Propel Quarterly Winter 2016

Page 1


Propel www.propelinfonews. com

ISSUE 17 • WINTER 2016


MAN CITY v CHELSEA Sat 3 Dec, 12.30pm Premier League

MAN UTD v TOTTENHAM Sun 11 Dec, 2.15pm Premier League

MAN CITY v ARSENAL Sun 18 Dec, 4pm Premier League

EVERTON v LIVERPOOL Mon 19 Dec, 8pm Premier League

NEWCASTLE v SHEFFIELD WEDNESDAY Mon 26 Dec, 7.45pm Sky Bet Championship

LIVERPOOL v STOKE Tue 27 Dec, 5.15pm Premier League

SOUTHAMPTON v TOTTENHAM Wed 28 Dec, 7.45pm Premier League

RANGERS v CELTIC Sat 31 Dec, 12.15pm Scottish Premiership

TOTTENHAM v CHELSEA Wed 4 Jan, 8pm Premier League

Plus, so much more live sport, including:

ENGLAND v AUSTRALIA Sat 3 Dec, 2.30pm International Rugby

INDIA v ENGLAND Thur 8 - Mon 12 Dec International Test Cricket


A feast of festive football with all the trimmings

Call 08448 245 670 Comparison refers to all live Premier League, EFL and SPFL football on Sky Sports vs BT Sport from 1st Dec 2016 to 4th Jan 2017. Sky Sports requires a Sky subscription, equipment and installation. Further terms apply. Calls to Sky cost 7p per minute plus your provider’s access charge. Fixtures correct at time of print: 09.11.2016 and may be subject to change.

uarterly The essential information resource for pub, restaurant & foodservice operators

Cutting the Mustard West End operators Lawrence Hartley and Tim Healy on their new project

Inside: Nathan Lowry interview Because you’re worth it? A letter to ‘The Donald’ Satisfying our ‘light’ appetites Ten emotional moments of truth Taxing – and benchmarking success Think smart Northern soul


ISSUE 17 • WINTER 2016

Editor’s Opinion

Editor’s Opinion

Threats and opportunities Dear Reader This is a uniquely challenging period, with the emergence of a host of new threats but also plenty of opportunities. On the threats side of the equation we have an unprecedented set of new challenges emerging in the form of regulatory costs – business rates hikes, the ratcheting up of wage levels and rents reaching new heights. London operator Young's has reported that business rate hikes would add an extra £5m to costs over the next five years, a rise chief executive Patrick Dardis described as "ludicrous" and a punishment for those operators that have created profitable businesses through heavy investment. Glendola Leisure has already been forced to sell its Rainforest Cafe site in Piccadilly after 19 years of operation because its rent bill has shot up by circa 50% to £1.5m. One leisure analyst, Tim Barrett of Numis Securities, has described the various pressures as an unprecedented margin threat. He calculated that Mitchells & Butlers alone faces additional costs of £14m for National Living Wage and £10m for business rates. He added: "Together this represents 110 basis points of margin attrition. We estimate total cost inflation of 3% to 3.5%, meaning like-for-like sales growth of at least 4% will be required to be margin neutral next year. Most operators plan to pass this on via price increases after several years of price restraint. We view this as sensible. While it may provide a welcome stimulus to like-forlikes, the danger is that imported inflation on consumer staples and fuel erodes consumer discretionary disposable income." On the opportunities side, there are new and exciting marketing channels, the opening up of new and cost-effective third-party delivery opportunities as well as new funding routes, particularly helpful for small and medium-sized operators. One clear theme of the past two years has been an intensification of competition within the sector – CGA Peach claimed the market saw 16 new concepts opening every week last year. Our own database at Propel indicates we now have more than 1,000 five-site-plus multi-site foodservice companies now operating in the UK market. What has become clear is that the UK market increasingly apes the US market, where mature brands face pressure from new and emerging brands that are often more agile and more able to meet the demands of ever more demanding customers. Large companies will need to focus on their best sites and it’s no coincidence that JD Wetherspoon, Mitchells & Butlers and The Restaurant Group have all been trying to sell dozens of sites from the bottom end of their estates. In this climate, it has become harder, although far from impossible, to grow sales. McDonald's in the UK is an example of a mature brand that has achieved continuous sales growth for a number of years, with the rest of the McDonald's global business attempting to learn the lessons from the UK business. The UK market has, this year, already witnessed the dangers of brand over-expansion with Ed's Easy Diner and Burger & Lobster both having to retrench after ill-advised openings. The market is, of course, very likely to see other examples in the coming couple of years, not least because the aforementioned cost pressures will increasingly punish those operators whose margins are already too slim. What is needed in this context is a mindset of constant restlessness, dissatisfaction, mild paranoia – and a willingness and ability to evolve at speed. This needs to be underpinned by ever-tighter control of costs – and speedy adoption of the technologies that create efficiency. It’s very much game on. Best wishes,

Paul Paul Charity ¡ WINTER 2016 ¡ PROPEL QUARTERLY





Contents 08

Difference in Taste


West End boys cut the Mustard


Propel Multi Club


It’s all about the bread


Ten emotional moments of truth


Think smart


Satisfying our ‘light’ appetites


Because you’re worth it?


The changing face of guest experience management

Glynn Davis talks to Nathan Lowry

John Porter interviews Lawrence Hartley and Tim Healy

in pictures

by Glynn Davis

by Chris Edger and Tony Hughes

by Ian Dunstall

by Cyril Lavenant

by David Martin

by Steven Pike





Northern soul


Dusk ’til Dawn


Bar & Nightclub Conference


Taxing – and benchmarking success


EPOS is dead, long live EPOS


A letter to ‘The Donald’


What millennials DON’T want


News Digest

Published by Propel Hospitality The Goose House, Brighton Road Lower Beeding, West Sussex RH13 6NQ

Director Jo Charity T: 01444 810304 E:

Managing Director Paul Charity T: 01444 810306 E:

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Managing Editor Paul Bishop T: 01444 817690 E:

Events Co-ordinator Anne Steele T: 01444 817691 E:

Deputy Editor Martin Cooper T: 01444 817689 E:

Design & Production Jonathan Taylor T: 01403 892685 E:


by James Hacon

in pictures


by Kate Nicholls

by Gareth Powell

by Paul Chase

by Ann Elliott

a selection of Propel Morning Briefing exclusives Contributors Paul Chase, Glynn Davis, Ian Dunstall, Chris Edger, Ann Elliott, James Hacon, Tony Hughes, Cyril Lavenant, David Martin, Kate Nicholls, Steven Pike, John Porter, Gareth Powell Printing and Distribution Evonprint, Mackley Estate, Henfield Road, Small Dole, West Sussex, BN5 9XR

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Shepherd Market Wine House

Pall Mall Fine Wine

Difference in Taste T

o look at the Royal Opera Arcade in central London from the outside it looks like a regular Victorian shopping thoroughfare that might house the usual high-end art and a smattering of expensive jewellery and artefact shops. And it does. But it is also home to two rather unusual bars. Pall Mall Fine Wine and the London Beer House are at opposite ends of the arcade and are equally apart in their offerings. The only idea you get that they are linked in any way whatsoever is when you try to use the lavatory in the London Beer House. It has an “out of order” sign with the suggestion you use the facilities at Pall Mall Fine Wine instead.

Cross-pollination This sharing of services is down to the fact they are owned by the same company – Taste Wine Group – founded by Nathan Lowry, who says: “They have been closed for weeks and we’re in no rush to mend them. Their breaking down has been a blessing in disguise because it has introduced the wine bar to the beer drinkers. It’s great cross-pollination.” Such synergies are not that easy to find in Taste Wine Group, which operates six venues, because Lowry has been building a collection of outlets in the capital rather than a chain. They have little in common apart from the fact they are all very different. They all look like wholly independent operations and have few peers in the industry.


Glynn Davis talks to Nathan Lowry about how he has rapidly grown Taste Wine Group to encompass a widely varying collection of London venues, and says the company is the perfect indicator on how to mix things up a little and give landlords something out of the ordinary


Although Pall Mall Fine Wine set the ball rolling for Lowry, with its opening four years ago, he has some form in the leisure industry. He recalls “I’ve done bars, pubs, clubs [including running famous music venue The Marquee] and I also located sites as a freelance for various operators. And I would always think: ‘What would I do with it?’.” When he took over the unit – a former antique shop “with two customers a day” – he knew a wine-focused venue would need to differentiate itself to be successful. The initial thinking was more a retail unit than a bar. “I’d watched normal wine shops being killed by supermarkets so I knew you needed to be individual,” he says, adding that the magic ingredient was the decision to take a hybrid approach to operate as part shop and part wine bar. “You need interesting wines and a format that enables you to explain them. “We weren’t sure how it would work. We started mainly as a shop but then added more wines to consume on-premise. Then we started hosting events and put in the outdoor seats [in the covered arcade].” A hefty 75% of sales are now on-premise drinking and the best customers also take bottles away. Lowry says: “They’ll take one bottle away and then order a case. The ultimate customers also do Christmas. We make a trusted friend of them during the year and in November and December we’re their ‘wine place’. Takeaway then goes to 50% of sales.” ▲


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Feature Although drink is the primary focus, cheese and charcuterie also play a vital role – and account for 20% of sales – as it “keeps people on the premises”. Lowry says: “You only need the smallest food offering but it has to be good quality. People don’t come into the place and say ‘I’ll have some cheese and charcuterie’ they come for the wine. But on a Thursday at 6pm, if one person orders a platter then all the tables will follow.” With constant testing and tweaking of the unit over a threeyear period Lowry effectively built a loose template from which he could roll-out the idea. This resulted in Shepherd Market Wine House, which was formerly a hairdresser and dry cleaners. “Although the units look different, they are largely the same [model], with the same vibe, and same passionate staff with wine knowledge,” says Lowry. I suspect Lowry would be bored with simply rolling out the same outlets, hence the radical diversion he took with the London Beer House 18 months ago, with its mere 300 square feet of trading space serving a revolving mix of beer from nine taps and a bottle selection. He says:“I knew about real [cask] ale but not about craft beer. I knew I needed to know about it. I brought in Gary Furey as operations manager who has a passion for craft beer and we just trialled things and it was [immediately] flavour of the month. It’s 100% wet and it’s gone great guns.”

Such was the appeal of the two units in the Royal Opera Arcade, two regulars who worked at investment firm Blackstone suggested Lowry take on a vacant unit it owned at St Katharine Docks in east London. “They offered me the Traders unit because St Katharine was looking tired and dated and they wanted some new independents in,” he says, adding that what he has since created very much adheres to the hybrid model. “There’s a big wine wall with 1,000 square feet on one floor and decking overlooking the marina. There is a shop element and a sit-down area [with 50 covers] and, again, 75% of sales is consume-on-premise.”

Attractive units This desire from landlords for differentiated independents also led to Taste Wine Group being approached by other big-time London property players to potentially take attractive units instead of letting them to larger operators. Lowry says: “They have been approaching us as they don’t want identikit businesses. People want individual drinks and interesting places to go so independent operators are being approached. For us, it’s been a case of giving it a try and seeing if it works.” Hence the recent opening of Pavilion Wine, which is part of a new Cadogan Estates development in Chelsea that sought to reintroduce traditional retailers such as a butcher’s, bakery and greengrocer to the area. It was interested in Lowry taking one of the units and the downstairs of the Pavilion outlet is now a wine store, while upstairs is an airy bar. A delivery service to the local wealthy clientele also figures in the mix. Lowry says: “We’ve a passing trade who’ll try a wine and then order a case so we’ll be doing local deliveries with our own van – a Mega Electric van – like the one used by Mount Street Deli. It will be a food and wine delivery service involving some of the other units.”

“Named the Takeover Bar & Club the intention is to offer a range of craft beers from different breweries that will “take over” the taps for a period” Pall Mall Fine Wine

With these openings, along with Southwark Wine in Bankside Arches, all concentrated in the middle of the year, the business had been on a roll. And then it was approached again – this time by Soho Estates – to take on a prime unit in Greek Street, Soho. Lowry says: “It wanted a safe pair of hands who was independent and so they asked us if we were interested. It has a 3am licence and capacity for 250 so there would have been big demand for it.” Named the Takeover Bar & Club the intention is to offer a range of craft beers from different breweries that will “take over” the taps for a period. There are presently nine beer taps and three for wine.

Experiment with concepts Shepherd Market Wine House

Pall Mall Fine Wine


There is also an opportunity for the space to be utilised by promoters and hosts for various other events. It is very much a work in progress and is undoubtedly playing to the strengths of Lowry in his capacity to experiment with concepts to test out what works best. As if his plate was not full enough with four units opened this year alone, he admits to being on “constant lookout for new sites” and indicates another is in the pipeline. Tantalising glimpses of artists’ impressions of a unit in County Hall on the South Bank of the Thames can be found on the group’s website, suggesting the portfolio will be growing again very soon. Taste Wine Group is certainly a very good indicator of the appeal of the independent operator that is prepared to mix things up a little and give landlords something a little out of the ordinary. They know this is what most excites customers today as the company increasingly seeks out differentiated eating and drinking experiences.

Glynn Davis is a leading commentator on retail trends



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West End boys cut the Mustard

Tim Healy (left) and Lawrence Hartley


he fact London has one of the most competitive restaurant markets in the world, particularly in the casual dining sector, will hardly come as news to operators. For Joe Allen, the iconic Covent Garden restaurant that was a pioneer of the much-copied American-style diner format, the boom in the non-formal sector means it has definitely seen competition increase during the past few years. As the Joe Allen site approaches its 40th anniversary, the basement venue in Exeter Street, Covent Garden, remains far more unprepossessing from the outside than most restaurants in the area, although it is now advertised by a sign inviting diners to “Eat at Joe’s” rather than the original nondescript brass plaque. Lawrence Hartley, who with fellow managing partner Tim Healy took on Joe Allen and nearby restaurant Orso in 2012, ticks off the competition that has set up shop in the area. Hartley says: “In the four years we’ve been here with these two lovely little restaurants we’ve had, in no particular order, The Ivy Market Grill, Balthazar, Cicchetti, Murano, Bill’s, the Opera Tavern and Bodean’s open within a ▲

Lawrence Hartley and Tim Healy tell John Porter how they plan to cross-pollinate their iconic Covent Garden venues, Joe Allen and Orso, and plans for their latest project Mustard




Joe Allen, Covent Garden stone’s throw. Some of those buildings weren’t even restaurants before, so they’re all adding seats and biting into your market.” Such intense competition – not only for customers but also for sites and staff – is one reason why Hartley and Healy’s latest venture, Mustard, takes them away from the West End and out to the arguably less glamorous locale of Brook Green, between Shepherd’s Bush and Hammersmith.

Hey Joe! Joe Allen opened in 1977, with its exposed brickwork, wood panelling, and long, woodclad bar – all design cues that have been widely borrowed since – themselves a close replica of the original New York restaurant opened by Joe Allen himself in 1965. Like the off-Broadway original, the Covent Garden restaurant became a kind of staff canteen for West End actors, with theatrical posters and photographs of famous customers adorning the walls. Joe Allen became known for American classics, including an off-menu “secret” hamburger and a drinks range including cocktails. Orso, which opened with an entrance around the corner in Wellington Street in 1985, was one of London’s modern breed of Italian restaurants, focusing on lighter dishes with the aim to showcase the best Italian produce. By 2012, however, Joe Allen and Orso were looking for a white knight. Healy and Hartley were separately running restaurants in south west London – in Hartley’s case Brula in St Margarets, while Healy operated A Cena in Twickenham. They were invited to become part of a consortium set up to acquire Joe Allen and Orso and headed by Carluccio’s co-founder Stephen Gee. Healy and Hartley had both worked in central London restaurants and knew the Joe Allen business – in fact, Healy had been taken there as a child by his late father and actor David Healy. Hartley says: “I’d made quite a few friends in the restaurant business. When Joe Allen came up there were six of us involved, all restaurateurs, from which they wanted two of us to be operational partners, Tim and I.” Asked about the state of the business at that


“We had to make what was basically a well-loved concept into a proper business, while at the same time keeping all the things that made us loved”


time, Hartley says diplomatically: “It wouldn’t have been for sale if it was doing well. It was tired; it needed resuscitation but it didn’t need to change its identity. For us, that was an interesting challenge. We had something you couldn’t buy in a million years, which is the love for Joe Allen, as well as for Orso. It was risky, but I think starting a new restaurant is probably riskier in this market.” The Joe Allen menu has been refreshed rather than overhauled, with classic prawn cocktail, creamy mac ‘n’ cheese, crab and avocado salad, spiced baby back ribs and 28 day-aged British rib eye on offer. The signature burger is still off-menu and only for diners in the know, while the drinks range includes quality American and European wines, as well as cocktails and craft beer. A piano also remains part of the offer, although the original pianist, who only worked from 9pm to 1am, has passed away. This does, however, mean music is now also played to the pre-theatre dinner crowd, who might be persuaded to return later. More robust back office systems mean income generated by the business is better managed – “all we inherited was three massive safes” – but the basic approach has been evolution rather than revolution. Hartley says: “We had to make what was basically a wellloved concept into a proper business, while at the same time keeping all the things that made us loved.” One area of investment has been PR and marketing support, which has helped to attract a new generation of customers to supplement the original, but gently ageing, Joe Allen customer base. Hartley says: “Price point was another issue, the perceived value wasn’t that great at the beginning, and it is now. Everything you get for your pound is now there, and customers understand that.” The upshot, he adds, is that at Joe Allen during the past year “we had 3% growth”. He says: “To say that of a restaurant of that age in this economic climate is something we’re very proud of.” However, he concedes that Orso is “not there at all”, with sales broadly flat. ▲

Main course at Mustard

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Feature All about Orso The menu at Orso, featuring seasonal Milanese cuisine such as zucchini fritti, grilled asparagus, risotto primavera, and veal chops, is very different to Joe Allen. So too is the ambience, with crisp white tablecloths and terracotta walls, although the photographs of stage actors on the wall reflects its locale and common ownership with Joe Allen, which is literally on the other side of Orso’s basement wall. Hartley sets out the differences between the two businesses. “Joe Allen is very luvvy, and appealed to a certain age set,” he says. “Our job when we took it over was to bridge that with a more youthful customer, and that was easy to do because of the Amerciana boom – everybody likes a rib or a hamburger – so we could piggy-back that quite a bit. Joe Allen’s cool, it has got the pianist, the secret hamburger, and we do comedy. “Orso is more about hand-me downs – it’s passed from mother to daughter, lawyer to apprentice, politician to biographer. Orso was very trendy when it opened in the 1980s, but that market has changed hugely. “Publishing is one of our largest customer bases, but that’s not what it was. People are more measured, and those classic ‘lock-in lunches’ just happen at Christmas now. In the old days getting people out of the restaurant and back to the office was a hard thing to do. “Orso is a different kettle of fish to Joe Allen, it doesn’t have the same story. We thought there was a lot more crossover when we bought the business than there actually is. The number of people who don’t know the two are associated is phenomenal. We initially wanted to keep them separate, but as we progress we now want to cross-pollinate them a little more.” The most popular products at the venues also differ. At Joe Allen it’s burgers, steaks, chicken and ribs, while at Orso it’s liver, pork belly, calamari, mozzarella – “but what they have in common is they are the dishes everybody likes, as much as we might want to be more original”.

Moving on Mustard At Hartley and Healy’s new venture, Mustard, head chef Jason Wild oversees a British-style brasserie with an all-day menu featuring locally sourced produce and dishes such as smoked haddock, spinach, kale and potato omelette,

Orso, Wellington Street, London

“We initially wanted to keep (Joe Allen and Orso) separate, but as we progress we now want to cross-pollinate them a little more”

and duck eggs on toast. They are joined by an a la carte menu, from lunch to dinner, featuring dishes such as Highland beef and Middle White pork rib. The drinks list includes beers from west London’s Portobello Brewery, English sparkling wine, and English craft spirits as the heart of a bespoke cocktail menu of drinks such as Vodka Marmalade Martini and Hedgerow Fizz. So what tempted them to the Shepherd’s Bush Road site, a former Café Rouge? “Temptation is a strong word – settling is a better one,” says Hartley. “In spite of all our contacts, it’s actually been incredibly difficult to get a property where we wanted. We got gazumped twice in Putney and once in Fulham Road, so we ended up looking at places the big boys didn’t want. We liked the building and thought we could do something with it very affordably. We have a big focus on British produce and it bridges the gap between ‘town’ and our old customers in south west London.” As trading hours expand, Hartley makes the point that “all the casual dining groups are going through the same challenge of delineating the different parts of the day”, with Mustard having changed its approach since opening in July. “I don’t think the menu was ‘evening’ enough for local residents to want to come out, we feel we can offer something more special,” he says. In pricing terms, “we’ve gone mid-market, it’s comparable to a Cote or Bill’s”.

Recruiting and retaining chefs

Orso, Wellington Street, London



At this point, Healy joins the conversation as the topic turns to the perennial challenge of chef recruitment. He says: “It’s the industry it is. If you want to become a chef then it’s hard work.” Hartley adds: “Front-of-house is a little ▲

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Mustard, Shepherd’s Bush Road, Brook Green, London

bit easier – I think people fall into it, with low expectations coming in and high expectations staying. I think it’s the reverse in the kitchen, they have high expectations going in and it’s worse when they’re working. It’s not glamorous – it’s hot, sweaty and demanding.” Healy says: “They see the celebrity chefs but, when you start out in the kitchen, it’s a routine. You might be cutting veg in the same way for three years, and it’s that monotony that’s difficult. It’s early mornings and late nights, double shifts, people get sick so you’ve got to cover – it’s relentless. It’s a slow career path and you’ve got to put in the hours to get yourself to a point where you’re respected.” However, one advantage of the casual dining boom is it has created a new wave of suppliers offering high-quality produce with the aim of bridging the skills gap. Healy says: “There are now some fantastic artisanal products you can outsource. We buy in meat and fish as a portion, so we’ve outsourced that skill. It’s also more cost effective, so that when you’re looking at gross profits (GP) it’s easier to keep track. It’s deskilling in a way – but we don’t compromise on flavour or quality. Somebody who hasn’t had a huge amount of training can work with the product.”

“When you look at the entrepreneurship coming through – whether it’s Byron, Patty & Bun, Franca Manco – all their products are deskilled, and it’s allowed them to grow very quickly.” Hartley adds: “The difficulty of getting the skill set is offset by the quality of produce you couldn’t buy before, and that has boomed because you have the casual dining market expanding at such a rate. At Mustard, we have a carrot cake made by (Devon-based) Salcombe Dairy, that’s a nice story and I think people are comfortable with that. Consumers care about the provenance but they don’t necessarily care about how it’s arrived at the restaurant. “When you look at the entrepreneurship coming through – whether it’s Byron, Patty & Bun, Franca Manco – all their products are deskilled, and it’s allowed them to grow very quickly.”

Point of difference The development of a production kitchen in central London has helped to ensure quality and consistency for the business, while maintaining a food offer that is a cut above the increased competition. Hartley says: “We put the most energy into our signature dishes, because that’s where our point of ▲



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Feature difference is. So for the ribs at Joe Allen, and the chilli, we don’t buy in the sauce or the marinade, we make it ourselves, because that’s key. “Our burger is all about good sourcing – it’s about getting the right patty, the right bun and the right veg. The flavour of the burger is of tenfold importance because it’s not on the menu, so it’s all added value. By ordering it, you’re in the club, so it has to be consistently good.” Healy adds: “Consistency is one of the biggest issues in any kitchen. You can create a menu and develop a dish but unless it’s consistent day to day, week to week, and month to month, you get crucified.” Hartley says: “The production kitchen does bulk preparation but has to follow very refined recipes in detail, and then you have the line that executes it, and those are two very different animals. Those people in production have a finer touch, while those on the line have to do as they’re told.” Healy adds: “There’s a picture of every dish on the menu, with the ingredients, the weight and methodology and the GP expected, and it’s absolutely consistent.” Procurement is also under the microscope; while some products are specific to one site across the business. Hartley says: “I think I give the chefs too much freedom and I’m trying to rein it in. We know where we get the best freerange chicken from, and all the restaurants need to buy from there.” As the industry’s costs rise, these greater controls become essential to staying in business. Hartley says: “Every casual dining operator I speak to tells the same story. Rent used to be 7% of costs, now its 12%; labour used to be 25%, now it’s 31%.” The production kitchen approach means the business is hitting target GP of about 75%. Hartley says: “We have very good friends in the business, and we all talk about this all the time. They’ve got the same problems – stakeholder pensions, the minimum wage, produce costs, rates, all these rising costs, and the only significant difference we can make to productivity is to the GP. Tim and I drive a much more aggressive GP than some of our peers, because you’ve got to make your margin somewhere.”

Mustard, Shepherd’s Bush Road, Brook Green, London

“What distinguishes us is that we put our heart, soul, and love into the business”

believe the “old school” casual dining approach exemplified by Joe Allen is very much back in vogue. Healy says: “Mustard isn’t a brand, it’s not like a rubber stamp. We morph into space. Until you have the offer right in the first one, you don’t know what’s around the corner. “What distinguishes us is that we put our heart, soul, and love into the business. It’s not just about ka-ching in tills, it’s that we can be proud of something that’s built because of our experience and understanding. One minute we were out in the sticks, the next we were here in these two iconic restaurants.” While food trends come and go, Healy sums up: “Ultimately, you want to go out and have a nice meal, and you want the right restaurant for that occasion. Joe Allen is the ultimate eatingout experience. You’re greeted with a smile, asked if you want to have a drink at the bar, then you get your table – and it’s all good. It’s the real McCoy, every other one out there is a pretender. There were no other restaurants like this before Joe Allen.”

Expansion These challenges have implications as the pair look at the possibility of further expansion. When Mustard first opened, there were suggestions it could be the start of a roll-out for a neighbourhood dining concept. The pair are now more cautious on expansion plans, suggesting further integration and driving efficiencies across existing restaurants is a priority. There is a strong focus on staff retention and internal development. Hartley says: “Cultural training and communication is really important. We have daily briefings and we offer lots of management courses. I think we have a very good retention rate, although it’s hard to get a figure out of other people.” However, Hartley and Healy are ambitious, fully expect further opportunities to arise, and ¡ WINTER 2016 ¡ PROPEL QUARTERLY


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It’s all about the bread Glynn Davis says there has been a massive innovation in the humble sandwich – and it still centres on the ‘glorious fermented foodstuff that holds the whole thing together’


ince John Montagu, the fourth Earl of Sandwich, Manger and EAT, along with big retailers such as Marks & Spencer placed some meat between two slices of bread and and the major supermarkets, have looked to broaden their helped popularise the new-fangled dish that took his sandwich offers with these Middle Eastern breads. Although they name, it has never really been a story about the filling were initially filled with hummous and falafel, they’ve become in the middle but has been much more about the bread. massively popular and you are just as likely to find ham and cheese This was the ingenious bit of this simple but rather impactful as the filler as you are anything more authentically Eastern. invention. And, arguably even today, 254 years later, the humble We’ve also seen the growth of Vietnamese cuisine, initially in sandwich continues to evolve as a result of the glorious fermented London, and this has led to the emergence of the Banh mi. This Vietnamese/French combo takes a more airy version of the baguette foodstuff that holds the whole thing together. I reckon we've seen and fills it with a variety of ingredients such as meat, fish and tofu more innovation in sandwiches in recent years than for a very long accompanied by vegetables, pickles and the core component – an time and this very much centres on the bread. authentic Vietnamese chilli sauce. But as tasty as this filling is, any The UK is not only a big bread-eating nation but is also a magpie, aficionado will tell you the key element is the bread – and the best stealing bits of the world’s best cuisines and embracing them as purveyors have theirs specially baked for them. its own – albeit frequently with a few alterations to make Such has been the recent revolution in sandwiches, it more palatable to the masses. This combination is even Indian food has been getting in on the act. proving fertile ground for sandwich innovation. “The UK is Dishoom cleverly took the already-Anglicised An early bit activity took place ten years ago not only a big cuisine to another level when it put bacon into when Spanish food importer Brindisa was asked bread-eating nation freshly baked (in the tandoor) naan bread. Could by the owners of Borough Market to create a there ever have been a better marriage of two but is also a magpie, hot food-to-go item. Its chef stuck some spicy cultures and their respective cuisines? I think not. chorizo and piquillo peppers between Italian stealing bits of the Such tasty developments have made the ciabatta and unknowingly helped kick-start the world’s best cuisines likes of Subway look rather pedestrian in current trend for the internationalisation of the and embracing comparison (sales in the US are down 3.5% quintessentially British sandwich. them as its on the previous year). Its policy seems to have Things have really taken off in the past couple been more about putting ever greater numbers own” of years – undoubtedly driven by the growth in food of items in between the bread – and melting some on the go, the development of convenience retailing, cheese on top of them – rather than focusing on any and the insatiable appetite for street food, where it is all clarity of flavours. This has undoubtedly been the cornerstone about dishes that can easily be consumed in the hand, often while of the glorious array of international sandwiches that have been standing up. appearing on the market. Hence we’ve seen flatbreads and wraps emerge as relatively But let’s not think we’ve suddenly gone all global with our recent evolutions in the sandwich world as the likes of Pret A sandwich affections. The reality is the same old stalwart fillings continue to dominate sales. Bacon, prawn mayo, BLT, egg and Pret A Manger vegan Mexican flat bread. cress, and beef and horseradish topped a recent survey in Olive refried beans, avocado, charred corn magazine of the UK’s favourite sandwich fillings. salsa, tomatoes and coriander However, these rather traditional fillings will not all be held together by something as boring as the run-of-the-mill sliced white that fuelled the country in my youth. And it’s also my guess that although the good old Earl of Sandwich probably put something we would recognise, such as beef and maybe a horseradish-type of accompaniment between his two bits of bread all those years ago, the actual bread he got his butler to use will again be a world away from that which the typical Olive readers will be consuming today. Bread continues to prove itself worthy of satisfying the everbroadening demand from customers for new tastes.

Glynn Davis is a leading commentator on retail trends



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Ten emotional moments of truth Chris Edger and Tony Hughes explain how great leadership works through the emotions


n our last article we highlighted the personal qualities inspirational leaders in hospitality exhibited to tap into the emotions of their teams (Spiritual, Holistic, Optimistic and Proactive – SHOP). We argued that – to date – much of the writing on effective leadership in hospitality contexts had focused on quality human resource management and engagement, but largely failed to square the circle. Because in the end, as Daniel Goleman (the high priest of emotional intelligence) observed: “Great leaders move us. They ignite our passion and inspire the best in us. When we try to explain why they are so effective, we speak of strategy, vision or powerful ideas. But the reality is much more primal. Great leadership works through the emotions.” As we said last time, science has discovered that emotional reflexes are far quicker than cognitive thinking patterns, moving us – due to primal survival and pleasure instincts – to react to our feelings more rapidly than rational thought! Leaders who are able to generate positive feelings (and neutralise negative feelings) among their teams stand a far better chance of securing outstanding hospitality behaviours. Dry logic rarely (or slowly) stimulates. Sensory appeal rapidly galvanises! In our next book, eMOTION! – How Inspirational Leaders Mobilise Superperforming Teams, in addition to expanding on personal qualities, we attempt to extend the frontiers of thinking on service leadership practice. We highlight the Ten Emotional Moments of Truth that inspirational leaders need to address at each stage of the employment cycle in order to generate optimal outcomes. In doing so we highlight how inspirational leaders “move people” into action through mobilising specific positive feelings. But what are these Emotional Moments of Truth? What positive feelings should they generate and which practices do inspirational leaders apply at each stage of the employment cycle to “shift” behaviours?




E’VOCATIVE EXPERIENCE’ – Design (generating love) – the start point for inspirational leaders is designing a hospitality experience that sears itself on to the hearts of all participants and recipients, creating deep-seated levels of attraction and attachment. How? By standing for something good, creating a warm personality and providing distinctive and generous benefits to all that interact with it. Inspirational leaders understand that if customers love their product and service, staff will love it too!


‘E’NTICE TALENT’ – Hire (generating desire) – inspirational leaders need great service personalities to deliver a great product but many will be embedded elsewhere – what they need to do is create a great hunger, appetite and thirst to join their “elite team”. How? By promising “worthwhile work”, taking an “uncorporate” approach to hiring (by putting their peoples’ stories up front) and by “winning over” opinion formers (parents, peers and careers advisors) as well as potential applicants. Declaring they are not hiring for “what you have done in the past but what you are capable of achieving in the future” is a message inspirational leaders deploy to create desire!


‘E’NTHRAL HEARTS AND MINDS’ – Onboard (generating awe) – once on board, inspirational leaders exceed newbies’ pre-set expectations, engendering feelings of amazement and wonder. How? By offering a warm welcome on the first minute of the first day, providing a thorough immersion programme (including heart-warming stories, legends, symbols and icons) and “coupling” them with buddies who help and uplift them.





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‘E’QUIP SKILLS – Train (generating confidence) – at the same time newbies are furnished with the wherewithal and resources to do the job, adding courage, conviction and boldness to their endeavours. How? By clearly establishing key principles (“your job is to make customers happy!”), backed up by technical training for quality, behavioural training for emotional intelligence (including non-verbal communication and “mood” management) and cognitive training for problem solving and planning.


‘E’NERGISE SERVICE’ – Lead (generating enthusiasm) – “front-line” leaders make it their primary objective to win the “shift battle” through galvanising their teams – creating a sense of verve, zeal and fervour to service customer needs. How? By making sure units are “set up for success” pre-session, setting the dynamic tone by modelling desired behaviours “out on the floor”, adjusting their leadership styles according to individual requirements (taskled for “don’t knows” and delegation-led for “can do’s”), rapid-decision making “in the heat of battle” and “getting peoples’ backs” when unwarranted criticism arises.

“Inspirational leaders recognise that recognition has a profound affect on behaviours; animating and enlivening people – creating surprise and delight!”


‘E’VALUATE PERFORMANCE’ – Review (generating gratitude) – finally, inspirational leaders must have performance review systems in place that enable people to know how they are performing and “where they stand”. These will (largely) promote feelings of relief and thankfulness among staff, most of whom want to be perceived as doing a good job. It is also an opportunity for inspirational leaders to have courageous conversations with people who are not “cutting it”, suggesting that great opportunities lie for them elsewhere! How? Through regular “formal” performance appraisals and coaching plus – most importantly – “informal” ad hoc discussions that reduce levels of fear and anxiety among “self-critical high performers” that they aren’t doing as well as they should!


‘E’XCITE BEHAVIOURS’ – Recognise (generating joy) – inspirational leaders recognise that recognition has a profound affect on behaviours; animating and enlivening people – creating surprise and delight! How? By rewarding “service behaviours“ through transparent (and timely) incentives, giving pay increments for the acquisition of extra skills and competencies, providing staff (and particularly managers) with some “skin in the game“, always celebrating success together and what we call “planned spontaneity“ that is, instantly rewarding and recognising people when you “have caught them doing it right!“


‘E’MPOWER ACTIONS’ – Autonomy (generating trust) – hospitality-based inspirational leaders know that given their teams’ requirement to service multiple occasions, needs and “touch points” they should “outsource” a degree of delegated authority and decision-making to the front line. This not only generates higher customer satisfaction but also makes staff believe in the reliability and truth of the organisation, making them feel more valued and in control! How? By providing clear guidance on “no go”, “check then go” and “go” parameters, allowing signature acts of self-expression, actively encouraging feedback on improvements (that are listened to and acted on quickly) and – in extreme circumstances – allowing people to apply “patch-ups” and “workarounds” to ensure business continuity.


‘E’NRICH CAREERS’ – Develop (generating hope) – inspirational leaders will also make sure maximum opportunity is given to both “ambitious” and “pillar” staff to enrich their careers through development paths and programmes that meet their aspirations for progression or career sustainability. How? By providing clear progression paths, accredited and certificated professional development programmes (that “mean” something to the outside world), effective career transition mechanisms that reduce “transition shock” for those switching jobs (upwards or sideways) and targeted mentoring/on-the-job coaching that helps individuals to grow and/or progress.


‘E’XCLAIM SUCCESSES’ – Communicate (generating pride) – at the same time, inspirational leaders ensure they have open, honest and vibrant communications that enhance feelings of belonging, achievement and satisfaction. How? By focusing content around key messages (with a fixation on progress and growth), cascaded through channels (such as face-toface, digital “pulse” briefings and “closed” social media circuits) that are quick, visual and impactful.

In summary, emotions are the most significant motivator of human actions. Positive emotions at the workplace unleash discretionary effort, creativity and a desire to fulfil customer needs. As such, we have identified ten stages in the employment cycle where inspirational leaders either consciously or unconsciously deploy a number of practices that generate emotion – love, desire, awe, confidence, enthusiasm, joy, trust, hope, pride and gratitude.

“Inspirational leaders ensure they have open, honest and vibrant communications that enhance feelings of belonging, achievement and satisfaction by focusing content around key messages” We would offer two further insights. First, we accept that negative emotions can be beneficial; our ability to process negative feelings (that is, seeing reality with clarity rather than excessive optimism) has been proven to lead to higher levels of resilience and better mental health. Second, humans can cultivate and reposition their emotions from negative to positive and vice-versa. However, it is the “magic touch” of the hospitality inspirational leader that mobilises positive emotion – reframing perspectives, moving feelings, shifting behaviours to create the conditions for “super performance”.

Professor Chris Edger is a multiple author on retail leadership and Tony Hughes is a luminary of the European foodservice scene


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Think smart

Ten years on from Apple’s launch of the iPhone, the smartphone will continue to transform our approach to business, says Ian Dunstall


n April 2000, when the auction of 3G next-generation have both been about for more than a decade). Increasing licences raised £22.5bn, it was clear this was going to smartphone penetration has merely hastened the immediacy of have a big impact on our lives but few (if any) of us really guests posting their comments, while new applications such as understood how the technology would work or what the Snapchat and Instagram have offered guests more platforms to share their opinions with their friends – and the world. future products would be. At the time, we were still nursing our What is evolving now is the reality that we need to assume Nokias, while the pioneers among us were experimenting with total transparency in the way we do business. Any action we BlackBerrys and electronic handheld devices. It took until the take (from supply chain sourcing to staff policies and launch of the Apple iPhone in 2007 for the impact of operating practices) must be made in the full change to start to enter our lives. expectation that our guests can access and Today, smartphone penetration has reached “We need to share this information. We need to ensure more than 80% of UK adults. They have become our actions are positive and defendable to our networking-shopping-entertainmentensure our avoid any potential implications of negative photography-scheduling-media-researchactions are positive newsworthy incidents being shared. navigating-banking-gaming-emailing and and defendable to phoning tool, and get viewed more than E-commerce implications – and avoid any potential one billion times a day in the UK. consequent location implications implications of During the past decade, new digital In the retail world, the sector impact of companies have developed their negative newsworthy e-commerce has been more immediate technological platforms into dominant incidents being and profound. The convenience and market positions, with tools and services now shared” money-saving value of online shopping has core to our daily personal and business routines, transformed the way people shop. Physical retail including Amazon, Twitter, Instagram, Uber and, stores are now reducing to specialist roles – for more recently, Deliveroo. instant consumption convenience, for browsing (where This smartphone revolution, and the associated technological there is a need to touch and see the product before purchase) advances in related sectors, is transforming the hospitality sector and for “retail entertainment”. and its guests. A by-product benefit for the hospitality sector has been Transparency of information a renewed access to good locations – landlords seeking We are now fully accustomed to our guests (and potential bars and restaurants to replace closing retail stores and as an entertainment attractor to enhance the overall retail users) having full access to online reviews of our businesses and experience for the remaining stores. ▲ to review and rate us themselves (TripAdvisor and Facebook ¡ WINTER 2016 ¡ PROPEL QUARTERLY


Insight The impact of e-commerce growth in the hospitality sector is now intensifying, driven by the scale of delivery companies entering the market. Many businesses are already seeing 5% to 10% revenue coming from these new delivery aggregators, with predictions this may grow to between 20% and 30% over time. And greater impact is ahead as new operators use the potential for a delivery-only trading platform without the need for expensive capital investment in restaurants and front-ofhouse service teams.

Expectations of service speed and experience The expression “cash rich – time poor” has been popular for some time. Smartphone expectations take this to a new level – “wait time = waste time”. The increasing capability of technology and access to information means customers now have an expectation their needs can be serviced immediately. Ironically, the smartphone is not freeing up our customer’s time – it is another burden on their time availability. UK adults now spend more hours a day on technological media consumption than they do sleeping. We are now seeing the early impact of wait-time intolerance in our sector. In the service models in the fast-casual sector, operators are focused on fast service and removing guest wait times, as well as related investment in cooking and service technology that enables faster cook times and more timeefficient systems. A key time barrier is typically the wait for bill payment and various technical and service model enhancements in the hospitality sector are focused on removing this delay – typically in the retail sector this is being managed with more self-service checkouts.

providing our customers with opportunities to share their product choices (food and drink) and their social company in our bars and restaurants with their network community. So we need to help curate our guests’ hospitality experience and give them positive news content to share – from the photogenic standard of our products to the way our staff engage with the guests and the style and entertainment of the ambience of our businesses. And our guests have a growing expectation their experience will be customised for their individual needs. This is an increasing trend of the retail experience (for mass customisation – allowing each customer of a scale brand to personalise their individual shopping experience). Our guests will expect a similar level of detail from their hospitality experience – how they can personalise their product and service needs to their individual requirements.

“We need to help curate our guests’ hospitality experience and give them positive news content to share”

Curating experiences to share

Related to this is the growing interest in pop-ups in the retail and hospitality sectors. These provide guests with a uniquely customised moment-in-time experience of the offer, typically with a more intense experience of the product offer that, again, gives them more opportunities to share their new experiences online. The hospitality world is growing in complexity. As well as the day-to-day focus on flawless delivery of the product, service and ambience of the guest’s experience, the rise to dominance of the humble smartphone is continuing to cause a rapid evolution and, in some cases, transformation of our approach to business. Some of these trends have become the “new normal”. However, I would challenge that for the majority of the themes above, the hospitality sector is in the early stages of adoption, with many depths of understanding ahead. And this is still early days – we are still in the first decade since Apple launched the iPhone. Think of the ongoing transformation of the way our businesses will satisfy the changing needs of our guests during the next decade.

Our customers are strongly influenced by the need to connect and network with their online community, on whatever social platforms they relate to. They have a growing desire for “experiences to share” so they have relevant content and updates on their lives to post. Our business is transforming into the picture business,

Ian Dunstall is a brand consultant advising hospitality businesses on brand strategy and development. He has a strong legacy of success, including startup brands and brand revitalisation

A good example of service speed focus is Domino’s Pizza, which is investing in technology to remove its delivery and takeaway guest wait time – in certain overseas markets they are developing a “five minutes out the door” model (order received and processed, and product cooked within five minutes). It is also using GPS technology to track a takeaway guest’s arrival time so the product is processed to be freshly cooked as the guest enters the door.




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Satisfying our ‘light’ appetites


Cyril Lavenant, NPD Group’s director of foodservice UK, asks if ‘light and balanced’ eating is the same as ‘healthy’ eating? Can a ‘treat’ ever be ‘healthy’ – and is there a business opportunity amid this debate?

hey say “we are what we eat” but it is clear seeking food that is “light or balanced”, with the implication that we do so because we see it as part of a healthy diet, is not the biggest motivator when consumers go out to eat or drink in Britain. Indeed, in the 12 months to June 2016, only 4% of all out-of-home (OOH) visits were driven by a “health” motivation (“wanted something light/balanced”). This is up only one percentage point compared with eight years ago, so it’s not a picture that is changing quickly. A much bigger motivation is to turn a meal into a “treat”, and our latest data (12 months to June 2016) shows the desire to “treat myself/others/kids” drives 17% of OOH visits. This is up three percentage points compared with 2008. But look at this more carefully. Analyse that figure of 4% of all OOH visits and you’ll discover this represents nearly 430 million potentially “healthdriven” occasions foodservice operators can tap into. At an average

bill per person of £4.14, this represents a £1.8bn opportunity. So if light and balanced food and drink is not a primary concern for consumers when eating out or drinking out, it certainly is a business opportunity that restaurants and retailers of all types should take into consideration when they create their menu.

“If light and balanced food and drink is not a primary concern for consumers when eating out, it is a business opportunity restaurants and retailers of all types should take into consideration when they create their menu” Are we the ‘healthy’ eaters we claim to be? So we say “light or balanced” dining is slightly more important when eating out than it was eight years ago and clearly many of us claim to eat carefully. But do

we say one thing and do something else? Speciality coffee, which can be high in sugar, is now a part of 14% of all OOH occasions, compared with 9% in 2008. At the same time, consumption of carbonated soft drinks has also gained in importance, as they are now included in 22% of all visits compared with 20% in 2008. However, consumption of alcohol is decreasing. Alcoholic beverages now feature in only 9% of all occasions, versus 13% in 2008. But if you want to see the big trends, look at burgers, pizzas, chips/fries as well as meat/poultry sandwiches and you’ll see demand has significantly increased since 2008. In terms of servings, burgers are up 55%, pizzas up 35% and chips/fries up 14%. Sandwiches featuring meat are up 29%, although the term “meat” does include poultry. At the same time, we are making the effort to eat vegetables, with servings in the 12 months to June 2016 up 5%, although servings of salads remain flat. So burgers, pizzas and fries are growing in popularity. Is this driven by consumers not caring enough about ▲ ¡ WINTER 2016 ¡ PROPEL QUARTERLY


Insight eating and drinking “healthily” or is it the result of the incredible variety of tasty products sold by many operators who want to satisfy our hunger for a treat? It’s understandable that people choose a “treat” rather than the “light and balanced” option and, lets face it, a treat is always fun. But does it suggest the current “light and balanced” product range is not large enough when we buy food away from home? Or when we want that especially “healthy” meal, do we assume that’s a meal best prepared and eaten at home in any case? Or does the best “healthy” option consumed out of home involve food we prepare in the home and put in a lunch box? Manufacturers – and some foodservice operators – are addressing these issues. They see a need to provide consumers with food and drinks that fulfil the role of a “treat” but that can still also be described as a “light or healthy option”. As we all think more carefully about what we eat, it’s not surprising to see the number of new companies promoting ranges of nuts, dried fruit, enhanced water, smoothies, natural energy drinks and colas, soothing drinks, coconut water and other products. All are growing at a very strong pace. One example is that servings of coconut water have tripled in the past year and vitamin waters have grown by 43%.

Chart 1: Total out-of-home – motivation to eat/drink out – share of all visits – YE June 16 17%


Wanted something light/balanced

The idea of “healthy” is difficult to define and the debate will continue. At the NPD Group, we can contribute to the debate by revealing what consumers are thinking.

“It will always be difficult to define “healthy” because consumers have different needs and different expectations.”

So exactly what is healthy food and drink? How do we define “healthy” anyway from a consumer’s perspective? What is a healthy meal? What is a healthy drink? Fewer calories? Less fat? Less sugar? Eating the recommended five portions of vegetables or fruit a day? Vegetarian food? Vegan food?

We know consumers like “choice”. It seems they feel good about what they eat when they have a choice of ingredients. Freshness of food products seems to be another way to convey a health message to consumers who seem to link fresh food to better food. It is the same for local

To treat myself/others/kids

sourcing, which seems to provide a sense of reassurance to consumers. But it will always be difficult to define “healthy” because consumers have different needs and different expectations. Those needs also vary from one week to another, one day to another, one moment of the day to another.

Britain and France: some differences I was born in France and came to the UK three years ago. I have noted some interesting differences between British and French consumers. The French try to minimise their consumption (and that of their children) of soft drinks and juices and give a special role to water. The emphasis is on the benefits to the body of mineral water. NPD Group’s data underlines this. At lunchtime in Britain, 26% of all OOH occasions include a carbonated soft drink compared with ▲

17% of out-of-home visits are driven by the desire to ‘treat myself/others/kids’







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Insight just 17% in France. Conversely, bottled water is only included in 10% of OOH lunches in Britain, compared with 19% in France. In both the UK and France, we are all taught about the benefits of including vegetables on your plate at lunch and dinner and, in both countries, there is widespread encouragement not to eat too much meat but to try to eat fish regularly. But I have found there is a big difference in the way we apply these rules. In France, to keep meal ingredients as natural and light as possible, vegetables and fish are not fried. We prefer baking and poaching and sauce is rarely added. But this is in stark contrast to the UK. Whether you are in a casual dining venue or a pub serving good food, an order of fish and chips is more likely than an order for baked or poached fish served with green vegetables. So a theoretically light dish instantly becomes heavy. Another difference I have noticed is the French try to eat healthily at lunchtime and dinner but allow themselves a “guilty sweet treat” in the afternoon. Conversely, Britons are less health-conscious at lunchtime but are becoming more thoughtful when it comes to snacking. The evidence here is the growth in Britain of smoothies, nuts, dried fruit and enhanced waters. Servings of smoothies, to give one example, grew by 2% in the 12 months to June 2016. But what is pushing this trend for healthier snacking? Are British consumers making real choices? Or are these trends simply a reflection of what is being offered in the market?

Operators must adapt to new consumer needs One thing is clear. Foodservice operators face a challenge in offering a range of

products to suit consumers’ needs. This is because consumers are more demanding and the range of what they expect is expanding too. This creates significant operational difficulties as well as potential margin

Chart 2: Total out-of-home – % servings change – YE June 16 vs YE June 08 55%

35% 29% 14%


38 38


Sandwich (Meat/Poultry)

Chips/ French Fries

issues if costs are high but sales are low. And it is important not to lose consumers in packed menus. When a menu offers overwhelming choice, we all go for our usual dish anyway. So if you are deliberately offering a “light option”, make sure your menu conveys this fact simply and easily. Again, offering a range of relevant products is not enough if restaurant staff are not trained to explain to consumers what the dishes are all about. In today’s intensely competitive foodservice market, attention to these details can help operators differentiate themselves. This, in turn, could easily assist business growth. Finally, foodservice operators must never forget about how their food tastes. It’s the pleasure of eating that still governs our choices. Who among us would ever be willing to regularly sacrifice pleasure?

Cyril Lavenant is director of foodservice for the UK at NPD Group




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Because you’re worth it? Foodservice will need to up its game even further to counter the widening price gap between drinking in or out of home, David Martin says, as the growing band of restaurant delivery consumers drink at take-home prices with their motorbiked meals “


e’ve become very good at selling cheap food and expensive drink” – wise words from my early days in the pub industry. I can’t claim them – they were the views of a forthright former colleague. He’d moved across town to become marketing director of Greenalls, which could have been dangerous if only it had brewed decent beer. His words go back 30 years but his view still resonates on several levels: u because it highlights a fundamental inconsistency in the retail proposition u because subsequent trends in the drinks market have exacerbated the situation u because of potential parallels in the future of the food market

“The long-term widening gap in the price of drinking in and out of home is not news – but the scale of the movement might be”

To the first point, on the mismatched value proposition between out-of-home food and drink pricing, it can still be argued – on the evidence of consumer research data – that



few, if any, out-of-home brands match JD Wetherspoon’s reputation for value across food and drink. Even Ryanair eventually realised dirt-cheap flights with punitive add-on fees might not be the best route to a positive brand reputation. On the second point, the Retail Price Index (RPI) provides (almost) 30 years of high-level history for on and off-trade drinks pricing. The long-term widening gap in the price of drinking in and out of home is not news – but the scale of the movement might be. Price inflation in beer at home during that period has been 56%. For beer in the on-trade, it has been 246%. If drink was deemed comparatively expensive 30 years ago, what does this say about the present day? Market data from CGA Strategy/The Nielsen Company shows that during the past 15 years, the price ratio for beer between the on-trade and off-trade has widened from about two to almost three. On supermarket deals, which will be influential in consumers’ perceptions, ▲

Close the gap between your intended and actual guest experience ENGAGE YOUR AUDIENCE The tools to engage teams and guests as stakeholders in your success

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Opinion the gap gets bigger. At the time of writing Morrisons, for example, was selling promotional packs of Carling and Fosters for £1.58 and £1.59 per litre respectively, compared with CGA Strategy/The Nielsen Company’s reported average lager price in the off-trade of £2.08. This extends the on-trade/off-trade price ratio up to four times. In the London market, the gap will be wider still. It’s no wonder the out-of-home beer market has steadily shifted in a premium direction in the meantime, as the old blue-collar customer base has dwindled, arguably priced out. The resulting evidence is clear in product category trends. But over and above that, to justify a price premium of three-to-four times, out-ofhome venues had better provide a meaningful experience premium. So what about food? The industry’s ability to sell what might be perceived as relatively inexpensive food undoubtedly helped the UK consumer to enthusiastically adopt the eatingout habit – the days when consumers in focus groups can afford to say “I can’t be bothered to cook”. But long-term inflation comparisons between grocery and out-of-home food are also unhelpful. During that near 30-year perspective, RPI inflation for food has been 111%, but for “restaurant meals” – the RPI’s best proxy for eating out – prices have risen 223%. For almost a decade from 2005, the gap in these two price indices moved relatively little. But since the second half of 2014, the gap has widened, in other words eating has been getting more competitive – with deflation in the price of in-home food of about 5% since the second quarter of 2014, while the price of restaurant meals has inflated by 4%. This takes us to the third point, the future for pricing, where the National Living Wage is surely going to nudge the pricing gap further apart because of differences in the labour ratio. The Association of Licensed Multiple Retailers’ recent benchmarking report shows payroll costs account for about 28% of pub/bar sales on average. Contrast this with the food retail trade, where the equivalent ratio for the major supermarkets typically ranges between 7% and 11%, according to Grocery Insight industry analyst Steve Dresser. The precedents from the drinks market suggest we will see differential socio-economic effects in the foodservice market, with contrasting consequences for geographies and market segments, and they are unlikely to favour those venues trading to poorer consumers. A recent piece in the Washington Post on the risks of a US “restaurant recession” considered the industry’s disappointing recent demand and traffic data. It included the role of relative prices of in-home and out-of-home food – something also recently referenced by McDonald’s chief executive Steve Easterbrook in comments on recent trading. In the US, compared with a year ago, food-out-of-home inflation was up 2.8% in August, while food-at-home pricing was down 1.9% – it’s the same pattern, and a similar gap, as we see in the UK.


223% “amount ‘restaurant meal’ prices have risen in past 30 years, according to RPI”

“It’s no wonder the out-of-home beer market has steadily shifted in a premium direction as the blue-collar customer base has dwindled, arguably priced out”


It’s instructive to check out readers’ posts from that Washington Post piece, even if these kinds of forums often degenerate into shouting matches. So with apologies to the sensitivities of my market research profession, here is a small sample of plain-speaking examples: u “with the minimum wage hike, they are all getting too expensive” u “they ask a premium price for unfresh food” u “when the quality of food is no longer there but the prices are stupidly high, of course people will stop eating out as often – and restaurants will suffer” u “we are eating at home because the costs for everything and minimum wage went up. No more of our hard-earned money for poor service when you can live like a king at home for one-fifth of the cost” We have been warned. Foodservice will need to up its game even further in future, not least because the growing band of restaurant delivery consumers – the modern-day “can’t be bothered to cook” – are mostly drinking at take home prices with their motorbiked meals. In the recent words of business author and blogger Seth Godin: “Average stuff for average people is getting ever more difficult to sell. If that’s all you’ve got, get something else.”

David Martin is managing director of market and customer insight resource Red Circle





* Source is CGA_Cider Dashboard 2016P06


Advertising Feature

Keep in Tune with Licensing For many businesses, music can be considered an important part of their service offering, used to help to deliver a standout pub and bar experience. Music can be more than just background noise. The right choice of music can contribute to pubs and bars standing out from the crowd, encouraging repeat business and increasing sales.


ith music often playing a key role in creating the perfect atmosphere, it’s important for you as a business owner to ask the following questions before you press the play button in your pub or bar.

1. Keeping the tempo: Music tempo can have an impact on the mood you’re trying to create – you may choose to play slower music at a low volume during the day and get the party going with a faster tempo in the evening, when it’s time for your customers to really let their hair down. Whatever your theme – if you’re going back in time with some Motown classics or crossing the ocean with some summer vibes – using well-known music from original artists and suitable genres will help you get the playlist spot on for the occasion.

2. Jukebox charm: Although they can be seen as retro, that’s half the charm. Jukeboxes can bring your customers’ personality to your venue, giving them control over the music they hear, encouraging engagement between customers and making their experience

more personal and enjoyable. As well as jukeboxes, customers can now choose songs from pre-set playlists, giving them the choice to match the music to their moods.

3. Music quizzes: Every pub quiz needs a music round – it’s a great way to interact with your customers, as well as them with each other. Even if you don’t usually play recorded music, make sure you’re legally compliant and properly licensed when you play snippets of songs. Music licensing companies such as PPL and PRS for Music are able to offer one-off licences per quiz to help your night strike a chord with customers.

4. Consider your staff, not just your customers: Whilst music can boost your customer’s mood and the atmosphere, it also has the potential to play an important role in motivating your staff. Most managers or business owners would agree that music makes their staff happier and helps them be more productive. So, consider mixing up the music you play behind the scenes. Playing your staff’s favourite tracks when they are getting ready to open up, or

giving back of house staff free reign of music in the kitchen could motivate them to be the best.

5. Legal requirements to consider: As a business owner of a pub or bar, it’s your duty to ensure you are licensed for the music you play. If you are playing commercially released recorded music via CD, radio or other digital sources, you will usually need a music licence from both PPL and PRS for Music. PPL represents record companies and performers, while PRS for Music represents songwriters, composers and music publishers. PPL’s licence means you don’t have to contact each record company individually to obtain their permission to play recorded music from PPL’s vast repertoire, one of the largest and most comprehensive music repertoires in the UK. With over 10.5 million recordings across various genres, PPL represents many independent and major record labels, as well as well-known performers and session musicians. A PPL licence enables you to legally play music from small emerging artists through to some of the biggest names in the business. Importantly, remember that having the appropriate PPL licence means performers and record companies can be fairly paid for the use of their music.

6. Get digitally savvy: Don’t be put off applying for music licenses – it’s a quick and easy process and you can get ahead by applying for a licence from PPL online at Alternatively you can call 020 7534 1070 or email PPL at It’s quick and the licence will mean you can play a vast collection of music from a host of genres. Play the music your customers want to hear and all with peace of mind that you are legally compliant.

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The changing face of guest experience management T

HGEM managing director Steven Pike looks at how an organisation can build a framework to help it become a modern face of guest experience management

he concept of a guest experience in our sector is surprisingly new. Traditionally, if you used the word “guest“ you imagined someone staying in accommodation or in your home. The overnight stay was often the common ingredient. Only a decade or two ago someone who went to a pub was, well, a pub-goer? A punter? Someone dining out in a restaurant was probably a customer. So what’s changed? It’s not that pubs and restaurants are all offering overnight accommodation (although some do, of course). The reason we found it hard to think of a term for pubgoers is because the experience was largely created by those who visited the pub. It was somewhere to drink, play pub sports, maybe to moan about the world with your mates, but always with a social purpose. There was little concept of an experience being managed. But what about restaurants? They’re different again. Restaurants as we know them today emerged in the wake of the French Revolution, when thousands of chefs employed by aristocratic and royal households suddenly found themselves unemployed. The newly powerful middle class drove the change from dining experiences being private to being more vibrant and social, giving all citizens the egalitarian chance to eat together. And so it continued, growing in popularity for a couple of hundred years. But there was always a kind of residual formality to the experience. There were certain expectations about what constituted a proper dining experience and it could be argued that a certain degree of traditionalism continues to hold back the French restaurant scene to this day. The seismic impact of the two world wars on cultural norms

and class barriers in Britain set the scene for the sector to grow here. But in the post-war period, people had little disposable income, many foods were hard to come by and there was little culinary tradition anyway. With both pubs and restaurants, there was a certain way of doing things, and no-one really questioned it. The first signs of major innovation in the sector began in the US, where the concept of the brand began to take-off. But behind the brand was often a production process, inspired by advances in manufacturing and distribution, but packaged up to be something you could aspire to experience. Service was seen as something that could be manufactured in a similar way and, to a certain extent, that’s true. However, the process-led approach meant every customer journey tended to follow the same steps, while some brands slipped into the trap of appearing robotic only to gradually wither and be replaced by a new concept with its own steps of service. While all this was going on, the hotel sector continued doing what it was doing with its more multi-faceted approach to the guest experience, and pubgoers continued, well, drinking mainly. And then came the ban on smoking in public places. You could now socialise at the pub without peering through a haze and your clothes smelling. It became much more appealing as a place to eat and socialise with family rather than just your mates. When pubs were refurbished, they began to feel a lot more like home, with soft furnishings and surfaces that weren’t quickly stained by cigarette smoke. Publicans and pubcos began to evolve their role into being more of a host – a word ▲ ¡ WINTER 2016 ¡ PROPEL QUARTERLY


Opinion with the same French origin as “hotel” and “hospitality”. In short, pub-goers started to become guests. This started to have a knock-on effect on restaurants. They suddenly faced competition from the pub sector and restaurants needed to become less formal and more welcoming if they wanted to avoid losing customers to pubs. There was still a market for fine dining but it was small, and will probably remain so. The growth opportunity was in more informal experiences. Again, restaurant customers began being referred to as guests. And let’s not forget about the market segment with the greatest growth in recent years. Counter service, quick-service restaurants, fast-casual, call it what you like. The increasing popularity of street food attests to the importance of experiential factors in retail environments. Even in this segment, customers are now guests – they buy experiences rather than products.

Framework So let’s begin to build a framework. At its heart is the “promise”. This should evolve out of your vision and comprise the things you want to be known for. But the promise needs to be authentic, easy for teams to remember and distinct from your competitors. Now let’s add four more Ps, not in the form of a linear customer journey but arranged in a wheel, representing the main areas of an experience that will need to be managed for a guest experience to be successful – People, Process, Product and Perception. And let’s break that down a bit further into 12 factors that will be present in virtually all guest experiences and which can be measured, usually in terms of likely impact on word-of-mouth. These can be seen in the GEM Framework on the previous page. When measuring each of these, whether through guest feedback or a mystery visit, consider how to separate the positive, neutral and negative. In effect, this means you could take a “Net Promoter Score” approach to each component of the experience. Let’s take the “Behaviours” component as an example. Try to find out from guests whether the predominant behaviour of team members was (a) cold, with a general lack of smiles or interest, (b) lukewarm, where some were engaging but others were not, or (c) warm, everyone was warm and friendly all the time. And don’t forget to evaluate the associated standards that support your brand promise in this segment – how do you expect behaviours of your team to be distinct from those of another successful brand?

“Publicans and pubcos began to evolve their role into being more of a host – a word with the same French origin as ‘hotel’ and ‘hospitality’. In short, pub-goers started to become guests”

But managing a guest experience is different to managing a customer experience, and it requires a different approach. Process is still a really important part of it, of course, but not everyone is going to follow a prescribed customer journey and, even if they do, they don’t want to feel like they’re being processed. Hotels, with their longer experience in hosting guests, were an obvious place to look for the answer, but there was quite a lot of traditionalism here too. In the past few decades hotels have, like restaurants, become very brand-led. This is also being challenged in the form of Airbnb. It seems we are increasingly choosing to trust complete strangers and good online platforms over more established brands. So the hospitality sector, for all its increasing diversity, now has one thing that unites its different concepts – whether pub, restaurant, hotel or counter service. And that’s the need for GEM (Guest Experience Management). It’s fast becoming a discipline in its own right, and we’ve seen a rapid increase in job advertisements for guest experience managers.

“Even in the street food segment, customers are now guests – they buy experiences rather than products” What these managers need is a methodology that enables them to measure and improve the experience of their guests, but grounded in the uniqueness of what’s on offer. In devising that methodology, we need to be driven by word-of-mouth, the social currency guests use to sound interesting to their friends. Naturally, we want to avoid negative perceptions, but neutral ones are almost as bad – they simply won’t get shared like positive ones, and you risk not being front-of-mind at all.


Note that although building a successful hospitality business relies heavily on creation of positive word-of-mouth, it is still a business. So there are a couple of factors that still need to be managed but which may never generate positive chatter at all. For example, people are unlikely to comment on how perfect the pace of service was or how amazingly clean everything was – but they’ll sure as hell comment on these things if they’re bad. Therefore, they need to be managed. Now you have a framework, you need a methodology to put it to work. This has three stages in a cycle – Engage, Measure, Improve. So engage your various audiences (teams and managers, guests and mystery guests), measure performance regularly against the framework (preferably independently), and work out how you can generate improvements. This latter stage should involve building a continuous improvement culture, translating measurements into actions, and training materials (mapped to the framework) that help people to understand what’s expected and to practise techniques for delivering it. So consider what being a guest really means, and perhaps the historical influences on today’s hospitality market, then take this framework to implement in your organisation (or ask us to help you do it), and be the modern face of GEM.

Steven Pike is managing director of HGEM HGEM is the UK’s leading expert in guest experience management (GEM). The company provides hospitality operators with tools for intelligence gathering, guest engagement and staff learning, working closely with them with a personal approach and modern software to help generate revenue growth through effective GEM. HospitalityGEM services include mystery guest visits, online feedback, social advocacy, performance analysis and learning management. Clients include Wagamama, Brasserie Blanc, Spirit Pub Company, Malmaison and Peach Pubs. For more information, visit:




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Northern soul

Mowgli founder Nisha Katona and restaurant, below

London no longer has the monopoly on new concepts in the UK, says James Hacon, who takes a look at the burgeoning hospitality sector in the north of England and highlights some brands to look out for as they begin to expand across the rest of the country


ome would have you believe London has something of a monopoly when it comes to new concepts in the hospitality sector. While it’s true our capital has undoubtedly become one of the leading restaurant destinations globally, other regions in the UK can boast equal levels of creativity and entrepreneurship. Until recently it could be said the north provided an opportunity the south didn’t, with lower premiums, a less saturated market and more property availability. This is far from true today, however, with many suggesting the powerhouse cities of Liverpool, Manchester and Leeds are close to saturation point regarding restaurants and bars. Earlier this year, I made the move north to take up my role at Thai Leisure Group as we grow our Thaikhun and Chaophraya brands nationwide from a mainly northern base. Basing myself in Leeds – on the one or two nights a week I find myself at home – I’ve used the opportunity to discover some brilliant people running great brands out of the north. I thought I’d get under the skin of a few companies that are not only successfully trading but growing in the north – and further afield too.

Mowgli Spotting a gap in the market for an Indian restaurant that didn’t just trade in the “10.30pm tikka masala slot”, Nisha Katona created a concept developed around the 20 dishes she’d happily eat for the rest of her life – her “desert island discs of Indian dishes”, we joked during our interview.


A barrister of 20 years, Katona was primarily a consumer until she ventured into the restaurant industry, but knew she required the skills of an experienced restaurateur so hired her general manager before even finding a site. A self-professed “curry evangelist”, Katona explains her cuisine is based on Hindi ayurvedic principles, with no onion or garlic, making food distinctly different from the dishes most people think of when choosing an Indian meal. This also makes for a great lunch option, a trade the majority of Indian restaurants simply don’t have. The break for the concept came in finding a 70-cover site in District 13, which has since become a trendy destination on the Liverpool restaurant scene. Still self-funded, the brand has signed for four sites, two in Liverpool, one in Manchester and one in Leeds. Site selection has been carefully undertaken with the thought being to prove the concept in high-street locations as well as within schemes. With the well-publicised chef shortage and a particular challenge surrounding the recruitment of Indian chefs following changes to UK immigration laws, the sector has to be careful to avoid the pitfalls of an immigration-based chef population that can result in inflated egos and, at times, situations that feel more akin to a ransom situation. Instead, Mowgli’s kitchen team is built on energy and enthusiasm, with clear specifications and an indepth training programme. The aim is to go national when finding the right investors – and sites! ▲


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Insight Arc Inspirations Following a rapid rise in the corporate environment, Martin Wolstencroft, chief executive of Arc Inspirations, was keen to do it for himself when he jumped ship to create the company with a business partner in 1999. He was a student in Leeds, lived there and knew the market, so it was the obvious place to start, he tells me in our interview. The multi-brand group now operates 15 units spread across Leeds, Harrogate, Manchester and York. Of the nine brands, he says the biggest roll-out opportunities are contemporary bar restaurant concept Banyan Bar & Kitchen; American barbecue concept The Pit; and sports bar The Box. The regionally focused roll-out to this point has seen the company leverage a great reputation, with natural cross-usage of the brands also providing an opportunity to cross-promote. Growth is ongoing, with another site signed in Leeds and a continued search for the right property from Birmingham upwards. With two to three sites planned per year, the company is confident it has a concept that fits almost any good site, with each brand targeting a slightly different market. As with any roll-out, a central support team has been growing healthily, with operations, food development, finance and marketing functions soon to be joined by a newly created role dedicated to development and new openings. When asked about the nuances of the north, Wolstencroft talks of confident consumers who know what they want and how to get a great deal, and who expect more from hospitality businesses. He adds that they also know their brands, who the competitors are, and how competitive the market place is. With many London brands growing in the north, his advice is not to take it for granted that just because you are successful in the south, you’ll do well in the north – pointing to a number of brands that have tried and failed. He believes consumers are looking for a strong identity and clear differentiation, with vanilla just not cutting it.

Banyan Manchester

Hickory‘s drink and popcorn

Hickory’s The neighbourhood American-style barbecue brand, backed by Piper, opened its first venue in Chester in 2010 and has since grown to five sites. The concept draws on the best of the southern US states, with a particular focus on Texan barbecue food and New Orleans beverages. The brand has big growth plans, with eyes on an estate across the north of England, having ventured as far south as it planned. The expansion will continue to concentrate on community sites, focusing on a loyal customer base that returns regularly. The company is looking at sites in Yorkshire, Shropshire, Staffordshire and Cheshire for future openings. The local approach is reflected in the brand marketing strategy, which sees no above-the-line advertising, instead focusing on community engagement through a range of sponsorship initiatives and local events. The company has also decided to educate the English on American football’s National Football League, leveraging this as a key brand hook for the future. With the expansion of barbecue concepts in recent years, Paula Brown, marketing manager for the brand, says Hickory’s is focused on authenticity to ensure it stands out from the crowd. This is being delivered via a considerable ongoing investment in training to encourage the team to understand and deliver “Southern hospitality”. In the past year, the company has sent more than 50 of its key team members to Texas, including chefs, trainers and general managers. Back home, 26 full-time trainers deliver more than 48 courses that broaden the team’s knowledge of a range of subjects covering products, company culture and specific knowledge. Next year there will be a reinvigoration of the brand, with a new-look visual brand and interior concept being rolled out as part of the redevelopment of the Wall Heath site that was destroyed by fire in August. This change will see the addition of theatre to the food, with a barbecue on the veranda and barbecue smokers in the restaurant. ▲ ¡ WINTER 2016 ¡ PROPEL QUARTERLY



Almost Famous

Almost Famous The Almost Famous brand was devised in 2010, ahead of the better burger revolution that followed. Founded by Beau Myers and Marie Carter as a pop-up in Manchester’s Northern Quarter, the outlet took a publicity-shy approach built on hard and fast rules that would build a reputation all on its own – no photos, no press, no bloggers and no ketchup. The brand has continued down a rather bold route with its proposition, with the website clearly highlighting its noreservations policy, instead encouraging potential customers to “chill out and turn up”, as well as clearly stating a lack of vegan options – with something of an edgy confidence that only burger brands seem to be able to boast. The company, of course, grew to become a fully-fledged restaurant in the Northern Quarter and, having launched a second site in the city, it’s fair to say in its home town of Manchester the brand may have exceeded its only ambition of being “almost famous”, with almost everyone knowing this brand. The growth has continued with additional locations in Liverpool and Leeds. Fast-casual in service style, the venues are industrial and quirky, with large bars making the concept stand out from other burger brands in the market. As you might expect, the proposition is mostly burgers with the addition of three nonburger items and a limited selection of sides. Since launching its latest site in 2014, the company has concentrated on optimising trading in its existing sites, introducing newer, bolder menu items and tweaking venues to provide more covers. This next year will see the brand acquire new sites, with the intention of growing nationally and with London firmly on the horizon. In the meantime, to bring the brand to a broader audience, the company has invested in the “Wondertruck” – an oversized American-style food truck that is an Almost Famous restaurant on wheels. So far the truck has treated burger-lovers across the UK at events such as Meatopia, Grillstock and Indy Man Beer Con.




Almost Famous

James Hacon is a development, growth and brand strategist for restaurant and hospitality groups, working as brand strategy director at Thai Leisure Group and for a select group of other clients

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Advertising Feature

Food poisoning – dealing with a claim against your restaurant Bad news travels fast. Should a food poisoning claim arise, of paramount concern for restaurants, pubs or hotels will be the risk of adverse publicity. Where there is insufficient evidence to conclusively deny liability, an early resolution at a reduced financial settlement and with no formal admission of liability will often be considered a very satisfactory outcome.

Case study A diner at a gastro pub alleged that she had developed campylobacter gastroenteritis after consuming a small portion of liver, which she had sent back to the kitchen on finding some of it was raw. Legal experts scrutinised evidence and launched a defence:

If you are faced with a formal claim, in addition to ensuring you have all the regular health & safety documentation in place, we recommend that you:


Keep any leftover food (if possible within the time span of the complaint).


Keep a clear record of any complaints to indicate whether or not a large number of people have suffered.


Make a note of any discussions that took place at the time of the incident.


Ensure you have all the contact details of the staff working on the day/night in question.

h h

Contact your local Environmental Health Officer for advice.

The facts


Symptoms developed 31 hours after consuming the meal – a period shorter than the 48-120 hour minimum incubation for campylobacter to develop.


The diner’s account that she had only eaten vegetarian meals before the incident was disputed, as a questionnaire confirmed she had eaten steak, scampi and chicken two days prior and these meals fitted with the 48-120 hour incubation period.


Medical evidence revealed that she suffered from a rare condition known to cause abnormalities in the gastrointestinal tract.

Outcome Despite these facts building a strong case for the defence, because the claimant produced supportive medical evidence it was clear that the claim could not be thrown out. However a significantly reduced settlement was achieved, with no admission of liability by the pub and, crucially, no adverse publicity. Should the worst happen and you find your venue subject to a food poisoning claim, to ensure you are able to take advantage of the best possible defence, it is important to always follow good practice in line with hygiene standards. This includes maintaining efficient food segregation, keeping records of regular checks in fridge temperature and food probing and ensuring that all staff undergo detailed health and safety training.



Speak to your insurers as early as possible; failure to adhere to reporting requirements may lead to your insurers refusing to indemnify you in respect of the claim.

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Recognising the best late-night companies at Dusk 'til Dawn ALMR chief executive Kate Nicholls presented this year’s Dusk ’til Dawn awards honouring the best in the late-night hospitality sector, on Tuesday, 11 October ¡ WINTER 2016 ¡ PROPEL QUARTERLY





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Conference Overview

Night fever

Martin Cooper delves into just some of the stories revealed by keynote speakers during the annual Bar and Nightclub Conference, organised by the ALMR and Propel

Albert’s Schloss

Mission Mars hits £23m turnover, primary aim to take Albert’s Schloss to London Serial sector entrepreneur Roy Ellis said his Mission Mars vehicle has hit annual turnover of £23m, three years after launch. The company, a joint venture between The Trof Group founders Adelaide Winter and Joel Wilkinson and Revolution Bars founders Ellis and Neil Macleod, now has nine sites. The four pubs in the group are turning over £45,000 a week, while three of its late-night businesses are averaging close to £100,000 a week. Its other concept, Albert’s Schloss, the £3.5m bar, restaurant and live entertainment concept that opened last year in Manchester, has averaged £250,000 a week since launch. Ellis said the primary aim was to take Albert’s Schloss to London. He told the Bar and Nightclub Conference he believed the concept would work in Belfast, Birmingham, Bristol, Dublin, Edinburgh and Glasgow – but London was its main target. He said: “We think we could put an Albert’s Schloss in these places but really where we want to be is London. That is where our primary effort in trying to find a site is going. We need about 15,000 to 20,000 square feet for the schloss and 30,000 to 40,000 if we want to put the whole thing in.” Albert’s Schloss is on the ground floor of the grade IIlisted, 3,000-capacity Albert Hall. The 28,000 square foot venue in Peter Street has a capacity of 700 in the bar/restaurant on the ground level and another 2,800 in the entertainment venue that sits above. It also caters for weddings – Ellis himself got married there – and even stages bingo. Ellis said beer made up 45% of sales, while wine and cocktails accounted for 15% each. About £30,000 a week comes from its alpine-inspired food offer. He added: “I’ve opened a lot of bars – about 100 – and probably invested well over £150m over 25 years, primarily in Revolution and Revolucion de Cubas. I’ve never opened a business like this and never owned a business like this. The previous most successful business we’ve had, interestingly, is two doors down from this building – a Revolucion de Cuba. We invested a few million quid there and it opened doing about £150,000 a week. I never dreamed we would have another business as good or anything like as good because in 25 years I can count on two hands the number of businesses we’ve opened that have made £1m in profit, so to open one just two doors down making close to maybe £2m, I didn’t think we’d get that opportunity again.”

Luke Johnson – pendulum has swung too far the other way on licensing, opportunity for consolidation Sector investor Luke Johnson argues that the “pendulum has swung too far the other way” on licensing, with operators facing an “ongoing existential threat”. Johnson, who has investments in Grand Union, Brighton Pier Group and Draft House, told delegates: “Licensing is more of a challenge than it has been in the past and it is an ongoing, almost existential threat to some of us – and it seems to me the pendulum has swung too far the wrong way. If this had been (the licensing climate) at the peak of the boom of late licences it would have been one thing but, as we know, the industry has been through a tough time and to have to face these sorts of additional challenges feels misguided. What to me is interesting and weird about the closure of Fabric is that, although the authorities don’t necessarily make this clear, I believe the drug menace is much diminished from what it was some years ago. And yet the fear about it is greater than ever, it seems. Certainly the authorities are more aggressive about their reactions.” Johnson argued that the sector has woken up to the proper recognition of investment costs. He said: “I think one of the many things that has been a wake-up call in the sector is people believing in the illusion of Ebitda, forgetting the need for capex. I think this sector, more than most, can be a fashion victim and requires constant rebrands and updating and repositioning. Millennials are looking for the latest thing – they have got short attention spans and move on. So it is hard to stand still and that requires constant investment in premises and such like and that means depreciation is a cost – so Ebitda isn’t really the measure of profitability.” However, he added: “I think the industry has been through a very difficult period and consolidation creates opportunities for those who have got the resources, management, stamina and formulas that can work. I think the opportunity in this industry is it is closer to the bottom than the top and there is much more value to be had. There are higher returns to be had for those bar and nightclub businesses you can believe have a future compared with high multiples being paid for coffee shops and restaurants. I think the industry will possibly consolidate further and there will be some major dominant players who have the advantages of scale, strong convenants, access to funding, and who can afford training and HR, good administration and systems, which allows them to win in markets where you have small independent competitors who can’t compete.” ▲ ¡ WINTER 2016 ¡ PROPEL QUARTERLY


Conference Overview

Phil Tate – bar and nightclub operators need to compete with ‘new wave’ events A substantial number of consumers have turned into “experience junkies” and traditional bar and nightclub operators need to expand their offer to appeal to them, CGA Peach chief executive Phil Tate has argued. Tate told delegates “new wave” events such as festivals, street food markets, ticketed indoor events, and pop-up bars were proving particularly popular with bar and nightclub customers – 67% of late-night consumers have visited one in the past year. New wave events have also proved to have wide demographic appeal, with age groups that have more disposable income, such as the over-35s, visiting in large numbers. Tate said: “Consumers have got so many options on the table at the moment as to where they go and how they spend their money. Our consumer is an experience junkie. It’s all about ‘what can I tell my friends that I did on Monday night that will make them jealous?’ This is where the competition that is emerging is getting it right. These new wave venues are setting the benchmark that traditional venues need to aspire to. Some 70% of consumers have visited one of these new wave events to replace a big night out. The number of new wave events is growing and the number of consumers attending them is growing, as well as the regularity of attendance. While traditional venues are looking at potentially

Intertain chief John Leslie – we will search the estate for secondary space after success of ‘stick hall’ Intertain chief executive John Leslie told delegates the company is searching for secondary space after the success of Felsons, a pool hall launched in an unused area above its Bournemouth Walkabout site. Leslie said: “It is a stick hall with a difference and we have done this in what was previously a completely unused space. We have called it Felsons. Eddie Felson was a real-life character so we have named it after him – he was played by Paul Newman in the film The Colour of Money. Amazingly, nobody had registered the intellectual property for Felsons as a stick hall or as a pool hall in the UK. But we have now and we have effectively launched a new brand with it. It was previously a derelict first-floor space. It has seven pool tables, one of which is outside, and it has developed a following of its own, quite separate from the Walkabout downstairs. It is almost like having a new venue

declining footfall, new wave events are benefiting from growth. We are anticipating 1.5 million visitors to Street Feast alone in 2016. That is a huge amount – and this is because it is creating that Phil Tate fear of missing chief executive out. No-one CGA Peach wants to be the person in the university refectory who hasn’t been, no-one wants to be the person around the work water cooler who hasn’t been. So it is managing to create that fear of missing out by having a great experience that is driving footfall. The trick has to be about how traditional operators take the elements that are currently happening at new wave events and integrate them into the current offers. I have seen the guys from Deltic Group doing that. I have seen some pop-up bars going into some of their venues at the moment. It comes back to that fear of missing out – giving consumers a reason to go in and something different on a weekly basis.”

with no extra overheads and it is producing £10,000 a week in sales. £2,000 of that is straight from the table – so a 100% margin on that; £100,000 a year just out of the tables – thank you very much.” On general plans for the future, he said: “We want to complete the refurbishment of our existing estate, which will take us another 12 to 18 months, continue to acquire for Walkabout – good track record so far and we want to continue with that – and we have got some interesting stuff to do in secondary space as well.” Leslie reported his Walkabout venues now have average sales per week of circa £34,000 and average site Ebitda of £320,000. He added: “Probably the most exciting part of our journey has been to actually get off the ground with our acquisition programme. Last year, we acquired four venues, two of them were former Après units in Solihull and Lichfield, a site in Brighton, and we acquired a site in Manchester Printworks as well. After an average spend of £750,000, the results of them have been outstanding. We all know the investment cycles within this industry can be relatively short but to get a payback in sub two years – we are more than comfortable with that.”

“£100,000 a year just out of the tables – thank you very much”





Taxing – and benchmarking success With the prospects of further payroll increases, a new payroll tax in the form of the Apprenticeship Levy, and a significant hike in business rates, April 2017 could be a perfect storm for the hospitality sector, just like 2008 – but it needn’t be, says ALMR chief executive Kate Nicholls


n this world nothing can be said to be certain – so the As the ALMR has grown and developed during the nine years old saying goes – except death and taxes. And, as many since we first started benchmarking key performance indicators operators start to absorb the impact of the latest changes in in the sector, so the scale and range of businesses contributing rateable value and the impact of an average 23% increase in their figures has also expanded – and this leads to some real bills on the bottom line, it may prove to be death by a thousand cross-sector learnings. As our membership has changed we cuts unless those revaluations can be challenged. have added nightclubs and now, for the second year, we have a Businesses have until the end of the year to lodge an initial separate set of analysis for casual dining operators – and at 27% dispute of the way in which their rateable value has been of the market, they are now the second-largest segment we calculated in the hope it can be corrected before are benchmarking. bills hit next year. This is a new right – one that Against a background of a turbulent economy, the Association of Licensed Multiple Retailers rapid social change and expected increases in “The publication (ALMR) was instrumental in pressing for – and the cost base, it is vital to have a good, solid of this year’s it allows you to check that the Valuation understanding of turnover and operating ALMR Christie + Co Office Agency (VOA) is working off the costs. This is particularly vital this year at Benchmarking Report correct information. Already we know in a commercial and operational level as we many cases it is not and that, crucially, move forward to rate revaluations and rent has never looked more it has failed to take account of the cycles in both the tied and commercial timely providing, as it allowances for over-performing operators. sector. Appropriate comparables and does, the key data with This year’s publication of the ALMR firm evidence of what differentiates an which to query, test Christie & Co Benchmarking Report has overperforming operator from a reasonably and rebut VOA never looked more timely providing, as it efficient one will be key when it comes to assumptions” does, the key data with which to query, test exercising the new “check, challenge, appeal” and rebut VOA assumptions. It is recognised system for rates – this is one report that will be by VOA and Royal Institute of Chartered Surveyors invaluable to refer to and is the only one recognised (RICS), as well as Parliament, as authoritative. Given that by RICS and VOA. the government is also proposing no appeals will be allowed if However, the report is more than just a vital strategic business the valuation is within a margin of error based on “reasonable planning tool for operators, it is also a critical annual health professional judgment”, this year’s report should be on everyone’s check for the sector as a whole. And here there are some stark desk and quoted to justify alternative valuation models. messages for the government. And with a decade’s worth of data to mine, there are some Evolution really invaluable insights, not only for rates and rents but also for There are three clear messages emerging from this year’s report. more general use with political audiences, who are all keen to Firstly, it is clear we have an evolving market – some would say forecast and map out what the impact of Brexit might be on a sector that has generated more than half of all new jobs since the there has been little short of a high-street revolution in the way in which we go out to eat and drink. This is a vibrant, dynamic and ▲ financial crash.





Insight innovative sector, characterised by business startups, SMEs and entrepreneurship. At a time when the House of Lords is looking back at a decade of licensing reform, we can see significant change, with food-led businesses increasing by more than a third, the emergence of casual dining as the second-strongest segment and, although there has been decline in community local pubs by a similar proportion, that decline has slowed as it has in the late-night market.

the Apprenticeship Levy, and a significant hike in business rates. This year’s report already shows margins under pressure – particularly food margins suffering where operators do not feel confident in passing on price increases to customers. Across the market as a whole, food margins dropped by more than 4% but community locals were hit hardest, with their food margins down 12%. Little surprise then that post-rent operating margin saw a Resilience squeeze – down two percentage points for most and at an average Secondly, this is a resilient market – during the past decade there of 11.4%, but falling particularly low to 6.7% for the pub sector, has only been one year of negative like-for-like growth in 2008/09 both food-led and community local. This margin squeeze is being and the long-term trend is for 4% growth year-on-year. This year, reported before the full impact of the NLW took effect – although across the sector as a whole, like-for-like growth of 3.1% has many operators made adjustments early – and is clearly apparent been reported, with casual dining, high-street pubs and licensed before the next deluge of regulatory costs are set to hit. We now accommodation all comfortably exceeding this sectoral average know from our work on Benchmarking, and also with KPMG on employment costs, an increase of only 1.5% in costs leads to a and almost doubling their reported like-for-likes year on year. margin erosion of 10% – the heat, therefore, is well and truly on. There are winners and losers, however. Our Benchmarking Report had just started last time we faced Last year, casual dining reported 2.2% like-for-likes and this this type of crisis and we can see then the effect of a perfect storm year it is 4%; high-street pubs reported 3.7% last year and this of credit crunch, increasing costs and legislative change (the year 5%; in contrast food-led and local community pubs last year smoking ban). That was the last time the sector showed negative reported 5.5% like-for-likes but this year they are flatter at 2.4% like-for-like growth and, while it was only a one-year blip, crucially and 3% respectively – so there is evidence of market share steal. what our survey shows is that this seismic and sustained shock Nightclubs, which have seen challenging times, significantly to the economy had a longer-term effect. In short, it created a improved their performance with their flat like-for-likes two-year fiscal drag on growth. Time and time again when we comparing with -3% last year and clearly reaping the benefits of look back at our survey data, we can see it took us two years after their above-average capex. we came out of recession to recover the lost ground in terms of With the Consumer Price Index actually falling 0.1% during the revenue growth, margins and profitability and investment. For period and the Retail Price Index (RPI) running at +1%, this is 2% example, like-for-likes were showing incremental growth around real-term growth. Indeed since 2009, when the sector started back a long-term average of 4% but, having fallen to -2% in 2008/09, on the road to recovery, food has seen growth of 56%, high street it was 2011 before they recovered that and it was actually 2013 35% and community local 23% – with RPI running at 19% during before the high street and community local segments reached the same period, the sector has comfortably outperformed the their previous forecast track. Similarly on rent, a lagging economy as a whole. indicator, rent as a percentage of turnover peaked and took two more years to come off the boil and Under strain return to sustainable levels. However, there are clear warning signs that the The message to government is clear – government must heed that this is a model this is a sector already under pressure and under strain – despite this positive growth, regulatory changes that may be affordable the costs of doing business are increasing in the good times are now on the fringe faster than revenues are increasing and this of sustainability. Remember, every 1.5% is putting pressure on already tight margins. average increase in increase in costs will erode those 7% net Overall operating costs increased this year bills on bottom line margins by as much as 10%. by 3.3% to 49.3% of turnover on average from latest changes April 2017 could be a perfect storm for – and this was fuelled, unsurprisingly, by the sector just like 2008 – but it needn’t be. in rateable value increases in payroll, up 5.5% to 27.8% of There is a truism that those who fail to learn turnover. As a proportion of total operating the lessons of history are condemned to forever costs, payroll now accounts for two-thirds of repeat them. What those lessons show is we need costs for food-led businesses and more than half for a two-year breathing space to manage the challenges more wet-led. The increase in operating costs was felt of Brexit and economic turbulence to allow us to respond to the across the board but was seen most acutely in labour-intensive, challenges of additional costs and regulatory change. food-oriented businesses – costs of doing business were up We know new rates bills will hit in April, we need at least two 13% in food-led businesses, 6% in the high street and late-night years of transitional relief to help us through that pain – and a segment, and almost 2% in community local pubs. resumption of high-street retail rate relief (worth £1,500) would help too. Delay the introduction of the Apprenticeship Levy for Conclusion two years to allow it to be fully road-tested and piloted and to Which brings us to the final strong message to take from this ensure it isn’t just another tax burden on business. Then we face year’s Benchmarking Report – and it is a forward-looking one. a fighting chance of responding positively to politically motivated Based on the decade of data, we should be able to predict steady living wage but, again, taking two more years to reach the goal continued growth, a cyclical substantive increase in capex, and could mean it is achieved without significant job loss and would a further softening of rents (the latter two being critical lagging allow businesses to continue to invest in growth, jobs and in their indicators). But we are not in normal times and this continued communities. growth and investment, which the government and the economy Get it right and next year’s Benchmarking Report could has become increasingly reliant on, cannot be taken for granted. continue to report a robust, resilient and vibrant industry but, get Brexit means we are heading into unchartered territory – it wrong and it is not just our sector that will suffer, it is UK Plc. although the markets have stabilised somewhat, business and The government therefore needs to act now to give the consumer confidence remains fragile and could yet crash when industry that vital two-year breathing space it needs. Article 50 is triggered. The cost of imported goods is already predicted to rise this autumn – wine suppliers and food importers Full copies of the ALMR Christie & Co Benchmarking Report are citing a weak pound to justify 5% to 6% increases in the cost are free to participating operators and to purchase from the of sales and the difficulty of prising British supplies away from ALMR office. the buying power of the supermarkets means prices here will be influenced by demand. At the same time, we face significant additional operational costs in the form of a second increase in Kate Nicholls is chief executive of the the National Minimum Wage in six months, another 6% hike in the National Living Wage (NLW), a new payroll tax in the form of Association of Licensed Multiple Retailers




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EPOS is dead, long live EPOS


EPOS is changing in a traditional sense with collaboration now the name of the game, says Intelligent Business Systems managing director Gareth Powell

his year has been a hectic 25th anniversary on the business front for everyone involved with Intelligent Business Systems. We’ve welcomed multi-site operators Arc Inspirations, CaffeKix, Eclectic Bars, Epic Pub Company, the Ideal Collection, Pieminister, Pug Pubs and Taylors of Oxford to our expanding client list. Other new clients are in the pipeline too, testimony not only to the ongoing appeal of our cloud-based hospitality management solutions but also our understanding of where EPOS sits in the market place. We've also recently added DesignMyNight and Preoday to the list of apps that communicate and share data with our cloud-based EPOS solutions. Thanks to our intelligent and careful deployment of API links, we now share data with more than 30 powerful and popular apps, including ApplePay, PayPal, Flypay, Pepper, Zapper, MyCheck, Orderella and Cake. Other API integrations include Indicator, Welcome, Guestline, S4Labour, Fourth Hospitality and ResDiary. As I have said on many occasions, integrating apps and EPOS solutions is the way forward for those of us working in the technology sector. We recognise and appreciate the traditional perception of EPOS as an isolated stand-alone system is redundant and a new definition is required where collaboration is the name of the game. In reality, it is very much a case of EPOS is dead, long live EPOS.

Customer impact Does this mean EPOS has become obscured by the huge investments being poured into single-purpose apps? Of course not. There is always going to be a need to process sales transactions and stock movements and record and share data. However, the end goal has changed for the operators (and us) because everything they do is driven by the impact of their customers. Our role is to help our clients and their third-party partners achieve a seamless omnichannel customer experience, whether it is buying in-store or shopping online from a desktop, mobile device or telephone. Cross-channel data synchronisation, easy promotions and loyalty programmes


Customers at GBK can use an app to order and pay for their food

are the key steps to enhanced levels of personal customer service. Our mission is to jointly manage and alleviate multichannel pressures, including the enormous challenge of streamlining platforms and systems to place the guest experience at the heart of everything our clients do. One of our long-standing clients Gourmet Burger Kitchen (GBK) uses Flypay’s clever and innovative Flyt platform to give its customers a genuinely enhanced “burger joy” digital experience. This flexible and dynamic order and payment platform was developed by Flypay in conjunction with ourselves because GBK wanted a seamless cutting-edge loyalty app to build brand devotion. GBK customers at more than 78 restaurants worldwide are able to take advantage of an exciting menu of fun added-value engagement activities.

“We recognise and appreciate the traditional perception of EPOS as an isolated stand-alone system is redundant and a new definition is required” The loyalty programme varies from simple stamp cards to reward visiting customers with burgers, milkshakes and sides to more complex “challenges”. For instance, customers are encouraged to visit other GBK restaurants beyond their immediate domestic and work catchment areas. When they do, they are rewarded for their efforts. This blend of simple and complex loyalty initiatives “gamifies” customers’ experiences and motivates repeat visits. This works because Flyt’s loyalty programme integrates seamlessly with our cloud-based EPOS system (StockLink) so customers receive loyalty points whenever they pay in-store or online at any of its nationwide restaurants.

Accumulating loyalty Customers can use the app to order food, pick it up in-store and accumulate loyalty points for online orders. Flyt has fully integrated this functionality with our EPOS solution to ensure mobile ordering is quick and easy and minimises the impact on busy


staff. Front-of-house staff simply accept the order on any POSLink EPOS terminal. The orders are automatically printed in the kitchen and appear on the kitchen screens. The system produces kitchen tickets and individual bag labels ready for collection at a time chosen by the customer. Admin is kept to a minimum as there is no order rekeying, which minimises human error and saves invaluable staff time. Customer convenience is the key feature of the Flyt app. The concept of table ordering has undergone a major transformation. Gone are the days when customers queue and order at the counter. Nowadays they have the option to simply walk in, find a table and order from their phones using the Flyt app. Customers wanting to order a second round of drinks or desserts use their phones rather than walking to the bar or catching the eye of busy waiting staff. It’s a win-win situation for everyone – shorter wait times for customers and more efficient staff who can really focus on a true guest experience. Every base is covered. GBK is also using Flyt’s Order Direct solution with additional integration alongside its delivery partner’s service and our solution. The result is a smoother pickup and less time spent keying in every order. When a customer orders from the Deliveroo website, the order automatically enters the EPOS terminal providing Deliveroo drivers with all the information they require for a fast, painless delivery. This is a great example of the future of cloud-based EPOS solutions successfully uniting different platforms to chat with one another physically and digitally. Multi-site operators know their customers want as many payment and engagement options as possible to stand out in a crowded market place. With this in mind, we’re looking forward to an even busier 2017 as we embark on further collaborations with other apps in the spirit of the omnichannel guest experience. Watch this space, as the saying goes. Meanwhile, enjoy a great festive season and new year.

Gareth Powell, is managing director of Intelligent Business Systems –

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Criticism is one thing, transitioning to a ‘doer’ is a whole different challenge, argues Paul Chase

President-elect Donald Trump


he election of Donald Trump may be symptomatic of a revolt of the “left behind”; it may represent a desire by the casualties of globalisation to return to a rose-tinted vision of a halcyon past that never really was. It may symbolise these things and much more, but the backdrop is one of economic turmoil and vast, global indebtedness that would constrain the actions of any new president, no matter how much of a “disruptor” he may conceive himself to be. The purpose of the letter below is not to heap opprobrium on president-elect Trump; I accept the reality of his election, and using the form of a letter to him is simply a device by means of which I seek to give expression to my concerns. Will “The Donald” read this? Almost certainly not, but I hope you will.

Dear president-elect Trump I confess my first emotion on learning of your election victory was a kind of surreal bewilderment. As in “can this really be true?” Perhaps, for the election of the first female president, we’ll have to wait for president-elect Kardashian to smash that old glass ceiling. You never know! Recently, I watched on YouTube a number of interviews that you’ve done over the years – with Oprah Winfrey, Larry King and Wolf Blitzer – to name but three. And you were consistent in your view, which you’ve expressed over many years now – that America is being ripped-off by acting as an unpaid global policeman; as well as by a series of one-sided trade deals that have seen American businesses close and American jobs go overseas. The world is laughing at America, you say. Well, Donald,

Joseph Sohm /

A letter to ‘The Donald’

“You now have the opportunity to show the political establishment not only what they’ve been doing wrong, but how you are going to put it right!”

you now have the opportunity to lead; you now have to make that most difficult of transitions – the one from “critic” to “author”; from “detractor” to “doer”. You now have the opportunity to show the political establishment not only what they’ve been doing wrong, but how you are going to put it right! But what kind of world will you inherit from your predecessors? Well, I’m not going to talk about foreign affairs, president Putin, NATO or immigration; just money. As Bill Clinton once put it “it’s up there with oxygen”, and the USA and the UK have certain things in common when it comes to money. Firstly, both our nations are highly indebted. It’s a myth to suggest that governments have pressed the reset button on the financial system since 2008, and deleveraged their borrowing. On the contrary, the UK’s national debt has more than doubled since 2008, and now stands at about £1.6tn and growing. But in the good old USA you do things on a much grander scale. In 2008, when president Obama was elected, your national debt stood at $10tn, and now stands at just a little short of $20tn. In the UK we have a saying: when America sneezes, we catch a cold. You get my drift? A lot of people think the 2008 financial crisis is over, or at least under control. I don’t. In fact, I think it was the prequel for the final act. In the UK and in Europe we have levels of government debt that are simply unsustainable, as does America. Put simply, indebtedness is now at a level that we can barely afford the interest, let alone repayments. When countries can’t pay their creditors one of two things happen: sovereign defaults, or an attempt at money-creation that will generate growth and ▲ ¡ WINTER 2016 ¡ PROPEL QUARTERLY



“You’re keen on building walls and protecting America, but I’m not sure how you’re going to insulate yourself from some of the things that are happening in Europe at the moment” But it’s not all bad news. The programmes of QE introduced in the US, the UK and the EU have increased economic stimulus, borrowing, and low interest rates to the huge benefit of one particular group of people: asset owners. People who own large amounts of stocks and shares and other financial assets have done very nicely thank you. Your Standard & Poor‘s 500 index averaged an annualised return of 10% between 1980 and 2008. But between 2008 and now that return has increased to 15% – a 50% jump from the pre-crisis level. Meanwhile, average wage levels in the US and the UK are, in real terms, only now just returning to the level they were in 2007 – before the crisis. This might explain why your “average Joe” feels he’s been “shafted” – to quote the ever-eloquent Bill Clinton. But then again, I guess if “Joe” didn’t feel shafted, you wouldn’t have got elected, would you? You’re keen on building walls and protecting America, but I’m not sure how you’re going to insulate yourself from some of the things that are happening in Europe at the moment. For example, the European Central Bank (ECB) is currently studying the feasibility of issuing a new form of Eurozone debt called the European Safe Bond. The basic idea is to bundle together government bonds from economically strong nations such as Germany, with bonds from weaker nations like Greece, which is on an economic life-support machine from the ECB, and to sell them as one bond, one investment instrument that can be bought by investors, such as banks. So, apparently healthy apples with rotten cores will be coming America’s way soon. Does this sound familiar to you? It should, because that’s exactly what American banks did to Europe, and the rest of the world, when they gave mortgages to the entire cast of the Jerry Springer Show and then bundled them up and sold them


Joseph Sohm /

inflation – vast programmes of quantitative easing (QE) and other measures. That’s why our central bank is quite happy to reduce interest rates, engage in more QE and to see our currency depreciate and generate annual inflation of about 3%, because in more than ten years that would mean our existing debt level would be inflated away by 30% in real terms, when expressed as a percentage of our gross domestic product (GDP). Now, as a businessman you will know that not all debt is bad. If you use the money you borrow to invest in real, productive enterprises that produce a good return on investment, debt can be a good thing. Only time will tell if it was worth increasing your national debt by nearly $10tn over eight years. My guess is it wasn’t. But what do I know? Well, I know that the interest payments alone on America’s debt is predicted to triple to $712bn by 2026. So, before you slash taxes and borrow even more money to engage in a massive, Roosevelt-style infrastructure renewal programme, just wait and see if the lower tax levels you intend to introduce really do generate higher growth. Growth-regression models do indeed indicate that for every 10% fall in tax as a percentage of GDP, there is a 1% boost to annual economic growth. But it’s just an economic theory Donald – don’t get carried away! And that’s just your national debt. What about household debt? As an example, are you aware of how much American students owe the government? In 2008 it was around $137bn, now it is just over $1tn. So, if you’re looking to carry on the current policy of financial smoke and mirrors, whereby we create money out of nothing in the hope that we can grow consumer spending without growing productivity, and thereby inflate our way out of debt, then you might want to forgive some or all of this money owed by students, and be the first world leader to cut out the middle man and engage directly in “helicopter money”! across the world like a bookie laying-off bad bets. It was called the sub-prime mortgage scandal and it plunged the world into a systemic economic crisis in 2008. So, if you want to carry out your declared aim of asserting “Americanism, not globalism” – of reversing the tide of globalisation – I suspect this will be harder than squeezing toothpaste back into the tube. Being a critic is one thing; transitioning to author is a whole new ball-game. And I can’t quite make out what kind of a conservative you are, Donald. You talk of your election victory as being Brexit plus, plus, plus. But whatever else we may say about Brexit, those in the UK’s political class who supported it did so in the name of opening up our country even more to global free trade, not to usher in a new era of protectionism. Let me suggest a working definition of “economic conservatism” to you Donald. An economic conservative is simply someone who believes in limits. Limits to how much government should tax and spend; limits to how much government borrows; and a limit to how much fantasy money central banks should create so that governments can avoid telling their electorates they have to adjust to living within their means, not beyond them. In short, economic conservatives believe in a return to “sound money” – in a world of flat currencies, created by a fractional reserve banking system, we can‘t afford to treat money as if it was a form of magic. I think our politicians know what has to be done to achieve what I have set out above; I just don’t think they’ve figured out how to get re-elected after they’ve done it. If you can figure out a way to come clean with the electorate and get America back on the path to fiscal rectitude, then you will have done the world a service. If you can figure out how to get re-elected after you’ve done it, you’ll have found the Holy Grail of politics. If you can’t, then governments, including your own, will continue to operate like giant Ponzi schemes and there will come a day of financial reckoning. Good luck with all that Donald.

Paul Chase is a director of CPL Training and a leading commentator on health and social policy


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ollowing the advent of mobile technology, its IT team have been at the cutting edge in keeping pace with its customers’ changing behaviours – ensuring they are matching the always-connected society with alwaysavailable bookings. Implementing a fully integrated online and telephone based table reservation system was a key driver for PizzaExpress, which understands the value of giving customers a seamless and simple booking experience. So, PizzaExpress called on the expertise of liveRES, one of the UK’s leading providers of online booking systems, and IOVOX, cloud based analytic experts. The key to success was their flexibility to integrate both the online and phone booking service, creating a fully connected reservation system. This means bookings can be made in any of the chain’s restaurants 24 hours a day, either online or by telephone, so no customers are left high-and-dry and no business is lost. Furthermore, fully automating over-the-phone reservations transforms operations for PizzaExpress, without having to have staff on hand at all times to pick up the phone to record bookings. Restaurant staff can now manage reservations directly from the restaurant floor, with calls that are missed

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being automatically handled through the system, enabling staff to focus on the business. “In the hospitality industry, it is important to make sure all channels have the same availability, so a premium service is available no matter how the customer would like to book,” said Siobhán Fagan, IT director of PizzaExpress. “This fully-integrated solution has given us the opportunity to ensure the bookings journey is as slick and customer friendly as possible, and we have seen an increase in bookings already.” Another key objective for PizzaExpress was to receive insights into customers booking behaviours and needs, to help them further enhance the restaurant experience. The combined insights created by liveRES and IOVOX has enabled PizzaExpress to become ever more agile in its bookings and marketing. Using the liveRES solution means that PizzaExpress can fully automate its reservations and table management activities, transforming its operations and enabling the company to focus on its business. This, along with liveRES’ statistics, and integration into the till system, gives PizzaExpress the ability to analyse the entire customer journey from booking a table, to ordering a meal, to paying the bill. And the IOVOX, cloud-based platform, allows PizzaExpress access and ownership of its booking statistics, giving it the power to analyse over-the-phone reservation trends over time. “Through these analytics we can track the customer journey, measuring demand and booking trends such a group sizes and busy periods. This helps with forward planning, and to identify problem areas to adjust,” said Fagan. Already, Fagan is using the data to introduce tailored and early access to customer offers as well as giving early visibility of menu changes. “Working with liveRES and IOVOX, we will not only continue to deliver on our commitment to offer the ultimate customer service today, but we will gain significant intelligence-led customer insights that will enable us to further improve the customer experience of the future,” concluded Fagan.


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What millennials DON’T want The Elliotts Data Driving Decisions survey, organised in association with consultants Morar, asked 1,000 consumers about the last time they chose to eat somewhere new. It followed the customer journey from that moment of inspiration to eat out, through to payment and their decision to share their experience, both off and online. Ann Elliott reveals the survey uncovered a lot about millennials – that core segment for our market “


illennials” has long been a major buzzword in the hospitality industry and most operators will have one target customer type (or one customer segment) they would typically classify as “millennial”. By millennials I mean 18 to 29-year-olds. This is the most attractive demographic to many brands because they eat out more often than any other age group. Couple this with an ageing UK population and it’s clear that appealing to a younger demographic is a necessity for longterm, sustainable success. In fact, there’s a case for saying eating out is simply a part of millennials’ routine. Only 4% hadn’t eaten out in the three months leading up to the research, compared with 15% of 45 to 59-yearolds. More than two-thirds (68%) of millennials had eaten out in the month leading up to the survey. I read through the results again in preparation for this article, and what was particularly fascinating wasn’t so much

what millennials like, but rather what they don’t like and don’t do. We’ve all read articles about attracting this holy grail of demographics, but you could argue you can learn a lot more by talking to consumers about what they don’t like. Often it’s what alienates a consumer that is most telling about their habits and preferences. Luckily our findings are split across the entire customer journey, with plenty to take on board for each step of their experience.

Inspiration To start, we asked our panel why they felt compelled to eat out. It’s interesting that the moment of inspiration can strike anywhere. Almost a quarter (23%) of millennials admitted to picking a restaurant while at work, compared with only 11% of 45 to 59-yearolds, while 36% were inspired while “on the go”, again higher than any other age group. ▲ ¡ WINTER 2016 ¡ PROPEL QUARTERLY


Feature Opinion There’s also the influence of social channels here as one-third (33%) saw a friend “check-in” to a restaurant on Facebook or Twitter and followed suit by visiting themselves. Unsurprisingly, this was significantly higher than the over-45s (15%). A buzzword I often hear in the office is FOMO (Fear of Missing Out); the data shows this is a real thing and millennial consumers are much influenced by what experiences their friends share online.

“A buzzword I often hear in the office is FOMO (Fear of Missing Out); the data shows this is a real thing and millennial consumers are much influenced by what experiences their friends share online” We also obtained feedback on what influenced their decision on where to eat. Millennials are, of course, digitally driven – almost a quarter (23%) are influenced by online discount codes, more so than any other age bracket. Millennials, though, are less inclined to look at printed collateral. While 16% of 30 to 44-yearolds said a leaflet influenced their last decision, this fell to 7% among millennials. It might be an environmental concern but it’s more likely that growing up digitally native has reduced the effect of a tangible piece of marketing. Regardless of the cause, expect to see millennials respond more to digital marketing and less to physical collateral. Having said that, only 11% were visiting a new restaurant as a result of receiving an email, with the 30 to 44-year-olds more responsive. One argument could be that in this age of information, millennials receive too many emails to give each of them significant attention. Compare this with a media article, which inspired 18% of millennials. The viewpoint many comms experts have – that an article obtained via PR has more impact and overcomes marketing cynicism – seems to ring true for millennials.

Research and booking When researching a meal, millennials are less likely to look at a restaurant’s menu before arrival. In fact, more than half (51%) admitted they didn’t look at the menu the last time they visited a new restaurant, versus 39% of 30 to 44-year-olds, while 54% admitted to not looking at a restaurant’s website, versus half of 30 to 44-year-olds. Millennials also don’t tend to gather feedback about a venue, at least they don’t do it offline or in person. Only 39% spoke to others who had been to the same, new restaurant, while more than half of over-45s (51%) did so. Instead, the younger generation are hopping on to social review channels to conduct research. This channel isn’t necessarily TripAdvisor but also Facebook, where reviews continue to grow in popularity. Circa 24 hours after checking-in to a venue, Facebook is feeding users with a new notification, asking for a review of the location. As a result, almost one-third of millennials (29%) are three times more likely to look at social media reviews than over-45s. But what other research are they doing? While they may not be as likely as older consumers to look at a food menu, the drinks menu is more important to a millennial – 38% of them researched a restaurant’s drinks menu, compared with only 22% of over-45s. They’re also taking an interest in travel logistics – 24% of millennials look into how they’ll get to a venue, versus 13% of over-45s. Despite this increased planning, millennials are no more or less likely to book a table – 39% booked their last visit to a restaurant, identical to the 30 to 44 and 45 to 54 age ranges. Their booking platform, however, is significantly different – 9% made a booking on their smartphone versus only 1% of over-45s. They’re also more likely to book by calling the venue as one-third (33%) rang up compared with 29% of over-45s.

Arrival and experience But what about the eating out experience itself? Millennials are less interested in receiving a greeting on arrival, only 37% expect


one. While on the face of it this is quite a surprising statistic, these consumers won’t want to be ignored either. Even fewer millennials indicated “yes” for our question: “Did you expect to be shown to your seat?” Only 24% said “yes”, perhaps influenced by the growth in fast-casual outlets where they can choose where they sit. Interestingly, and I would expect contrary to popular opinion, only three-quarters (75%) said atmosphere and ambience was important to them. It seems high, but for over-45s this jumps to 86%, and is 91% in over-55s. Millennials are less likely to care about how the outside of the restaurant looks too – 73% said it was important compared with 82% of 30 to 44-year-olds. While this does indicate environment is less important, it’s worth noting that it is still important to almost three-quarters of millennials. When it comes to ordering, millennials don’t like being given a recommendation by team members, in fact only 11% act on them versus 19% of 30 to 44-year-olds. This is despite the fact more than one-third (34%) of them went into the restaurant without any idea what they wanted to order, higher than any other age group. Then things get really tough, millennials are hard to please! Almost a quarter (22%) claimed there wasn’t enough choice on their most recent restaurant experience. That might seem low to some, but only 3% of over-45s made the same claim. It’s almost as difficult on drinks – 18% of millennials were disappointed, higher than any other segment.

“Millennials are less interested in receiving a greeting on arrival, only 37% expect one” Part of the problem might be their assuredness of what they want to eat. Almost half (47%) knew what dish they would order before they had even opened their menu – for over-45s this is lower (25%). Millennials have a favourite dish for every cuisine type and know how they like it. Ditto drinks – 42% know what drink they want before arrival, versus 23% of over-55s. That said, they aren’t afraid to ask questions – 41% claimed to have asked their server questions about the menu, far higher than the over45s (25%).

Payment and sharing When it’s all over and it comes to payment time, millennials may as well be given a card machine with their bill. They’re the most likely segment to pay by card (59%), a figure I’d expect to rise as contactless payments continue to take over. They’re also the most open demographic to contactless payment – almost a quarter (22%) have paid by mobile app, compared with 4% of over-45s. As you can see, there is plenty to think about when catering to millennials, from that initial moment of inspiration to eat out all the way through to whether or not they share their experience. Across the board there were subtle nuances in our data, where millennials’ data varied from the rest of our sample. In fact, they were the anomaly segment that most frequently differed from the consensus. Your reward for taking all of their preferences on board, getting your offer spot on and impressing the millennial isn’t great either. Only 53% will tell friends and family, lower than every other segment. They are, however, more likely to post photos on social media (28% versus 20% of 30 to 44-year-olds), so giving them plenty of eye-catching visuals to snap is a worthwhile consideration. Hard to impress, hard to get the word out. It’s a good job so many of us love this industry, what a challenge!

Ann Elliott is chief executive of leading sector marketing and PR agency Elliotts – Follow her on Twitter: @elliottsagency


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News Digest

News Digest Innis & Gunn founder – principal aim of £1m crowdfunding campaign is to roll-out The Beer Kitchen brand

Dougal Sharp, founder of Scottish brewer and retailer Innis & Gunn, has told Propel the principal aim of its £1m crowdfunding campaign is to roll-out The Beer Kitchen brand. The company, which was founded in 2003, is offering a 2% equity stake in return for the investment on crowdfunding platform Crowdcube. Innis & Gunn intends to double its turnover to £25m during the next three years and the capital raised through the Adventure Capital campaign will be used to accelerate its immediate growth priorities. Sharp said its main aim was to fund the roll-out of The Beer Kitchen brand, which was launched in Edinburgh in July 2015. It has since opened a second site, in Dundee, while bars will follow in St Andrews next month and then Glasgow, which will house the company’s first micro-brewery, before its first international venue in Toronto, Canada. Sharp said: “We are focused on rolling out The Beer Kitchen in Scotland for the time being. We believe there is plenty of opportunity and it is working fantastically well for us. It is a question of ‘when’ we head south but we need to work out what the right route is for us. We are in ongoing negotiations on a site in downtown Toronto. Canada has long been our biggest market abroad so it makes sense to take The Beer Kitchen there. We will be looking to work with an experienced hospitality partner and, if it is successful, then we will look at other markets.”

Propel Morning Briefing, our sister daily news bulletin, has broken all manner of exclusives in the past few months. Here is a selection of the many stories brought to you first

Luke Johnson takes 10.64% stake in Elegant Hotels Sector investor Luke Johnson and his partners at Risk Capital have taken a significant stake in Elegant Hotels Group, the owner and operator of six upscale freehold hotels and a beachfront restaurant on the island of Barbados. Johnson appeared on the share register with a stake of 10.64% in the company after buying 9,450,000 of the company’s shares. Fellow principals at Risk Capital are understood to have bought a further 550,000 shares in the company for a total stake of ten million shares. The total investment is worth about £7.6m. A Risk Capital source told Propel: “We are value investors and have followed Elegant Hotels since its flotation (in May 2015).” Elegant Hotels announced in August that its recent acquisition, Waves Hotel and

Spa, is now open for business, having been extensively redesigned and refurbished after it was acquired by the group for $18m in March. The board expects Waves to be earnings enhancing for the group in FY17, with excellent potential for further improvement in FY18 and beyond as the property develops its reputation. The company also announced it

Comptoir Libanais boss – ‘foundations now in place to execute our measured expansion plans’

The chief executive of Comptoir Libanais, the Lebanese canteen specialising in fresh Middle Eastern dishes, has told Propel the company has the foundations in place to execute its “measured” expansion plans. Having opened restaurants in Bath, Exeter and

Soho in the past month, Chaker Hanna said the company, which now has 17 sites, was keen to grow both in the capital and the regions. He added: “We have strengthened the team and with the initial public offering in the past three months, we now have the foundations in

had reached an agreement in principle to bring a 123-room luxury hotel in Antigua into Elegant Hotels’ portfolio under a management contract. The hotel is under construction and is expected to open in mid-to-late 2017. This will be Elegant Hotels’ first property outside Barbados and its first management contract, and it is expected to be earnings enhancing in FY18.

place to execute our expansion plans. We opened our first site in 2008, in London, and the success of our first regional site in Manchester gave us the encouragement to open outside the capital.” Further sites are due to open next year in Reading and Oxford and Hanna said there was no reason why Comptoir couldn’t have a presence in “all the big cities”. He added: “We could have one or two restaurants in these places – but there is no rush. We’ll take it one step at a time. The location has to be right. It took us two years to get the right site in Manchester, while in Exeter it took 18 months. I wanted to be in Oxford three years ago! But the funding and team is in place that will allow us to expand at a reasonable pace. Growth is important but it’s got to be the right opportunity.” ¡ WINTER 2016 ¡ PROPEL QUARTERLY


News Digest Fulham Shore opens 28th Franco Manca, at Westfield Stratford, pipeline to take total to more than 40 by 2018 Fulham Shore, led by David Page, has opened its 28th Franco Manca pizza restaurant, this time in Westfield Stratford shopping centre in London, and announced it has a pipeline of openings lined up with the aim of having more than 40 sites in total by spring 2018. Page told Propel the next Franco Manca to open will be on Monday, 5 December at WestQuay Watermark – Hammerson’s £85m dining and leisure development in Southampton – at a 130 square metre venue on the scheme’s lower promenade. It will be the brand’s debut in Southampton and only its third restaurant outside London.

The company will return to the capital to open a site in Victoria Nova in January, and Page said the company had also exchanged on sites at a former police station in Richmond and another close to Putney bridge, with openings planned for March or April 2017. They will be followed by a launch in Reading at the end of the year. Page said the company was also negotiating for three sites in Edinburgh and building a pipeline to reach “40 to 42” sites by spring 2018. Fulham Shore also operates ten restaurants under The Real Greek brand and Page told Propel having opened at Boxpark Croydon in October it would open its 12th site at Southampton Watermark as a double launch with Franco Manca.

Former L’Atelier des Chefs managing director plans Arlo’s expansion in London and beyond

Former L’Atelier des Chefs culinary schools managing director Tom McNeile has told Propel he is planning expansion of his informal steak restaurant concept Arlo’s in London and potentially beyond. McNeile opened the 75-seat site in Balham, south west London, in July. The restaurant, which is on the corner of Ramsden Road and Balham High Road, serves a simple menu of grass-fed British beef from native breeds alongside a selection of homemade sides, sauces and seasonal salads. McNeile is already thinking about expansion and is looking to build a cluster of sites in the south and south west of London. He said: “At Arlo’s, we hope to tap into the market catering for people who eat at restaurants such as Byron and


Franco Manca. You can grab a burger or a pizza for £9 or £10 but there are few places you can do that with steak. I don’t believe a very good steak has to cost £20 to £25 a head. At Arlo’s we have a simple and straightforward goal – to source the best beef and serve it quickly and simply. I’ve got an experienced executive board behind me and everything is open. We would go where the market wants us – I don’t see any reason to put a geographical block on it – at least at this early stage.” McNeile began his career in the hospitality industry after five years as a currency trader in the City and having spent six years in northern Russia, initially working on a trawler and then managing a salmonfishing operation.

changing and we’re really excited to be launching this concept. The name comes from the song One Bourbon, Steak-lobster lounge restaurant One Scotch, One Beer, which concept Bourgee has said was recorded by John Lee it “smashed” all booking Hooker in the 1960s. It gives us and sales targets during the another string to our bow and opening weeks of its new the chance to attack another Chelmsford site. The company’s market. The thing with Porky’s second restaurant opened on 1 is it is quite set. The menu October at the city’s new £3m is always the same across dining quarter. The 120-cover, all the sites. One Bourbon two-storey site has a bar central Tavern gives us flexibility. We to each floor. James Welling can do more small plates and Mark Baumann launched rather than just main plates. the “affordable luxury” brand It gives us more opportunity. in Southend in 2014 and have Our chefs can also be a little already agreed deals for sites in more creative with the dishes Bury St Edmunds and Norwich, – something like barbecue with discussions at an advanced tapas for example.” A second stage on a property near One Bourbon Tavern is set Colchester. Welling said: “The to open with the conversion start in Chelmsford has been of the Porky’s site in Crouch phenomenal, with thousands of End. Brigg said: “We think it bookings taken. Performance in would benefit more from being terms of revenue has also been a drink as well as a food site staggering and we have already rather than just as an out-andhit the heights of Southend. out restaurant. At Porky’s it’s While we have barely scratched probably 70% food sales, while the surface in terms of One Bourbon Tavern will be promoting our full offering, we 50/50 – potentially more on the are delighted with the start we wet side.” have made and look forward to driving performance further in the coming weeks as we Steamin’ Billy boss – ready ourselves for our Bury ‘new rateable values and Norwich sites to open.” are another nail in the Previously, Welling told Propel coffin for British pubs’, the company would build a set for £200,000 rise cluster of sites in Essex and East Anglia before gradually across its 11 sites advancing across the country in Billy Allingham, managing an “organic, measured way”. director of Leicestershirebased Steamin’ Billy Brewing, has told Propel he fears the Porky’s launches sister new business rates will be concept One Bourbon “another nail in the coffin” for Tavern to ‘add more British pubs after seeing the strings to its bow’ value increase by more than £200,000 across its 11 sites. Simon Brigg, co-founder of Allingham said the proposed London-based barbecue rates would take £100,000 off restaurant Porky’s BBQ, has the company’s bottom line told Propel the company next year. Nine of the sites face has launched sister concept increased rates under the new One Bourbon Tavern to “add valuation, including the Dog & more strings to its bow”. Gun in Syston, which would rise The concept launched on in from £11,250 to £27,300, and October in West End Lane, the Cow & Plough in Oadby, West Hampstead, on the site which would go up to £98,000 of smokehouse and bar One from £47,000. Allingham said Sixty. The 2,500 square foot the Dog & Gun had a turnover site has 80 covers as well as of £3,000 a week when the a bar offering 15 draft beers, company took it over and it bourbons and cocktails. Brigg, had now increased that figure who founded Porky’s with to about £8,000. He added: wife Joy, said: “It’s barbecue“We buy troubled boozers and themed but more drink-led. The gastro-pub market is dilapidated sites, put £150,000 ▲

Bourgee smashes sales targets at new Chelmsford site





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News Digest to £200,000 into them, and we are getting penalised for doing well. I thought this revaluation was about giving rural pubs some rate relief! I think it will put some pub companies in jeopardy. People are trying to run efficient businesses but this is another nail in the coffin for the British pub. We make these pubs a great asset for the community, employ local people and now we are being penalised an extra £200 to £300 a week. We pay £1m a year to HMRC on a turnover of £5m and employ 170 people. I’m happy to pay my way but this is yet another cost and I think some pubs will struggle, particularly tenanted sites, which publicans go to and improve and get the revenue up.”

Chatwin said he was looking to acquire further sites to continue expansion. He added: “We’re working on a few potential deals at the moment. It’s difficult, though, to get good-calibre sites and rents are going crazy as well. We’re looking to get to ten in the next couple of years and then we’ll have a think about where we go from there.”

Neil Lambert – Firezza has UK-wide appeal

Neil Lambert, joint managing director of gourmet pizza delivery company Firezza, has told Propel he believes the brand has UK-wide appeal. Firezza, which was acquired by PizzaExpress earlier this year, has opened its 19th site Grace Land acquires two in Exeter. Firezza, which has sites in London, looking 16 sites in London as well as one each in Tunbridge Wells, to double estate to ten Milton Keynes and Exeter, has pubs in next few years revealed a rebrand, as well as a The founder of London-based pipeline of sites for expansion, neighbourhood pub brand as part of a push to restore Grace Land has told Propel simplicity to the pizza delivery he is looking to double the market. And while the pipeline, size of the estate over the which includes Dulwich, next few years after acquiring Hampstead and Reading, two new sites in the capital. centres on the southern part Anselm Chatwin has bought of the country, Lambert said bar restaurant Verden in he believed Firezza would Hackney and Jan’s Bar in Stoke work across the UK. He added: Newington to take Grace “Our belief is the model of Land’s portfolio to five sites. overpriced, poor quality and Agent AG&G acted on both two-for-one pizza is broken. We deals for Grace Land, which believe we can offer greatis a partner of Barworks and quality pizza from £6 and, while currently operates the Black it affects margins, we can make Heart in Camden Town, the it work through order volume. Earl of Essex in Islington, and We think there is scope to grow the Kings Arms in Bethnal the brand inside and outside Green. Verden was acquired London. The Firezza brand is from a private landlord for strong in the capital but we’ve an undisclosed sum through seen massive growth already agent Dean Gambles and Co. from the new sites in Milton The building in Clarence Road Keynes and Exeter and we see is undergoing refurbishment that growth expanding across and whas reopened in the the UK. We’re taking it one site next couple of weeks as at a time but we believe there The Mermaid. Jan’s Bar was is great demand for proper acquired from a private vendor, pizza at an affordable price.” via landlord Wellington Pub Company, for an undisclosed sum through agent A3A4 Ever So Sensible Licensed Property. Chatwin Restaurants looking to said: “It’s a great location double estate to 20 after but it needs a lot of love and period of consolidation attention. There’s a little house at the back that we want to use Ever So Sensible Restaurants managing director Chris to create an indoor/outdoor Bulaitis has told Propel he is area in the garden and also looking to double the size of use as a private dining room.”

Starbucks aims to make tea as popular as coffee in stores again as it launches Teavana hot brews in UK Starbucks tea category manager Charlotta Oldham has told Propel the company aims to make the drink as popular as coffee in its stores again as it launches its Teavana hot brews in the UK. The company has introduced ten new hot teas to the range following the launch of its Teavana iced brews in the summer. Oldham said Starbucks, which acquired Teavana in 2012, was trying to “create a modern tea experience for the new generation of millennials”, with the new range including green tea and tea lattes. She said: “When Starbucks opened its first store in 1971, we had 27 teas on the menu – it was the company’s estate in the East Midlands following a period of consolidation. The company has opened its 11th site – The Royal William IV in Lincoln. The Brayford Wharf pub is Ever So Sensible’s fourth in partnership with Enterprise Inns and will operate under its Lincolnshire Pub & Kitchen brand. Bulaitis said the company, which anticipates reaching £7m turnover this financial year, was now looking to acquire further sites as it aimed to build a 20-strong estate in the region. He said: “We are looking to develop

all about the tea and all about the coffee. Today, most people associate Starbucks for its coffee and we want it to be known for its tea again as well. We are trying to re-image tea. We love our tea in the UK but we are looking at how we can modernise the tea experience with both traditional and contemporary flavours and appeal to millennials. That is the market we are trying to tap into. They are adventurous and want to try new things and we think this new range encourages that. Teavana is a very exciting long-term commitment for Starbucks. We are certainly in this for the long haul.” more sites across the East Midlands with a similar format and extend our relationship with Enterprise Inns. We’re looking at two or three new sites a year and aiming to get to 20. That’s what we can go to before we need to look at how we administer or operate the business. We are looking at cities and big towns and doing deals with good leasehold sites or joint ventures. The beauty of being food-led is we can take on part-tied leases and still make a very good overall profit margin.” ¡ WINTER 2016 ¡ PROPEL QUARTERLY


News Digest Founder of London grab-and-go poké concept concentrating on getting model right before expansion The founder of a new graband-go poké concept in London next month has told Propel he is concentrating on “getting the model right” before considering expansion elsewhere in the capital. James Gould-Porter is has launched

Island Poké in Kingly Street, Soho. The concept is based on build-your-own bowls of Hawaiian-style raw fish, a craze that has swept the US. Backed by White Rabbit Fund, the restaurant investment platform of former Soho House Group commercial director Chris Miller, the venue serves Hawaiian-style sashimi straight from the Pacific, fresh Acai (breakfast) bowls, as well as 100% Hawaiian Kona coffee.

Shepherd Neame looking to double size of managed estate, unveils new brand identity

Shepherd Neame chief executive Jonathan Neame (pictured) has told Propel its primary focus is on its 60-strong managed estate and the company is looking to double its size over the next five years. Shepherd Neame has also unveiled a new “more modern and dynamic” brand identity, which is being rolled out across the portfolio. Following its full-year results, Neame said the company was reaping the benefits of its hard work over the past few years. He said: ““We have invested in our properties, our products and our people. It’s not happened overnight. It’s about quality not quantity and when the conditions are right it pays back handsomely. We have put a lot of capital into our managed sites and built up the


accommodation and food offer. The accommodation has been getting stronger and we have good revpar. The business is in very good shape. We now have 60 managed sites and we are targeting 40 to 60 sites, either through acquisitions or through our existing estate, over the next five years. It’s a similar rate of growth to what we are doing currently. There are different parts to our strategy but our primary focus is the managed estate. We are investing £9.5m this year in our hotels and pubs, which is an increase on the £8.6m we spent on refurbishments in 2015.” The company has also unveiled a new brand design with a new logo. Neame said: “It’s more than just a logo – it’s a new identity – more modern and dynamic.”

The site has about 15 covers as it focuses on a grab-and-go format. Gould-Porter said: “My first taste of authentic poké was in Maui when I was nine, which stuck with me and led me to quit my job in the art market and take poké to the streets of London. We were looking for someone to come on board and back us and that’s when we met Chris. He really bought into the whole concept and we’re incredibly excited to open our first bricks and mortar site. The fish will be the key player – we really want to showcase it. It’s about highlighting the authenticity of the dish and the quality of the seafood. At the moment we are concentrating on getting the ball rolling – we don’t want to run before we can walk. If there is an opportunity to grow we would take it but first we need to get the model right here.”

at how we can add tangible value to their business. We look for four things in any business we invest in. They are quality management – it’s all about backing good people; a differentiated product; strong growth potential; and a proven capital model that delivers a strong return on investment. If they have these four attributes, then we are interested.”

Hop founder says A1 sites will make concept a ‘lot more scalable’

Paul Hopper, founder of Vietnamese street food concept Hop, has told Propel restricting Hop stores to A1 sites will make the business a “lot more scalable”. He said: “For A3 restaurants you pay a massive premium for the lease and it’s so competitive. If you want to scale it’s a lot easier to do with A1, albeit it’s a lot harder to do the model because you have to KPC co-founder – find other people who will cook we’ve appetite for the food for you or you have to further investments in have your own central kitchen. foodservice market At the moment, while we’re still small, we have agreements The co-founder of private with a couple of suppliers equity firm Kings Park Capital who cook things for us to our (KPC), which invested in recipes. We have a very intense “better burger” restaurant model with a lot of prep (a concept 7Bone Burger Co total of 300 hours a week) but this month, has told Propel then the volumes are big – 600 it has the appetite to back further foodservice businesses. customers in less than two hours. You can justify that many The company specialises in prep hours when you’re doing investments in the leisure industry and has so far acquired that sort of volume. We’re always looking to simplify the stakes in sector companies processes. The menu may look Abokado, Fuel Juice Bars and Inn Collection as well as 7Bone. the same as when we launched but the way we make dishes And Jason Katz, who founded and the supply chain have KPC in 2007 with Hugo changed massively, such as Robinson, said it was keen to cutting prep stages and multimake further investments in using some ingredients. I could the industry – as long as the fill a book with the number of companies concerned met tweaks we’ve made to ensure four key criteria points. He our processes are easier and added: “Pubs and restaurants more scalable so anyone can are a big component of the come in and learn them in a leisure industry and we are few days.” Hop has opened hungry for more investments a second site near Bank in in this area. We are backed by November and a third planned 70 chief executives, chairmen for March next year. Hopper and owners of businesses in said: “The plan is to open 30 the sector. We look to support to 40 sites in London and then ambitious companies and start looking nationally and their management teams to help them fulfil their vision and expand as much as we can. I want to open ten in the first accelerate their growth. We three or four years and then it spend a lot of time working can go crazy from there.” with these brands, looking




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