where a high volume of footfall brings in strong revenues. TRG operates at many of the UK’s airports and the group recently said that its new brand ‘Coast to Coast’ is performing “superbly” after its launch late last year in Brighton. This restaurant heavyweight has seen solid sales amid tough economic conditions.

Peel Hunt’s Nick Batram: “One of the most highly regarded leisure operators in the UK with an excellent track record of financial performance. Frankie & Benny’s is the largest branded offering within the portfolio and continues to deliver excellent returns.”

Christie + Co’s Simon Chaplin: “Best known for the brands such as Frankie & Benny’s and Garfunkel's, TRG has many strings to its bow. The main brands are wanted by landlords in any leisure/ retail scheme but it is also developing other brands which may r oll out in the future. They are also steadily expanding their quality pub estate seeking sites for Brunning & Price and have retained Christie + Co to assist with further openings planned throughout 2012 and beyond.”

Did you know…The Restaurant Group serves over 35 million meals a year.

10 Stonegate Pub Company
Annual turnover: £500m (estimated)
source: Eat Out

Stonegate operates 560 pubs and bars and is probably most well-known for buying 333 Mitchells & Butlers’ pubs when the company was formed back in 2010. The business merged with Town & City Pub Company in 2011 and has quickly established itself as a key player in the pub trade. Stonegate is a company that knows the importance of giving back with frequent charity initiatives including a £90,000 donation to Great Ormond Street Hospital last summer. Most recently, the company launched training for over 10,000 employees taking inspiration from Einstein.

Peel Hunt’s Paul Hickman: “Stonegate has strong brands and high quality unbranded pubs under focused management.”

Christie + Co’s Neil Morgan: “Having taken over the unwanted and unloved high street M&B sites, Stonegate has been steadily transforming these into a successful and profitable estate, less reliant on brands. The company is also rumoured to be interested in the acquisition of other managed pub portfolios.”

Did you know…Stonegate’s Yates’s brand launched a smartphone app in late 2011 describing its customers as “digitally astute”.

09 Punch Taverns
Annual turnover: £522m
source: Punch

Punch Taverns is one of the biggest operators of pubs across the UK and one of the first to introduce a BIIBAS Code of Practice. After demerging from Spirit in 2011, the company now operates around 5,000 pubs. Punch often hits the road in search of new licensees and in 2011 it launched an iPhone app letting potential licensees search via GPS for pubs to let anywhere across the country. In its most recent financial statement, Punch CEO Roger Whiteside said he has a “clear plan to return the core estate to growth in the mediumterm”.

Peel Hunt’s Paul Hickman: “The company is still the second largest owner of tenanted pubs in the UK and has a complex debt structure.”

Christie + Co’s Neil Morgan: “Punch is focusing on its core estate and plans on driving performance through food.”

Did you know…Punch has donated over £200,000 to 170 local causes through its Community Spirit Project.

08 Gondola Group
Annual turnover: £570m
source: Gondola

Gondola Group serves 43 million meals a year across its 650 restaurants. Its popular brands include market-leader PizzaExpress, Zizzi, ASK, Byron and Kettner’s. Gondola’s restaurants are strategically located in high footfall locations and many of the company’s initiatives are industry firsts. PizzaExpress impressed the technological world by launching an app allowing customers to pay for their meal at any time during their visit and Zizzi was the first full-service restaurant to work with Pennies – the Chip ‘N’ PIN charity – and is on course to deliver over £100,000 in electronic donations. Gondola has a strong eye for emerging brands and Byron has quickly become a widely-admired operator.

Peel Hunt’s Nick Batram: “The group is the owner of some of the UK’s best known high street restaurant brands, led by the iconic and highly regarded PizzaExpress. Byron is a relatively young and highly promising burger concept.”

Christie + Co’s Simon Chaplin: “With some of the best-known names on the High Street restaurant scene, Gondola now have another success on their hands with Byron, their quality burger chain which is expanding rapidly.”

Did you know…PizzaExpress’ lighter options menu ‘Leggera’ was approved by WeightWatchers when it was first introduced, potentially giving the brand another two million customers.

07 Marston’s
Annual turnover: £682m
source: Marston’s

Marston's produces renowned beers including Pedigree, Cumberland Ale, and Hobgoblin. The company currently operates over 2,150 tenanted, leased, franchised and managed pubs situated across local communities in England and Wales. In 2011, the number of executive directors were reduced from five to three and Alistair Darby was appointed as chief operating officer. Chairman David Thompson says that Marston’s has made good progress on three key objectives: generating sustainable growth, increasing return on capital, and reducing debt ratios.

Peel Hunt’s Paul Hickman: “Strong returns from its investment in newbuild food pubs, combined with the success of the Retail Agreement model for tenancies, have strengthened support for the dividend yield.”

Christie + Co’s Neil Morgan: “With expansion focused on new-build sites for managed houses Marston’s has been quiet on any potential group activity. And that’s unlikely to change. It will continue to roll out its franchise agreement wherever possible, and may continue to churn the estate.”

Did you know…One in four pints of premium cask ale and one in five bottles of premium ale sold in England and Wales are Marston's products.

06 Enterprise Inns
Annual turnover: £711m
source: Enterprise Inns

Enterprise Inns operates over 6,200 pubs across the country. More than 85% of Enterprise pubs offer food and in 2009 the company revealed plans to convert waste cooking oil into biofuel. Enterprise joined the Carbon Trust and it operates a code of practice for licensees, which was said to be “well-received” when it launched in 2011. Last year the company invested £250,000 in Royal Wedding celebrations aimed at helping licensees boost business. Over 500 pubs operate the iDraught system providing real-time information on volumes for each draught product, helping licensees track sales, eradicate stock and cash losses, and plan labour schedules around peak periods.

Peel Hunt’s Paul Hickman: “The shares have performed strongly on the success of pub disposals, reducing the risk that Enterprise will not be able to manage its debt obligations going forward.”

Christie + Co’s Neil Morgan: “Enterprise is continuing to pay down debt. There has been selective disposals at the right price with suggestions of a number of packaged deals to be completed prior to September.”

Did you know…Enterprise Inns was founded by Ted Tuppen in 1991, initially acquiring 368 pubs from Bass.

05 Spirit
Annual turnover: £734m
source: Spirit

Spirit, which demerged from Punch Taverns in 2011, operates over 800 pubs in the UK employing 17,000 people. Another 459 are leased to licensees with the backing of Spirit. It’s brands are known for value and include Chef & Brewer, Fayre & Square and Flaming Grill. The company has a strong CSR ethos and actively supports its employees. Most recently, Spirit launched an apprenticeship programme for deputy general managers and added a dedicated recruitment website to its digital offering. In February 2012, chief executive Mike Tye urged people not to write of f the pub business and predicted a “revival”. He aims to double the size of Spirit within 10 years.

Peel Hunt’s Paul Hickman: “Spirit has made a strong early impression realising excellent returns from under-invested pubs, which is generating earnings growth independent of the challenging environment.”

Christie + Co’s Neil Morgan: “Released from the shackles of Punch, the Spirit estate is looking to fi ne tune the offer and even expand brands going forward. Around 80 disposals have already been announced from the Spirit leased estate.”

Did you know…98% of Spirit pubs have smart meters installed and 86% have energy-efficient lightbulbs.

04 Greene King
Annual turnover: £1.042bn
source: Greene King

Greene King manages over 2,400 venues across the UK including Loch Fyne, Hungry Horse and Old English Inns. In 2011, Greene King made several acquisitions buying Cloverleaf, Realpubs and the Capital Pub Company. The company is an avid supporter of CSR initiatives. In March this year, The Three Stags pub in London was been awarded a three star rating from the Sustainable Restaurant Association and Greene King has just launched a new fundraising partnership with Macmillan Cancer Support. Online e-learning modules are now available for staff and in May induction training was remodelled.

Peel Hunt’s Paul Hickman: “GK is successfully delivering earnings growth and dividend income. Organic growth, driven by development of brands such as Hungry Horse is complemented by acquisitions such as Capital Pubs and Realpubs.”

Christie + Co’s Neil Morgan: “With an estate that encompasses tenancies, leases and managed houses Greene King has expanded aggressively and will develop Hungry Horse due to its value offer in these austere times.”

Did you know…Greene King became the main shirt sponsor for Mansfield Town Football Club in June 2011.

03 JD Wetherspoon
Annual turnover: £1.072bn
source: JD Wetherspoon

JD Wetherspoon is one of the UK’s best loved pub companies. Its founder and chairman Tim Martin started it with a single pub in 1979 and has grown the business into a market leader operating 835 pubs. The company was named after Martin’s teacher in New Zealand who told him he’d never make it as a businessman. The chairman’s vocal support of the pub trade and his anti-government stance has won him many fans and he’s recently signed up to the British Beer and Pub Association. JD Wetherspoon has demonstrated its ability to anticipate industry changes ahead of time and a prime example of this was when Martin made all his pubs non-smoking well before the smoking ban law. In 2011, the company was named as one of the UK’s top employers with judges saying: “Wetherspoon's open lines of communication and training opportunities exceed the industry norm with bonus and share options for almost all employees.” Last year, the company surpassed sales over £1 billion for the first time but has recently slowed expansion after seeing its tax bill jump by £50 million. JD Wetherspoon has a longstanding charity partnership with CLIC Sargent and has raised over £5 million since 2002.

Peel Hunt’s Paul Hickman: “JD Wetherspoon has performed relatively well during the recession, and its value-led brand has increasingly moved into the mainstream. Very cash productive, although it needs volume to protect a low operating margin. Currently curbing the number of openings while maintaining earnings growth by buying back its own shares.”

Christie + Co’s Neil Morgan: “JD Wetherspoon has sensibly re-evaluated its expansion plans with selective acquisitions.”

Did you know…In 2004, JD Wetherspoon opened a national distribution centre in Daventry becoming the first pub company to consolidate its deliveries in such a way.

02 Whitbread
Annual turnover: £1.778bn
source: Whitbread

Whitbread was first founded in 1742 and in 1948 listed on the London Stock Exchange. The former owner of T.G.I Friday’s and Pizza Hut now runs several brands including Costa Coffee, Table Table, Brewers Fayre and Beefeater Grill. The company serves 19 million customers every month and business is currently booming with both revenue and pre-tax profits up 11% on 2010/11. Whitbread has a very strong CSR strategy and uses its ‘Good Together’ programme to promote staff, community, environment and customer well-being. In 2010, Premier Inn and Beefeater Grill opened low-carbon sites in Burgess Hill, West Sussex. The venues use solar panels, rainwater harvesting and ground-source heat pumps, which use the earth's natural energy to cool and heat the bedrooms and restaurant, as well as providing hot water. Whitbread staff vote for a charity partner every year and this year’s fundraising will benefit Great Ormond Street Hospital. Last year, £1.3 million was raised for WaterAid after staff, suppliers and customers got behind the cause. The business is a strong supporter of its employees and in February this year it launched three food and beverage academies and will create 10,000 new jobs in the UK by 2015.

Peel Hunt’s Paul Hickman: “Regarded as a bellwether leisure investment, although its main strength is its Premier Inn brand. The restaurant brands, which are relatively small in terms of profitability, have struggled to show independent performance.”

Christie & Co’s Neil Morgan: “While Whitbread is largely focusing its attention on expanding Costa Coffee and Premier Inn brands, there is little activity on the pub/ restaurant side of the business.”

Did you know…Beefeater Grill has launched a points-based loyalty card rewarding customers with five points for every £1 they spend on food and drink.

01 Mitchells & Butlers
Annual turnover: £1.796bn
source: M&B

Serving 125 million meals and 435 million drinks a year, Mitchells & Butlers is the juggernaut of the pub trade. Operating over 1,600 pubs nationwide, its brands include Crown Carveries, Harvester Salad & Grill, Ember Inns, O’Neill’s, Miller & Carter, Toby Carvery and All Bar One. Over 90% of all its brands have guest satisfaction rates above 90% and the average price of a main meal is under £8. Free WiFi is available across the whole estate and the company recently celebrated its 1,000th Cask Marque accreditation at the Rose & Crown in Sevenoaks, Kent. M&B is another staunch supporter of its employees and last year the business trained and recruited 14,000 people under the age of 21. In February 2012, 13 M&B retail business managers and 33 retail managers graduated from the company’s Postgraduate Diploma and Postgraduate Certificate in Multi-Unit Leadership & Strategy, developed in partnership with Birmingham City University. Its CSR strategy is widely-publicised and in 2011 M&B donated over £350,000 to worthy causes through corporate donations and employee fundraising. The pub company recycles over 38,000 tonnes of waste every year and in April 2012 M&B was officially awarded the Carbon Trust Standard for the second time. Turnover figures in 2011 were impressive at well over £1.5 billion but half year pre-tax profits announced in May 2012 fell by £1 million to £42 million, which the operator blamed on recent heavy rainfall. Over the last few years, the company’s executive board has been described as a “r evolving door” after significant changes were made to the way it runs its business. M&B swapped its three-channel structure for nine brand groups in November 2011 with each respective brand operations director reporting into the main operations director Robin Young. The business has been without a chief executive since March 2011 when Adam Fowle surprised the industry with his resignation. Chairman Bob Ivell says the search for a chief executive is “progressing well” but more detailed information is yet to be announced.

Peel Hunt’s Paul Hickman: “M&B is admired as an operator, but its attraction as an investment has faltered due to board instability and the unusual shareholder structure with a few individuals dominating the list. Currently going through a major change programme.”

Christie + Co’s Neil Morgan: “Despite the boardroom dramas M&B has continued to push their expansion and realign the brands. Toby, Browns and Harvester look to be the key drivers with new style Toby Carverys and even takeaways being opened. Browns is the high street brand and Harvester still target s the family market. Much of the expansion is being done by using the existing estate or new builds, including leisure/retail parks.”

Did you know…Mitchells & Butlers employs over 16,000 members of staff aged 16 to 24 and the company aims to create 3,000 new jobs this year.

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