Propel Quarterly Autumn 2016

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

Hippo boss Rupert Clevely interviewed

Inside: Four qualities of inspirational leaders Encouraging female entrepreneurs Tackling the Brexit effect The rise of The Bottle Shop The Joule in the crown The advantages of wine on tap Through the looking glass Asking the right questions


ISSUE 16 • AUTUMN 2016

Editor’s Opinion

Editor’s Opinion

Winners and losers in the post-Brexit era Dear Reader There's no doubt that Brexit is the burning topic of the hour – with the sector seeming as evenly split as the rest of the UK on this issue. Uncertainty is never a great thing in business and the Remain camp may yet prove to have been right to warn against the dislocation a departure from the UK will cause. It is encouraging that we're running reports in Propel that indicate rapidly increased tourist enquiries in relation to visits to the UK. Our recent benchmarking survey showed that sector opinion remains as evenly split in the wake of Brexit, although a small majority of operators are either happy or relaxed about the decision. Less encouraging is the number of reports emerging already of aborted deals as operators find their confidence dented by the outcome of the EU referendum. It's only the passage of time that will prove whether Brexit is our worst post Second World War mistake or the start of a golden age. The sector has rapidly evolved in the past five years into its mature phase, 25 years after Wetherspoon and PizzaExpress began the quick-fire national roll-outs that are now much more customary. The UK market is now more similar to the US foodservice market than any other country in the world. There are a number of mature brands struggling to stay relevant in a market that saw 16 new concepts launched each week last year. Like-for-like sales growth is not easy to achieve in this part of the market. It's ironic that the premium end of the market provides a safer market position. Who would have thought a few years ago that Mitchells & Butlers would be shrinking Toby Carvery and Harvester to grow its premium steak brand Miller & Carter to 100 sites. Meanwhile, there must now be a danger of the sector reaching saturation point in a number of towns and cities in the south east in particular. This will mean weaker brands will fail over time. We are also hearing stories of brands that have prospered in London faltering outside the M25. We believe this process will be speeded by the ratcheting up of the National Living Wage. This is surely the biggest structural challenge faced by the sector for a very long time. Still, the sheer quantity of innovation in the marketplace is thrilling and serves an important purpose – UK consumers love the experiences they get eating and drinking at your sites and will always want to leave their homes to enjoy them. The sector will have winners and losers – but there's no doubt the sector itself is a winner. Our summer conference highlighted many of the positives in the sector. NPD Group presented research that shows all day-parts are now in growth with breakfast, still a developing part of the market, showing the strongest growth. Business Growth Fund's Jonathan Simon provided evidence of the strong appetite to invest in the sector, with no fewer than eight companies receiving the Fund's backing in recent years. Boost Juice Bars and Coaching Inn Group are just two of the businesses proving that a well-defined business focus can be the foundation for rapid growth once a forward-thinking external investor is recruited. Pizza Pilgrims and Porky's BBQ provided further evidence that consumers reward hard-working entrepreneurs who establish a unique market position. The conference also heard from City Pub Company's Clive Watson, who is proving yet again that it is possible to grow an estate of high quality pubs from scratch given a little imagination. The company's Cambridge Brewhouse site is a fine example of what is possible, even at a site that many other operators had passed on over the years. Peach Pub Company co-founder Hamish Stoddart reported that the company's unusual "partner model", by which site managers take a share of the equity in the business, is alive and well. In fact, the company is looking to provide a further twist by offering to mentor a smaller business and share its head office capacity. I know several companies are in talks with Peach over this – and it will be fascinating to see how it pans out. As ever in this sector, fascinating is very much the watchword! Best wishes,


Paul Charity ¡ AUTUMN 2016 ¡ Propel Quarterly





boss as hungry as ever 08 Hippo after making return Rupert Clevely by Sonya Hook


The Joule in the crown

Neale Chandler talks to John Porter

advantages of wine on tap 21 The by Glynn Davis lot of bottle 22 A Glynn Davis looks at the rise of The Bottle Shop


he new phenomenon delivering T an impact by Cyril Lavenant

female entrepreneurs 32 Encouraging by Ann Elliott four qualities of 36 The inspirational leaders


by Chris Edger and Tony Hughes


he black magic of marketing T effectiveness by James Hacon

the balance 41 Tipping by Ian Dunstall the Brexit effect 44 Tackling by Kate Nicholls Multi Club Conference 50 Propel and summer party


in pictures and overview

you the money 61 Showing by David Fitzgerald and booze – a glass half full 64 Brexit or half empty?


by Paul Chase

the right questions 68 Asking by David Martin the looking glass 71 Through by Steven Pike in technology 74 Investing by Gareth Powell Digest 77 News a selection of Propel Morning Briefing exclusives


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

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Propel Quarterly ¡ AUTUMN 2016 ¡

Contributors Paul Chase, Glynn Davis, Ian Dunstall, Chris Edger, David Fitzgerald, James Hacon, Sonya Hook, 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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Feature Rupert Clevely

Hippo boss as hungry as ever after making return


t’s been five years since Rupert Clevely sold his successful pub company Geronimo Inns but the quiet life clearly didn’t have enough appeal as he’s back in the industry again. Last September, Clevely announced he was forming a new company, Hippo Inns, a joint venture with Enterprise Inns. Clearly on paper it looks like a winning combination of expertise, but is it possible to build a portfolio of successful pubs in a climate where many on-trade businesses are closing or struggling to make a profit? Clevely is confident there is a gap in the market for Hippo; so much so the business now comprises five pubs only 11 months after the company was formed. He says: “It’s been just over five years since I sold Geronimo and I found I was missing the industry enormously. I was still involved in the leisure sector as non-executive chairman of Pizza Pilgrims but it was different from when I was running my own business. “I missed the people and the excitement; and my wife and children believed I had been wallowing around too long at home, hence the name Hippo. “When the opportunity with Enterprise presented itself it all made sense. I had worked with Enterprise for many, many years and always had a great relationship with them. After all, without their help Geronimo would not have been what it was.” The timing was perfect, according to Clevely:


Hippo Inns co-founder Rupert Clevely talks to Sonya Hook about why he came back to the industry, the challenges faced and what the future holds for his new venture

Propel Quarterly ¡ AUTUMN 2016 ¡

“Enterprise was looking at the managed idea and I was wanting to get back into pubs.” In fact, the opportunity wasn’t just a perfect one it was essential in allowing Clevely to embrace the industry in the way he wanted. He explains: “If the opportunity with Enterprise hadn’t presented itself I wouldn’t have done it because I simply wouldn’t have had access to the sites, and also I knew that one pub wouldn’t be enough for me – I wanted to take on a number of sites and build something bigger. “The thing is that in London today, if I was to try to restart Geronimo, finding sites on my own would be very hard; the capital would be possible but finding the property would be nearly impossible. Finding good free-of-tie and/ or freeholds is much more difficult today. “Great companies such as Young’s and Fullers are doing very well and they are buying all the best freehold pubs within the M25 and, frankly, I can’t compete with that.”

Is the business doing well? Clevely explains that he is very happy with the way Hippo has performed so far. He says: “We now have five sites with the addition of The Lillie Langtry, which has opened really positively. “All the sites are performing well with four above budget and one that needs tweaking, but all of them are trading profitably. “It is important to remember we started a new business from scratch and opened four in a short space of time. I think we have done really well. ▲


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“We have invested well and they look fabulous. It is about how we operate. It’s all about delivering great service and a great product. I am extremely happy and, with growing sales, my outlook is very positive. “One must remember that the first site opened in October, second in mid-February, third in mid-May, and fourth in early June; we are a very new business. I took on pubs that were tired and needed new energy. “Another thing to remember is that it is not like restaurants, where you can put a Michelinstarred chef in to immediately entice new customers. I don’t have named chefs but I do have a great team with a great offer. People will find the pubs and come to them when they hear about them – but it takes time. “Meanwhile, I am delighted with Enterprise. They are terrific to work with; a really energetic business.”

“Another thing to remember is that it is not like restaurants, where you can put a Michelinstarred chef in to immediately entice new customers. I don’t have named chefs but I do have a great team with a great offer”

“The challenge is more related to the offer, the market and the competition. Operationally, I make sure we get that right.” It has been a busy time for Clevely since Hippo was created, and he quickly realised his initial part-time plan was not going to work. This posed another challenge. He adds: “The other big thing for the company is chief operating officer Dawn Donohue has left the company. It was my fault as I really missed being involved in a business that was so much my own vision and feel. Initially I went in with one foot as executive chairman three days a week, and I felt this would be enough but, in reality, I needed to get back in full-time and there just wasn’t room for the both of us. “I feel like a man reborn. I can’t tell you how much I am enjoying myself.” ▲

Challenges Moving back into the business after a five-year break hasn’t all been plain sailing, however, and Clevely admits he has faced some challenges. “The big challenge for me as an individual is I am an older guy now from when I had Geronimo and I think the market, in terms of our beer portfolio, has marched on at one hell of a pace. Today there is also a lot more competition – not just pubs but also from the casual dining sector. “The focus is different since my Geronimo days; then we were selling Stella and Fosters and the customers were completely happy. We had a food offer of good quality, things such as chicken and leek pie, fish and chips, and more mainstream items. The beer range didn’t really matter then. “In comparison, now there is a need for a craft beer range and more excitement in our portfolio. Customers expect beers local to the pub. ¡ AUTUMN 2016 ¡ Propel Quarterly


Feature About Hippo

The company has five sites up and running having launched The Lillie Langtry in Lillie Road, West Brompton, in August. In September, the company will open the Islington Town House in Liverpool Road, Islington. “Very simply my vision for Hippo was to re-enter the food and drink sector, pubs continue to be my passion,” Clevely explains. “I love pubs and, even after the EU referendum result, I still think it will be a strong sector. Interestingly, our figures show sales have actually been very positive since the result on 24 June. “My vision was always to create great places to go. Little has changed. We have added small twists, such as cooking on charcoal and live music in certain venues, but mostly there is no great new vision. “I didn’t have a big hare-brained scheme when I set up Hippo, just to have good pubs with a great offer and great service. Above all, we need to be creative, exciting and ensure the customer has fun.” Hippo’s food offer is very much about sharing plates and a good variety of quality dishes, he explains. “The food uses fresh, well-sourced ingredients and dishes are cooked simply. It’s not about fussy food, but it has to be affordable. “It’s mainly about variety; pubs must have a good range of options. We need to offer vegetarian and healthy options, even though 90% of the customers take the traditional dishes of burgers or fish and chips. It mustn’t be too fancy or gastro. They want casual and relaxed dining with dishes that look and taste good.” Today, speed of delivery is more important than ever, Clevely says, while also pointing to the importance of alcohol. He says: “The wet side of the business is much stronger than when I started Geronimo years ago. Now you can’t hide behind food; your drinks and beer range is absolutely critical. Pro rata, we are selling less food and more drink than I thought we would. It means we have to have more exciting drinks; now people expect there to be four or five cocktails on the list. People are drinking better, are more inquisitive, and want the staff to be knowledgeable.”


What’s next for Hippo?

“I feel like a man reborn. I can’t tell you how much I am enjoying myself”

Propel Quarterly ¡ AUTUMN 2016 ¡

One thing, Clevely notes, is that Hippo doesn’t plan to continually refurbish and revamp each site annually. He says: “We aim to renovate and fit-out our sites to a very good standard to ensure they are in great shape going forward, but we will continue to sparkle annually. “We have invested well. It is all about maximising the returns so there is no maximum as to what we spend just making sure the financials look right. “The pubs have to be individual and it depends on the area and the building. I work closely with my wife Jo and her team as to how each site should feel. They need to blend into the area; the cookie-cutter approach of old would crash and burn today.” So will Hippo be opening another six sites next year? “I am going to see a site this afternoon and one next week, so watch this space,” he announces. But we may not see the company expanding quite so quickly through 2017. He adds: “As I have always said it is about how well we do. We are supported by Enterprise in terms of our capital expenditure. If we are doing well they will continue to help us grow and to support us but if not we may decide to slow down with the pub openings and concentrate on working on our existing portfolio. “We would like to open a large amount of sites each year but it depends on money and other factors. There is plenty of opportunity and I sincerely hope I will open a number each year.”


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The Joule in the crown energising the pub sector Neale Chandler

Joule’s retail director Neale Chandler talks to John Porter about why he believes the company stands out from its competitors and what the future holds


he British pub has undoubtedly endured its fair began again, and Joule’s opened its 40th pub, in Ludlow, this share of challenges over the past 25 years. From summer, all but one is a freehold. Chandler is yet another Bass government-imposed changes ranging from the “graduate”, having worked on the pub retail side from 1992 to Beer Orders to the smoking ban, to a roller coaster 2000. After a stint in the bar and restaurant business in his native of recession and social change that has sometimes restricted South Africa, he returned to the UK and joined Joule’s in 2011. consumers’ spending power, and also given them many new “The hook was to create a tenanted estate under a branded, leisure choices apart from an evening in the local. If the pub has trademarked umbrella, which even today makes it a bit different a habit of regularly defying the doomsayers and demonstrating in the pub sector,” he says. The heartland of the business is that it’s a fit and proper business model for the 21st century, Staffordshire, Shropshire and Cheshire, with its geographic reach that doesn’t simply happen by accident, of course. Instead, it’s now nudging Birmingham to the south and over the border into a tribute to the hard work and dedication of experienced, savvy Wales in the west. operators up and down the land. Branded approach Among those building a strong reputation in this Other than three managed sites, the pubs are all respect is Joule’s Brewery. The name comes with “We look tenanted. Each maintains its individual character, provenance dating to the 18th century, when although the branding and design cues are the Joule family set up a brewery in Market for people who consistent. One benefit of this is that “in Drayton, Shropshire. The current custodians of get what we do, who our heartland the Joule’s name was well the brand came about it in slightly circuitous can see themselves known, generally to an older segment of the fashion, however. With a track record that working in our population” says Chandler. Maintaining a included playing an instrumental part in the branded approach in a tenanted estate is, launch of Caffrey’s Ale at Bass Brewers, Steve environment while Chandler concedes, “a bit like herding cats Nuttall led a management buyout of the Bassstill being selfat times, because the nature of a tenant is that owned Highgate Brewery in Walsall in 1995. Five employed” they are general entrepreneurial, they’re business years later, that business was sold, after which owners”. He adds: “We look for people who get Steve and his wife Chrissie, previously a director at what we do, who can see themselves working in our Bass M&B, began building a tenanted pub estate. environment while still being self-employed.” Neale Chandler, Joule’s retail director, takes up the story. In practical terms, Joule’s has an in-house team that fits He says: “They were fortunate towards the end of 2007 to sell out and furnishes each new pub to a high spec, including ten of their 15 pubs to one of the nationals, just before the crash front-of-house, beer cellar and kitchen. Chandler says: “On a of 2008. So the roll of the dice was with them, so to speak. They complete refurbishment our investment is between £120,000 then started looking at developing another tenanted estate, this and £250,000 – it varies by pub according to the current state, time with a hook.” size, location, access etc.” The typical cost of entry for an Joule’s had ceased brewing after its acquisition – by Bass, ironically – in 1974; by 2008 the trademark had found its way into incoming tenant is about £20,000 to £25,000. Chandler says: “In the ownership of Molson Coors, and a deal was done to acquire that is included their deposit, their plant and equipment, smalls it. Brewing began – or resumed – in Market Drayton in 2010 in and sundries, and stock. In some cases we have part-funded a new brewery built in the 16th century Red Lion Inn, using the the entry cost on an interest-free loan basis, depending on the same water sources as the original brewery. Pub estate growth operator and the pub.” ▲ ¡ AUTUMN 2016 ¡ Propel Quarterly


Feature The New Inn team

The New Inn, Newport Tenants are tied for draught products only. “In return they get support across various disciplines,” says Chandler. “We encourage them to premiumise, to stock well-known brands and products. As the taste and palate of consumers evolves, we’re encouraging them to go down the craft spirit route. The beer is still the cornerstone of Joule’s – it’s the reason why we exist and the reason why a lot of people go into our pubs. In terms of tenant recruitment, as the business has expanded, we’ve found that we get more people coming to us. We get a lot of referrals, and a lot of our operators have previously had pubs with other pubcos. Because they’ve had that experience they recognise the clear differences between the way we operate and the way other companies operate, and they are consistently our best referrals.”

“As the taste and palate of consumers evolves, we’re encouraging them to go down the craft spirit route. The beer is still the cornerstone of Joule’s – it’s the reason why we exist and the reason why a lot of people go into our pubs” Potential tenants are actively encouraged to speak to existing licensees to get a real picture of the business. Chandler says: “We start from a position of ‘do we like you, because we have to work with you’. We have to be sure that they’re engaged with our story as well as being passionate about running their own business. Most have experience, but it’s not necessary. We’re quite small, we don’t have a training facility or a training pub, but we do on-site training. We’ll invite them to work with a seasoned operator for a week or two. We then try to match the right person to the right pub. Not everyone has the experience to run a big operation, but we have a number of smaller operations, which suit some people better.” Joule’s sites are typically in larger village or market town locations and often have some history attached to them, such as the listed Lower Chequer in Sandbach and Royal Oak in Wrexham. “We look for pubs that are intrinsic to their community, woven


into the history,” says Chandler. “A great example is the Royal Oak in Eccleshall. On our opening night I met a chap there who was probably 80, and his grandparents had been married in the function room at the Royal Oak in the 19th century. We still look for pubs that have that uniqueness. We have a strong view that pubs are for the community and we are just the current custodians.”

Community sponsorships The brewery is a main sponsor of Newcastle Town FC – based in Newcastle-under-Lyme, rather than the “other” Newcastle club on Tyneside – and encourages its pubs to follow suit. Chandler says: “Every pub and every operator is a little bit different. Whether they’re into rugby, football, dominoes or cribbage, if they believe it’s a good business opportunity from a local point of view, then we’ll support them to arrange sponsorships.” The casual dining boom is no respecter of either history or location, and “we are as exposed to the trends and vagaries of eating habits as anyone”, says Chandler. He adds: “Expectations are higher than they used to be; they see, do and expect more. What we do is target people who live in communities, who like pubs – if they love beer even better. A good operator running a good community pub will become the pivot of the community. They have to work at that relationship, it’s about trust, and when that all clicks into place, the pub absolutely thrives.” ▲

Joule’s Brewery Financial performance Reported figures for the year ending 31 March 2016 u Ebitda up 14.1% to £2.0m u The pub estate generated £1,939,000, an increase of 15.4%. u

Propel Quarterly ¡ AUTUMN 2016 ¡

he brewing and sales division generated £138m, T with draught beer sales up 16.4% to 6,539 barrels

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Feature In food terms, tenants have the support of a development chef based at one of the managed pubs, along with a recipe bank. “A few years ago we started evolving the business model, having worked out that food is important,” says Chandler. “As we invest in pubs, we build bigger kitchens. Probably 70% of our pubs are places where food is integral to the success of the business.” The sales mix varies, with some new or bigger sites achieving 40% to 45% food sales. The menu focus is very much on classic rather than fashionable. Chandler says: “We encourage tenants to sell food that’s relevant to the Englishness of the pub. You should find fish and chips, with a batter made with one of our ales, and steak and ale pie in all our pubs. Our market is Middle England and we’re not in the two-for-£10 business. It’s about quality, consistency and being as fresh and as local as they can be.” There are no nominated food suppliers, but tenants have a list of recommended trade wholesalers “where the price is right and the service is good”.

“The plan right now is that we’ll stop for a bit, and our in-house build team will go out to our existing estate, sparkle everything, and we’ll retrofit a couple of pubs” Standards are monitored by the operations team using a tablet-based checklist that scores the pubs on key measures such as service and food quality. “The next evolution of that will engage and incentivise the entire business in a mystery customer programme,” says Chandler. “It’s in the development process at the moment, but not quite there yet. In recruitment terms, in common with most operators we struggle to find quality kitchen staff, with experienced chefs a particular challenge. In response, we very much try to grow our own. We’re looking at starting an apprentice programme at the Red Lion, the pub at the brewery.” CVs are shared and Joule’s tenants also have a social media platform to share details of available staff.

Brief hiatus However, Chandler doesn’t see the skills shortage as an inhibitor on the continued growth of the business. He says: “There are always people looking for work, the trick is to find the right person.” Having said that, after consistent growth at five or six pubs a year to 2010, funded mainly through the income generated within the business, Chandler expects a brief hiatus in expansion for the remainder of 2016. “Steve Nuttall is on record saying we could roll this out to 100 sites,” says Chandler. “The plan right now is that we’ll stop for a bit, and our in-house build team will go out to our existing estate, sparkle everything, and we’ll retrofit a couple of pubs. As the years have gone on, our design has evolved, so to stay relevant we need to continually invest in the older part of the estate.”

The New Inn, Newport The investment focus also shifted to the brewing side at the start of July, when Joule’s doubled its footprint in Market Drayton with the acquisition of a 1.5-acre site adjacent to the existing brewery and Red Lion pub. Nuttall said of the deal: “This new site doubles our footprint and will allow Joule’s many options for the long term. As we are in the heart of an ancient town, our options for extending are very limited, so this purchase future-proofs our continued presence in the town and our importance as a Shropshire brewer with access to the essential Market Drayton aquifer, our mineral water source.” Chandler says: “We are always looking for the right pubs, and I anticipate that next year we’ll be on the buying path again. In terms of new pubs, we’re always looking. The geographic footprint can expand. Our brand is becoming more and more well known, and so consequently the risk gets less. We are looking to infill, there are opportunities in Bridgnorth, we could probably get up to Uttoxeter, and we’ve now expanded down to Sutton Coldfield and Birmingham. We have target towns.” When it comes to getting the right sites at the right prices, Chandler adds: “The pipeline is still there – although it’s not as good as it used to be. When we started buying in 2008/09 the market was on its knees. The old adage that one man’s junk is another man’s treasure is true. I think when people go to other pubs, that is when they realise just how good our pubs are. I do think we lead our market in our heartland.”

Neale Chandler Retail director Joule’s Brewery Favourite pub: My favourite pub is the New Inn at Newport – I like the style, the nooks and crannies, the booths and the big tables. It’s very social but also very private if that’s what you want. I also particularly like the retailing and the warmth of the pub; it makes me want to go back. Favourite beer: My favourite beer has to be Joule’s Blonde – completely drinkable, easy on the senses and also helpfully light, especially if I’m driving. If not driving I can have a session on it and not worry too much about the next day. Favourite meal: I’m a burger man. I feel like I’m getting good value, the only downside is that it can be a messy moment with the toppings and the sauce sliding out the bottom of the bun when I pick it up, so I tend to eat it with a knife and fork.


Propel Quarterly ¡ AUTUMN 2016 ¡



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By offering wine on tap, operators can make the drink more accessible while enjoying clear cost benefits and logistical advantages, says Glynn Davis

Tapping into the fount of wisdom


ar too many times I’ve popped into the Sourced for tap dispense, which very much feeds the growing demand for Market outlet in St Pancras train station for one of its craft and artisan products. great selection of bottled beers but never considered The idea is that it sources fresh wines for immediate ordering a glass of wine as an alternative. That is until consumption, which are ideally thought-provoking and have a recent visit, when I was struck by the new wine fount that had something a little unusual about them. Evidence has shown that been installed on the bar counter. whereas drinkers might be put off by something scary in a bottle, Founts dispensing beer are commonplace in pretty much every the sight of a wine available by tap is much more accessible and bar and pub up and down the country, but seeing wine poured encourages experimentation. this way is an entirely different matter. Normally it is not particularly The ability to constantly offer different wines one keg at a time visible in a bar or pub. Unless it is sparkling wine or champagne enables restaurants and bars to have a healthy evolving list of wines. placed in an ice bucket sat prominently on the bar counter, then They can also avoid storage problems, since the wines are supplied wine bottles are typically hidden away and out of sight of customers. in key-kegs (involving a sealed bag that sits under pressure in a Seeing wine on tap has certainly made the drink more plastic and cardboard box), which take up very little room. Once accessible if my recent experience is anything to go by. empty, they can be crushed down ahead of recycling. But my initial thoughts were it wouldn’t be any good Consider that one keg holds 26 bottles so with six because I’ve far too many memories of poorwines on tap, this would equate to having more “The ability quality bag-in-the-box wines pedalled by barely than 150 bottles sitting around causing storage credible producers. Then I noticed an Austrian headaches. For the likes of Padella, which is to constantly offer Gruner Veltliner wine was one of eight a tiny unit, the ability to have a six-tap fount different wines one available on Sourced Market’s fount. dispensing two whites, two reds and two beers is keg at a time enables I’m no wine expert but having a wife who is massively beneficial. The flexibility of using such half-Austrian means I have drunk my fair share restaurants and bars equipment is also evident at Galvin HOP, where of this particular variety and come to regard it one of the taps dispenses Maille mustard! to have a healthy as a consistently good drop that deserves its As well as offering flexibility, wines on tap also evolving list premium pricing. On investigating “wines on deliver clear logistical advantages, which have of wines” tap” further, I’ve found some rather interesting major cost benefits. Jamie Wynne-Griffiths, of OW bars and restaurants that have started to introduce Loeb, suggests that across the 50 wines on tap he it via respected wine suppliers OW Loeb, Bibendum presently supplies there will typically be a saving of 25% Wine and Roberson Wine. on these wines in keg versus the same liquid in bottle. Since this is passed on to the restaurant and bar owner, it means a £6.50 glass High-class places of wine could be sold on to the customer for about a fiver. These three companies have been experimenting with wine on This serious cost saving will undoubtedly appeal to many tap during the past year or so and OW Loeb has installed founts drinkers but for bars, pubs and restaurants the challenge will in some high-class places in London, including Trinity restaurant be to change the public perception that wines sold this way are in Clapham, Michelin-starred Chez Bruce, the Galvin Brothers’ somehow inferior to those from a bottle. HOP bar, and a batch of newer, cutting-edge venues, such If the wine industry needs inspiration that such change is possible, as Padella, Morito, Sardine and Clipstone (sister restaurant it need only look to the craft beer producers who now supply much of Portland). of their beer in kegs rather than casks and also increasingly put it into What these places desire from their modestly-sized wine lists (now very fashionable) cans rather than bottles. is something a little different that satisfies the increasing appetite for adventure among diners and drinkers. OW Loeb is typically Glynn Davis is a leading commentator on retail trends working with small producers from whom it purchases its wines ¡ AUTUMN 2016 ¡ Propel Quarterly


Feature “sold” to customers, especially as he recognised he was an expensive off-licence but a cheap bar.

Uncompromising stance There was no certainty of success with this new style of off-licence/bar and the odds were not helped by the uncompromising stance Morgan was taking with the range of beer he stocked. “On opening day there was no real proof people would accept a bar that only sold bottles,” he says. “It was also important to get away from the pub and its traditional type of service, where they just sell what people expect. We wanted to give them what they didn’t expect. I honestly felt people might come and simply not ‘get it’. But I always believed that if they tried the beer, then they’d hopefully be hooked.” It is now recognised that in 2010, Morgan was at the forefront in the south of England of what has become a broad craft beer movement. He opened alongside the Euston Tap, Cask Pub & Kitchen and Mason & Taylor bars that all joined pioneers The Rake bar and the White Horse in Parsons Green. Morgan’s hybrid bottle-focused model was to quickly benefit from two innovations – the invention of the disposable key-keg, which eased the movement of draught beer by taking it out of steel kegs, and the Lindr beer dispenser from the Czech Republic. They combined to suddenly enable The Bottle Shop to easily sell small quantities of draught beer alongside its bottles.

A lot of bottle C

onsisting mainly of two bookcases, with shelves of reading material replaced by rows of beer bottles, the first Bottle Shop outlet – in The Goods Shed farmers market and food hall next to Canterbury West train station in Kent – is a pretty modest affair. But while it might be small in stature, its beer selection is far from modest. Its owner Andrew Morgan has ensured from the day the store opened for business on 23 November 2010, the aim has been to offer the world’s best beers, many of which are unavailable elsewhere. Morgan also created an unusual hybrid model involving both takeaway and on-premises drinking using The Goods Shed’s communal tables – with the same price charged for both options. He reckoned the bar would be critical, as this would give each bottle the chance to be


Glynn Davis looks at the remarkable rise of The Bottle Shop, from its humble beginnings in a Kent food hall in 2010 to its ongoing expansion and legendary position at the forefront of the UK craft beer movement

Propel Quarterly ¡ AUTUMN 2016 ¡

“It is now recognised that in 2010, Morgan was at the forefront in the south of England of what has become a broad craft beer movement” As Morgan was refining his business model in Canterbury and sourcing a broader mix of beers from around the world, the UK was getting a taste for craft beer and The Bottle Shop’s quirky offering. It all crystallised for Morgan in June 2011, when he hosted an event at Londonbased brewery The Kernel involving a tasting of 19 beers from Danish brewer Mikkeller. “We quickly sold the 75 tickets at £40 each – helped by social media – and even had a waiting list. It felt like a moment, with people travelling from all over the country to attend,” he says, adding that others were also recognising this changing climate. They included two Bottle Shop customers who had come into some inheritance money and wanted to invest in the business but recognised Morgan needed to “get away from the shop” and look for growth opportunities. “We needed a bigger market to supply into to make it worthwhile for overseas brewers to supply us with their beers,” says Morgan. “From this we unintentionally created a wholesale business as well as raising a further ▲


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Feature £100,000 from private investors that enabled us to take a railway arch at 128 Druid Street in south London.”

Beer Geeks In April 2014, the unit came into use as both a warehouse for the wholesale business and a second Bottle Shop bar. The idea was to have two beers on tap and a wide selection of bottles that would appeal mainly to beer geeks, according to Morgan. But things didn’t quite go to plan. He says: “On the first Saturday we thought we’d take £200 but it ended up being £1,500 and the number of people visiting was only just about manageable. And they were 95% non-beer geeks just dropping by. They were engaged with beer but not knowledgeable,” adding that after only three months changes had to be made.

“On the first Saturday we thought we’d take £200 but it ended up being £1,500… and they were 95% non-beer geeks just dropping by” Out went the printed bottle list and in came a mezzanine area, ten keg beers on tap were introduced and a plan was put in place to shift some of the stock to another location. Although Canterbury has remained a constant 50:50 split between takeaway and bar sales, the Druid Street unit has – unexpectedly – been much more skewed to bar sales from day one. Only 10% of revenues are takeaway, while a hefty 70% is draught beer consumed on the premises. “We didn’t think we’d end up as a bar,” says Morgan. “We thought we’d have another bottle shop but you have to embrace demand and so we took the route of adding the mezzanine and serving draught beer on the two levels. We can now get 100 people in and do four-times the sales we did originally.” With confidence gained from operating a successful bar, which has become a fixture on the “Bermondsey Beer Mile”, in June this year Margate seafront became the location for the latest Bottle Shop, which also has its focus on draught beer sales rather than bottles to take away. “It’s even more of a traditional bar experience with fresh beer and fresh coffee – we’re 99% on-trade,” says Morgan, who adds that unlike Druid Street this new outlet has a toned-down beer offering very much tailored to the local market – with a concise ten taps and 100 bottles. “To drink Beavertown [beers] on draught is a revelation in Margate [unlike London, where it is more commonplace]. Rather like BrewDog’s bars, which had a bold offering but now have a far more reduced selection, we don’t feel the need to over-gild the lily. We just need a simple offering.” The double-fronted unit has a ground-floor and mezzanine area, with views of Margate Bay as well as a roof terrace planned for later in the summer, which is giving Morgan a good opportunity to experiment with the look and feel of the different areas.

The Bottle Shop’s best-selling beers 1.

beavertown ~ Gamma Ray and Neck Oil


omnipollo ~ any of its beers


Green Flash ~ when we receive shipments fresh from California


Birrificio Italiano ~ Tipo Pils


Cloudwater ~ all of its Double IPA beers

He says: “We can make the mistakes in Margate, which is a much more accessible market than, say, London. If we get the right balance of components here, we’ll use this unit as the model for opening bars in places like Brighton and the capital.”

Flexible brand Although more bars are clearly in the grand plan, Morgan says he is keeping things flexible and could easily add further takeaway-focused bottle shops like the Canterbury original. “The brand is flexible – we can pick and choose,” he says. This could involve further partnership Bottle Shop stores that mirror the outlet in Waterloo Square, Newcastle, which opened in November 2015. It involves a third party using the brand and buying beer through The Bottle Shop wholesale business. Preferring not to call it a franchised store, Morgan says: “Effectively it’s a good [trade] customer who buys most of their beer from us and we give them access to interesting beers, which stay within the overall business.” Despite making strategic changes and navigating his way through a rapidly evolving beer market, Morgan retains the key objective of sourcing and selling “phenomenally interesting beers, as that’s the core of the business”. “We were the first wholesaler for Beavertown and Kernel beers.” He says: “We’ve been on a journey with them and we travel the world looking for different beers. To create value we need beers outside those others have. This remains the case today.”

Test bed He recognises the advantage of using Margate as a test bed, where he can play around with ideas and experiment at much lower cost and risk than if he was in another more high-profile location.

Morgan’s view of food “We’ve traditionally not offered any food beyond the basic crisps and Scotch eggs, as we don’t see kitchens as part of our plans. This would be a very different market to be operating in. We don’t need to augment our average customer spend and we hold our customers longer than traditional pubs.”


ProPel QUArTerly ¡ AUTUMN 2016 ¡

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The new phenomenon delivering an impact


As the foodservice market in Britain faces intense competition, NPD Group director of foodservice for the UK Cyril Lavenant says the growing use of technology by branded operators and delivery by independents are reshaping the industry

elivery has always been present in foodservice but it is growing at a fast pace with the emergence of aggregators such as Just Eat, Deliveroo, Hungryhouse, Urbanbite, Take Eat Easy and others. This new phenomenon is riding key trends that all of us in foodservice know so well – the importance of creating an excellent customer experience, the decreasing “loyalty” of consumers to specific brands, the growth of technology, and how it serves our desire to save time. Over the past ten years, most industries have worked hard on improving customer experience. Retailers and operators everywhere are striving for excellence in customer experience. Indeed, this is the best way to grow loyalty among customers who are becoming less and less loyal to brands generally. It is crucial to keep in mind that customers do make purchases in all (or most) industries. Even if consumers do not necessarily behave in the same way in all industries, they tend to have the same expectations. Consumers don’t always

see the complexity that lies beneath a good customer experience – often they assume it “just happens”. So if they see a certain purchasing technology in one industry, they expect it to be used in other industries. They therefore expect the same level of innovation and attention from retailers/operators in all their purchase journeys.

OOH had no choice but to evolve since the recession During the recession, consumers had to limit their out-of-home (OOH) eatingout and drinking-out occasions to save money. This has resulted in a 2.8% traffic decline for total OOH since the year ending March 2009. At the same time, consumers have changed their behaviour as they realised these small sacrifices were not affecting their life. This new behaviour became their “new normal”. To survive and grow their revenue, operators understand they need to improve their approach to foodservice. Improving the customer experience is a key focus. That customer experience has improved in many different areas: quality, taste and diversity of food and beverages,

“So the era of blind loyalty is over, and with a market gaining just 0.6% in visits in the year ending March 2015 and 1.5% in the 12 months to March 2016, there simply isn’t enough space for everyone to grow” quality of the restaurant’s environment, better service, increased modernity, and use of technology. If you add to these changes the fact that operators are increasingly offering “all-day meals” to consumers, from breakfast to dinner, with a good level of quality, it is not surprising that consumers have become less and less loyal. So the era of blind loyalty is over, and with a market gaining just 0.6% in visits in the year ending March 2015 and 1.5% in the 12 months to March 2016, there simply isn’t enough space for everyone to grow. ▲ ¡ AUTUMN 2016 ¡ Propel Quarterly




Obsession with gaining time We are all obsessed by the idea of gaining time. As a result, our priorities are changing. The emergence of breakfast is the perfect illustration of that trend. Single adults as well as parents have consciously or unconsciously decided they have other priorities in their life than having breakfast at home. Consequently, the government had to urge Britons to reconsider this as an important meal, and not only for kids. Operators have noticed that trend and have started investing in their coffee and breakfast offer. This has resulted in a very strong rise of the breakfast occasion in OOH since 2009 (for the year ending March 2016, breakfast visits are up 11% versus a drop of 2.8% for the total market).

“The change is that foodservice delivery aggregators have stepped on to the battlefield – and with notable success” Technology is another way to help consumers save time waiting for their table or for their beer. A solution is to develop an app that allows consumers to order their food and – even better – pay for their food. An app obviously also allows the brand to promote itself and push the products it wants. Indeed, paying with your mobile allows you to carry nothing but your mobile phone with you. This is particularly convenient when going out late, doing sport, going to events and all those situations where you want to have a minimum of high value items with you. There are also less expensive solutions such as those that send an SMS to tell your customer

Chart 1: Total out of home visit change – YE March 16 vs YE March 09 38%


Total Visits when a table is ready. But this all requires investment, which is most of the time impossible for the majority of independents, and such an investment would not necessarily deliver a high enough return on investment.

Delivery to meet convenience expectations Since the beginning of the recession, “homing” has become very strong among consumers. We realised we could really enjoy our time at home with friends and family without the expense of visiting restaurants. Since 2009, the total foodservice market has lost 2.8% of its traffic because consumers want to save money. In that period, total delivery was up 38%. This marks the fifth consecutive year of visit growth for delivery. But until a couple years ago, delivery was limited mostly to takeaway outlets. So what has happened?

Chart 2: FSR – Average ticket at dinner 16





Delivery Aggregators are changing the game The change is that foodservice delivery aggregators have stepped on to the battlefield – and with notable success. Between October 2015 and March 2016, these aggregators took 4.7% of all foodservice dinner traffic. Now the giant Uber has just launched UberEats, and our industry expects this new delivery aggregator brand to turn into another big player in the coming months. Not only are aggregators making our life easier but they are also helping independent restaurants as they are providing marketing and communication support. This is in principle a good thing because it will force the industry to react and adapt.

Profile of the delivery market Delivery in the OOH foodservice market is most important to the quick-service restaurants or QSR sector (such as QS Pizza, Ethnic Take Away) where these delivery occasions represent 7.9% of all QSR visits. Delivery then accounts for 2.2% of all full-service restaurants (FSR) visits but a smaller 1.3% of all pub visits. Unsurprisingly, we see the highest growth of delivery within FSR, with visits up 65% versus year ending March 2009 (versus 38% for total OOH) and 24% in the past 12 months (compared with just 10% for delivery visits in the industry). Pubs, now providing so much more in terms of quality and diversity of food, will have to follow in the footsteps of FSR if they are to avoid losing too much traffic to local restaurants. The announcement by Punch that it is now partnering with Just Eat to offer fresh food (delivered to its customers) is a positive sign that the pub sector is getting more involved in the delivery game. Logically, delivery has so far been mostly used at dinner – 73% of all delivery visits occur at dinner when dinner only accounts ▲

Propel Quarterly ¡ AUTUMN 2016 ¡ ¡ SPRING 2016 ¡ Propel Quarterly


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Insight “Delivery is growing rapidly. Our industry must continue to adapt to this trend as delivery service is constantly morphing with other ‘super convenience’ trends, which are beginning to impact foodservice” Flying tonight? Amazon has been testing delivery by drones

for 27% of all types of OOH visits. Delivery is slightly more London-centric when looking at the total OOH and much more prevalent in London for FSR occasions. Delivery is largely used by the family segment, and is very popular among the 18-to-34 age group and C2DE social classes. Indeed, delivery appears to be a good way for families, young adults and lower revenue consumers to have a nice meal at home that comes from an FSR but at a lower cost.

Higher average ticket in QSR, lower average ticket in FSR Within QSR, delivery is a good way for operators to generate a higher consumer spend than average (28% higher at dinner for example). However, we see a reverse trend within FSR. Indeed, when looking at dinner in FSR, the average ticket is £9 for delivery occasions compared with £16 for visits where consumers eat on-premise. This comes from the combination of fewer items consumed and a lower price per item bought. The key reason behind this is that delivery, which is mostly used for home consumption, allows consumers to drink their own wine or

Delivery at a glance Since 2009, the foodservice market is down 2.8% in visit terms, while delivery has shot up by 38% Delivery concepts have led to consumers expecting “super convenience” (“I want it here; I want it now!”) Aggregators now represent nearly 5% of all dinner visits The growth of aggregators should help independent restaurants grow their number of visits but may have a negative impact on turnover and margin


beer, without paying the typical premium that restaurants charge. Only 2% of FSR dinner visits attributable to delivery include wine, compared with 14% for on-premise FSR occasions. And only 5% of these FSR dinner delivery visits include a beer, compared with 22% when eating on-premise. With the same ambition to save money, consumers focus on the main dishes and skip sides (15% of delivery visits include a side dish versus 22% for on-premise visits) and desserts (1% of delivery visits include a dessert versus 17% for on-premise visits). This is an issue for restaurants as they get 50% less revenue per person when they deliver their food. The negative impact on margins is even more important in reality as operators must also pay the delivery aggregator. This means operators have to improve the experience of their restaurants to maintain or increase on-premise consumption. And they must make sure these delivery visits are incremental to their base business otherwise it only means less revenue and less margin for them.

What is the ‘delivery’ motivation? Motivations to have an FSR dinner differ when comparing on-premise consumption and delivery visits. When consumers decide to eat in the restaurant, their motivations are about socialising with friends, spending time with their family, treating themselves, dining as a couple or celebrating. Spending time with family and treating themselves are also important for delivery occasions. The difference is associated with functional motivations such as “I did not want to cook, I had nothing at home” and “I wanted to satisfy hunger or thirst”. These are of much higher importance than for eat-in occasions. When you know that a social occasion brings in on average nearly 15% more spending than a functional visit, it is important for delivery services to be able to be part of those social occasions.

Propel Quarterly ¡ AUTUMN 2016 ¡

Offering an experience to compete with delivery Delivery is growing rapidly. Our industry must continue to adapt to this trend as delivery service is constantly morphing with other “super convenience” trends, which are beginning to impact foodservice: u There are now “supper sharing” apps where people cook in their kitchen and sell their food to their neighbours u Amazon Prime is now delivering food and beverages in as little as one hour to your door (but for selected postcodes only at the moment) u and deliver from the high street to your door, including foodservice items u UberRush has started in the US What does the future hold? It’s difficult to say. But the foodservice industry can be relied upon to respond well. It can convince consumers to keep eating in restaurants and ensure it does a good job of getting food delivered. Ultimately, the success of a restaurant relies, of course, on the quality of the experience (including good quality of food obviously) that it delivers to its customers! And it all comes back to the basic need of our industry: offering high-quality service. People are motivated to spend more money when eating in a restaurant by two factors. Firstly, we don’t want to look cheap in front of our friends, families, or even in front of the waiter. Secondly, the quality of service and friendliness of the staff makes us more willing to spend more. The good thing is that quality of service and friendliness of staff is something an operator can work on.

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

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Encouraging female entrepreneurs


evin Roberts, chairman of Saatchi and Saatchi, caused a stir early in August when he said, in an article in Business Insider, “the debate is all over”. He was referring to the gender diversity debate within the advertising industry. He went on to say he didn’t spend any time on supposed gender issues at his agencies at all, commenting that the issue was way worse in sectors such as financial services, where there were problems left, right and centre. He was fired the next day. I think he made some valid points in the article though. He commented that, rather than holding ambitions to progress into the higher echelons of the C-suite, many women – and men – simply want to be happy and do great work, which management can often overlook. I understand what he is trying to say: that not all women are ambitious in the traditional male ways; that happiness in a job can be enough of an ambition on its own; that not everyone is ambitious for the same things. On a personal level, I was very happy for 18 years at Whitbread in a corporate career, steadily climbing the greasy pole but nothing has made me happier than running my own business. I set up the agency in 2001 but three years after setting up, I did go back into corporate life at board level lured by the thought of making money from a private equity/venture capital deal some time in the future. I found, however, the thought of making mega millions was just not inspiring or motivating enough on a daily basis (and they never materialised for those who did stay). I also realised I had gone AWOL in the three years of working for myself and was totally unemployable – a sobering but joyful revelation. I left corporate life for a second time because I wanted to be an entrepreneur again – and I was fired which, of course, also helped the decisionmaking process. An entrepreneur is defined as “a person who sets up a business or businesses, taking on financial risks in the hope of profit”. It is scary but there is nothing quite like the feeling of being your own boss:


u You are answerable to no-one (except the bank perhaps) u You are in control (in theory of course) of your own time and how you spend it u There are no politics (unless you want to argue with yourself) and no corporate restraints u You have freedom. You create your own work-life balance – no-one does it for you u There is a real buzz from putting your ideas into action and seeing them work

While the number of women setting up their own business is increasing, it remains relatively low – especially in the hospitality sector. Ann Elliott explains the benefits of making the leap and becoming your own boss

Propel Quarterly ¡ AUTUMN 2016 ¡

u Success is yours to define and it’s lovely when it arrives

Sector divide Recently I looked at the list of entrepreneurs I know in the leisure and hospitality sector – 86% were male, 14% were female. This ratio applied to both the operator and the supplier side of the sector. I was a bit surprised to tell the truth. It seems a shame that females comprise such a low percentage of those who have started their own businesses. There are challenges though, of course, to going it alone, not least in finding finance, advice and support. Luke Johnson spoke at a recent lunch I held for Leading Women in the Sector and he was quite blunt when he said that being an entrepreneur is brutal. It’s a life of ups and downs, of success and failure, of constantly learning from both (probably more from the latter than the former). It’s hard, relentless, unforgiving and frustrating. Entrepreneurs need very thick skins. I don’t know if the 14% figure is high or low compared with other industries because comparative information is hard to come by. According to, there are 1.4 million self-employed women in the UK but, of course, that doesn’t mean they are all entrepreneurs. Of the 1,000 people on the Sunday Times Rich List, only 114 of them are women but again they may or may not all be entrepreneurs. The website also quotes the fact that the women’s entrepreneurial rate ▲






Opinion What some thought of the proposal for a female entrepreneurs’ day:

Sarah Willingham is an entrepreneur, investor and personal finance expert best known for her role in Dragons’ Den, as well as management in numerous high street brands. She bought the Bombay Bicycle Club while in partnership with The Clapham House Group, expanding the brand from six restaurants to 17

never been much of a feminist and } I've always believed we should make it

through life on our own merits. Easy said though, as I've always been confident and fortunate that no-one has put any serious barriers in my way. That said, I would do anything to help open people's horizons, even if it is for them to then decide on a quieter and less challenging life. Choice is a big thing for me.

you operate alone what you really } When need is reassurance and inspiration –

Picture by Owen Blacker / Wikimedia

so the more interesting stories about everyone’s journey successes as well as the pitfalls we can share with participants the better.

your proposal is fantastic. Count me } Iinthink 100% for “idea one”. Entrepreneurship

at 5% in the UK outpaces that of France and Germany but is half the rate of the US. The Office of National Statistics stated in a recent report that the number of female entrepreneurs has increased by 9.6% in the past two years compared with a 3.3% rise for men so the movement is there, which is great news. And it seems to be happening with millennials. An article in City AM commented that the British female entrepreneur is on the rise, with 59% of entrepreneurs under 35 being female versus 30% of those aged 35 to 54 and 16% of those aged over 55. The research featured in the article, from HSBC’s Private Bank’s Essence of Enterprise report, found female entrepreneurs are, on average, marginally more successful than men in terms of turnover – the average business revenue generated by female entrepreneurs was $4.1m compared with $4m for men. Again women fared better than men in terms of personal wealth – women averaged $5.2m versus men at $4.7m. Internationally, according to an article in the Economist, there are 126 million women operating new businesses but they only take part in business at rates equal to men in seven countries – Panama, Thailand, Ghana, Ecuador, Nigeria, Mexico and Uganda – so the UK does have some way to go to meet this ratio. I wrote to 211 entrepreneurs recently to ask if they would be interested in supporting a female entrepreneurs’ day designed to encourage, motivate and inspire women to set up a businesses in this sector, taking on financial risk in the hope of profit. The response after just 48 hours was astonishing (see box opposite). It would be great to see more women make the leap and enjoy the benefits of being their own boss. It would also be a huge benefit to the sector as a whole as women do bring new and different perspectives to business. Hopefully we can begin to make that dream a reality for some, even in a small way.

should be in everyone’s veins; it should be taught at school from day one. Commerce is crucial and the working world today demands everyone to be an entrepreneur or have entrepreneurial skills. There is a lack of female role modelling and support for this. Their work-life balance is a pressure still in today’s society even though more men are also becoming the main parent in a relationship where there is a male and a female as parents.

idea, definitely not enough women } Ginreat the sector in senior positions nor running their own businesses. Happy to help in some capacity – just let me know.

the ideas in your paper are great. } II think particularly like the fact that running

“Recently I looked at the list of entrepreneurs I know in the leisure and hospitality sector – 86% were male”

your own business allows you to work flexibly – a key issue for female talent.

am supportive of your proposals and } Iwould be happy to be a small session

speaker. I think the mix of keynote speakers to stimulate thought and then the chance to actually enter into dialogue and ask the questions on your mind is a good balance.

think it is a great idea and should be } Isupported as your stats suggest an imbalance between men and women starting their own businesses. I am happy to help as a presenter or to bounce ideas off and to mentor.

would love to help, specifically in the } Iencouragement and inspiration side.

I believe that to be an entrepreneur you don’t need money, knowledge, mentoring, an idea, passion – you need courage, drive and the willingness to work very hard, the rest is secondary, the rest can be built, it can be searched for.

Ann Elliott is chief executive of leading sector marketing and PR agency Elliotts – Follow her on Twitter: @elliottsagency ¡ AUTUMN 2016 ¡ Propel Quarterly



The four qualities of inspirational leaders – SHOP!


Chris Edger and Tony Hughes explain how tapping into the positive emotions of the team can prove a recipe for success

n our last book “Effective Brand Leadership – Be Different, Stay Different. Or Perish!”, we focused on the critical role of brand leaders in originating, scaling-up, evolving and reviving foodservice brands. One of our main conclusions – having drawn on our own insights, combined with 24 in-depth case studies provided by brand leaders such as Tom Byng from Byron, Jillian McLean from Drake & Morgan and Karen Forrester from TGI Friday’s – was the brands most likely to succeed provided “distinctive uplifting experiences” for their teams and guests. We argued that, in effect, brand members personified their brands. It was vital team members felt “uplifted”, resulting in them acting in a “contagious” manner – infecting their guests with joy and happiness so they departed from their brand visits with fond memories that were (in all probability) likely to result in revisits and strong advocacy to social media sites, friends and family. But how do you provide “uplifting experiences” for your teams? In the book we touched on the importance of connecting “emotionally” with team members, to drive attentive, caring and collegiate behaviours. But what did we mean by this and what generic qualities do brand leaders require to achieve this?

“It stands to reason, therefore, that leaders who are able to generate positive feelings (and neutralise negative feelings) amongst their teams stand a far better chance of securing outstanding hospitality behaviours” In our next book “eMOTION”, we explore how inspirational leaders tap into the positive emotions of their teams through “activating their positive feelings” by a variety of means to achieve “super-performance”. Science has shown us that humans are physiologically and neurologically primed to react to seven dominant feelings (anger, sadness, fear, surprise, disgust, contempt and happiness) and 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! It stands to reason, therefore, that leaders who are able to generate positive feelings (and neutralise negative feelings) amongst their teams stand a far better chance of securing outstanding hospitality behaviours. Dry logic rarely (or slowly) stimulates. Sensory appeal rapidly galvanises! Our new book will outline how inspirational leaders drive “eMOTION” through activating positive feelings during ten fundamental “moments of emotional truth” – but what qualities do they require to lead in this way? We believe – in addition to generic technical, behavioural and cognitive requirements – these leaders have four distinct qualities that have emotional resonance. Inspirational leaders are:



piritual – the first quality that inspirational leaders have is spirituality. They are imbued with a clear heartfelt purpose, which energises those around them, evoking and summoning up deep feelings of attachment and loyalty. In short, they stand for and articulate something powerful and worthwhile. They have a sense of higher purpose and are custodians of a “noble cause”, which attracts buy-in and loyal followership. This spirituality is sincerely expressed, grounded in integrity, generating trust and respect!


olistic – their second quality is their ability to provide coherence through taking a balanced, holistic approach. They can see how all the moving parts of their organisation fit together to “harmoniously” form the greater “whole”. This is particularly important in foodservice-based contexts where breakdowns in one area of the operation can have unintended effects elsewhere. Also, they are quick to neutralise negative emotions, such as fear, anxiety and anger amongst their teams through their ability to spot and fix deadly combinations. Above all, they appreciate the contributions of all their team – assimilating and melding – rather than fracturing through “divide and rule”.


ptimistic – their third major quality is infectious optimism, which is imitated by those around them. The link between positive thinking and optimal emotional states has long been established; as has the insight that humans – due to primal survival instincts – have a tendency to aver towards negativity and scepticism. However, positivity creates positivity! It unleashes creativity and helps people transition through difficult times and events. Inspirational leaders recognise this. They are relentlessly optimistic about the present and future potential of both their teams and their organisation – they are “glass half full” types (not delusionally but realistically so!) Their enthusiasm and positivity is contagious at all levels of the organisation, enabling them to manage the short-term journey while guiding the organisation to its long-term destination!


roactive – finally, in tandem with the qualities above, inspirational leaders ooze urgency, energy and pace. They proactively observe, challenge, rectify and follow-up. In short, they are “on the case”, without squeezing autonomous behaviour out of the organisation. They are “in” the business rather than “on” it! This enables them to “run at” rather than “run away” from problems; encouraging the same behaviours from their teams. Again, this behaviour minimises any feelings of immobilisation, inertia and fear that might paralyse the organisation when things are perceived to be going wrong. They have the ability to turn negative sentiments into positive feelings (such as gratitude and enthusiasm) because they are actively willing to do something to ‘sort things out quickly!’

Inspirational leaders understand that it’s not necessarily what you do and say that makes a difference; it’s how you make people feel that counts! Inspirational leaders optimise emotional climates within their organisations by generating positive feelings. The qualities they possess to do this are encapsulated in SHOP! – spirituality, holism, optimism and proactivity.

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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The black magic of marketing effectiveness


James Hacon says those in brand strategy and marketing will have to work hard to cut through the noise to get their message heard as the sector nears saturation point in terms of new site openings

ompetition is fierce in the sector right now, with some saying we are near saturation point in terms of new site openings. In many places it is clear that supply outstrips demand, putting pressure on brands to win market share from other major players, rather than independents. Within my network, it is clear that marketing budgets are increasing, with many more brands than before turning to above-the-line advertising. In the average 90-minute period, a consumer sees 250 adverts from more than 100 brands in 70 different formats. The average cut-through is less than 1%, according to a statistic published in The Guardian recently. What does it mean to us as an industry? Simply, we have to work remarkably hard to cut through the noise and get our message heard. With the insight I’ve had into businesses, both large and growing, it’s all too often the case that the marketing activity is a scattergun across multiple channels, regularly short-term focused. This is particularly the case with digital and social media channels. One factor we seem to be extremely good at in the sector is creative – some great ideas and awesome design, delivered with a lot of passion. That is a great start but has to be balanced against a more strategic and data-focused approach – where data is used more effectively to map activity against business patterns, better targeting individual customers by their behaviour, and monitoring marketing effectiveness. In the licensed retail space, we can really only build revenue in two ways – by increasing footfall through acquiring new customers or increasing frequency, and by maximising custom through increasing spend per head and turning more tables.

“In the average 90-minute period, a consumer sees 250 adverts from more than 100 brands in 70 different formats. The average cut-through is less than 1%” Surprisingly, the metrics we can track these against are quite limited too. For the most part, marketing teams will already be monitoring and analysing the soft, fluffy metrics such as web hits, email open/CTR, social engagement and database size. The next step is to track and analyse conversions – enquiry volumes by email and phone, reservations volumes, and group booking numbers. The last link in the process is to map this against the commercials – cover numbers, revenue and spend per head.















Once you know the metrics you’re tracking, it’s time to map them against each other and back to activity, by marking it up. With digital marketing it’s often a lot easier to track individual campaign or activity success – particularly compared with brand building or traditional marketing – but you should expect to see trends appearing. In a basic format this can be achieved through spreadsheets with the help of CSV files. Taking it to the next level you can upgrade your analytics software to support some of this tracking and, if you are looking to really get this right, you could turn to a company such as Tahola or CPL Online, which both offer big data-tracking solutions and can create a customised solution.

In my experience, operators can be very sales-focused and will expect a direct impact on the cover numbers and revenue against a campaign, sometimes in a short time-span. Brandbuilding marketing can often take longer but will have a more lasting impact. When tracking this activity, it is important to look at other factors to try to establish the impact over a longer-term basis because it’s not always as obvious, although easier, if you can track through the marketing metrics, then conversions to commercials, over a period of time. When considering the data you are collating and measuring for your marketing, it may be worth looking at what you send to your wider company. In the most part you will find any one person in your business may only really need eight-to-ten metrics to help them make decisions. One decision we’ve made at Thai Leisure Group is to base our reports around the future and not the past. While yesterday’s and the historic data is included, we believe we should be giving people the information to help them perform better today and for the week ahead – so even when it’s not all in the black, rather than getting down they feel motivated, with all the data they need to help them make decisions.

James Hacon is brand strategy director at Thai Leisure Group and continues to work with a select group of other operators to advise on growth strategy

Propel Quarterly ¡ AUTUMN 2016 ¡

Advertising Advertising Feature Feature

Slips & trips: top tips for dealing with compensation claims What What happens happens when when a a customer customer at one of your outlets at one of your outlets slips slips or or sustains sustains an an injury injury and and then then launches a a claim claim for for compensation? compensation? launches Sometimes the the cause cause of of a a fall fall or or Sometimes accident may not be clear cut – accident may not be clear cut – and and if if it it occurred occurred through through no no fault fault of of yours, yours, you you clearly clearly do do not not want want to to be be faced with large settlements and faced with large settlements and court costs. costs. court

Best practice practice tips tips to to avoid avoid costly costly claims claims Best

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If you you do do face face a a claim, claim, make make sure sure your your insurers insurers are are aware aware so so that that If they they can can carry carry out out investigations investigations in in a a timely timely manner. manner. Failure Failure to to adhere adhere to to your your insurers’ insurers’ reporting reporting requirements requirements may may lead lead to to refusal refusal to to indemnify indemnify you you in in respect respect of of the the claim. claim.

Set Set out out clear clear procedures procedures and and instructions instructions for for staff staff (for example, for dealing with spillages) and (for example, for dealing with spillages) and ensure ensure they they understand understand and and follow follow them; them; don’t don’t rely rely purely purely on on common sense. sense. common

Freeths Freeths is is one one of of the the few few law law fi firms rms in in the the UK UK that that specialises specialises solely in advising hospitality and leisure operators. solely in advising hospitality and leisure operators. Extensive Extensive knowledge knowledge of of how how the the law law impacts impacts on on the the industry ensures ensures our our team team always always provides provides relevant, relevant, industry practical practical advice. advice.

Use Use ‘sign-off ‘sign-off sheets’ sheets’ for for staff staff to to record record checks checks undertaken for hazards, any issues undertaken for hazards, any issues identifi identified ed and and remedial action taken. remedial action taken. Keep a a maintenance/repair maintenance/repair record record for for equipment equipment and and Keep furniture. furniture. Complete Complete accident accident book book entries entries for for all all accidents accidents –– even even apparently minor ones. apparently minor ones.

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Follow up up with with a a more more thorough thorough investigation investigation report report giving giving Follow details details such such as as when when the the area area was was last last inspected inspected prior prior to to the the incident, incident, the the known known cause cause of of the the incident, incident, or or accounts accounts from from any any witnesses. witnesses. Photographs Photographs are are often often useful. useful. Staff should should not not make make any any admissions admissions or or comments comments to to an an Staff injured injured party party regarding regarding the the cause cause of of the the accident. accident.

Train Train staff staff to to complete complete the the accident accident book book correctly correctly and and accurately; the the entry entry is is likely likely to to be be a a key key piece piece of of evidence evidence accurately; if if a a claim claim arises. arises. Give Give details: details: eg eg –– “customer “customer reported reported slipping on wet fl oor near till one. slipping on wet floor near till one. Floor Floor inspected inspected and and no no liquid seen”. liquid seen”.

Specialist Legal Legal Support Support For For Specialist The Drinks, Drinks, Hospitality Hospitality & & Leisure Leisure Industry The Industry Call: 01908 01908 668555 668555 Call: For more more useful useful legal legal insights insights visit: visit: For ¡ AUTUMN 2016 ¡ Propel Quarterly


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Tipping the balance T

Custom and practice

he hospitality industry is picking its way through the self-induced complexity of service charge transparency and accounting. But are we really listening and delivering what the guest wants? The limited statistics I have seen from various unrelated sources indicate that: ➤ 87% of diners in restaurants leave a tip ➤ The average tip is 9% ➤ Almost two-thirds want to see discretionary service charges removed from the bill ➤ Nearly 60% want the entire tip to go to staff, not employers ➤ Almost two-thirds would prefer tips to go to a specific individual who serves them So let’s consider some of these challenges. There is a difference between a service charge and a tip – even if, in reality, it is the same transaction. Service is transactional and functional – important but unexciting. Great hospitality is more engaging and experiential – it creates an emotional connection to a person who is worth tipping. So a service charge is something the restaurant collects, a tip is something a guest voluntarily offers. But do guests really want to pay a tip “as the norm” or would they rather reserve that moment for the “exceptional hospitality experience”? In an ideal world, this would be on every occasion. In reality, it is not.

Ian Dunstall says service charges need to change from a moral obligation for diners to a fair way to pay the right reward to the right roles

Tipping is a custom that originates from Tudor times, when visiting gentry would tip their host’s servants. In reality it has become a method for the hospitality industry to artificially lower its prices by reducing a key cost element (labour) with the expectation that guests feel morally obliged through custom and practice to pay servers the balance of their wages via a voluntary service extra, invisible to published menu prices. Given a guilt-free choice, I would predict a proportion of the 9% average payment would cease if guests felt they had the real choice. The evidence is the fact that in non-table service (bar and counter) systems, tips are much fewer when the obligation is removed. It is likely the custom and expectation of service charges will naturally diminish over time. The living wage has started to improve pay rates and a trend towards less formalised service styles, such as fast-casual, reduces the table service norm. Add to this the momentum from a growing band of pioneers such as Danny Myer, who are challenging the status quo and rebalancing menu prices to fully account for labour cost so service charge is not a required extra. But how do we manage the near-term future? There is a rapid movement towards service charge transparency, encouraged by media pressure and government intervention, which rightfully ensures staff retain the service charge revenue. ▲ ¡ AUTUMN 2016 ¡ Propel Quarterly



“Studies reveal tipping is often discriminatory – workers receive different levels of gratuity based on factors such as age, sex, hair colour and even breast size!”

However, there is still the question of tip distribution among staff. Despite the majority of guests preferring tips to go to their specific server, there is a growing trend towards team tip-pooling managed within the rules and processes of a Troncs system. Supporters say it encourages teamwork, rewards the behind-the-scenes roles the guest doesn’t directly interact with, and is generally fairer. But should tip distribution be fair? Forgetting the moral obligation to comply with the custom, what guests really want to do is to tip/reward the person who makes their occasion special by being more engagingly attractive to talk to and making an extra special effort to care and be attentive to the guest.

Best-in-class behaviours We all know from service experience that these best-in-class behaviours are sometimes the exception rather than the rule – so shouldn’t the servers who exhibit these exceptional traits be more richly rewarded? Wikipedia states that studies reveal tipping is often discriminatory – workers receive different levels of gratuity based on factors such as age, sex, hair colour and even breast size! Should we be shocked or surprised by that? Aren’t we in the entertainment industry where attraction matters? Nobody assumes that on their respective team shifts Cameron Diaz or Cristiano Ronaldo receive the same share of reward for their efforts as their colleagues – for these superstars their image, personality and/or work rate makes them worth more. Why do our guests want us to treat our servers differently? Our guests want to give extra reward to the specific person who made their restaurant experience more fabulous – the staff who made a greater effort, were more friendly, were more attractive to the customer. How does that ensure other, non-guest-facing service roles are properly rewarded? That is a separate problem – partly because good servers receiving tips will have the sense to share with the support team who help them look after their guests (for example, plate money to the chef),


“Despite the majority of guests preferring tips to go to their specific server, there is a growing trend towards team tippooling managed within the rules and processes of a Troncs system”

Propel Quarterly ¡ AUTUMN 2016 ¡

partly because core wage rates need to identify the correct reward levels for these roles. There has only been one instance in which I have truly believed in the case for equally shared tips. This came in a premium country pub, where the majority of the staff were Antipodean transients living in pub staff quarters, where the intense (24-hour-a-day) team bond was so important. There, it seemed more valid to preserve the entirety of the team bond and spirit with equal reward. The challenge of fair tip distribution is it encourages average behaviour from the team. The stronger ones either don’t try so hard or move somewhere their talent is recognised and rewarded. Isn’t a system that rewards the best people most and inspires others to reach their standards a better principle?

My vision for the future: ➤ We find a fair way to pay the right reward for the right roles without relying on service charges to compensate, with menu prices set to reflect this real labour cost. Ideally, restaurants should not charge extra for service ➤ Discretionary tipping changes from being a moral obligation on the guest on every occasion and becomes truly discretionary when really deserved ➤ The customer is able to reward the person who individually serves them – only when they get truly great service and in the confidence the person keeps the individual tips they earn In totality, this ensures we attract great staff and they are well rewarded – with a fair wage rate and the opportunity to gain extra tips if they ensure guests have a great meal experience.

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

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Tackling the Brexit effect O

ver the course of a week in June, Britain suffered a profound shock. At the time, it seemed both seismic and cataclysmic but, as the weeks have passed since the “Leave” vote on 23 June, nerves have steadied and markets have, if not recovered, stabilised. But we are far from back to business as usual. Luke Johnson, in the immediate aftermath of the vote, argued that change can always bring opportunity; radical surprises can fuel inspiration and innovation. That is undoubtedly true, but we can only capitalise on that opportunity and seize it if we have a strong, collective voice not only to lobby for the changes we need to free up business to invest and grow, but also to help navigate the choppy waters ahead – and the Association of Licensed Multiple Retailers (ALMR) is in the thick of it providing just that.

Challenges There is no doubt that Brexit will be the defining geo-political economic event of its generation. It will not only set the domestic political agenda for the rest of this decade, its effects and aftershocks will continue to be felt well beyond that as all sides grapple with new trade agreements and a resetting of international relations. There are some very immediate challenges – and the ALMR has been at the forefront of negotiations with the new Brexit, business and employment departments to ensure the needs


ALMR chief executive Kate Nicholls sets out the association’s manifesto for reform following the UK’s decision to leave the EU

ProPel QUArTerly ¡ AUTUMN 2016 ¡

and concerns of licensed hospitality are taken into account. At the very first ministerial round table, there was a need to fight hard to get recognition of the special challenges faced by hospitality as a result of the vote and a lack of understanding of the volume of foreign nationals employed in the sector, the projected skills gap we are already facing – needing 220,000 extra workers by 2020 at current rates of growth – and the amount of upskilling we provide to our teams.

Solutions In the battle between free movement of goods and free movement of people, we need to make sure an early Brexit solution is found for current and future employment needs and that the needs of the service sector are not eclipsed by manufacturing. Thanks to the ALMR’s early interventions, we have a clear marker with ministers. Our immediate focus is on a resolution of the status of existing EU workers and a right to remain – short term we are working to provide solutions for future EU migration and, over the longer term, we are working to redress the constraints of the current points-based migration system to focus it on areas of skills shortages and training opportunities not just high skill, high wage sectors. In a time of almost full employment, failure to deliver will hamper future growth and sustainability. But if you think that grappling with these ▲

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Opinion set out the ingredients we believe are essential to deliver it. Lord Wolfson, a Conservative peer and “Leave” supporter, put it bluntly: we can either embrace comfortable decline or dynamism, which can be uncomfortable. As the head of “Next”, he has certainly shown his competitors the discomfort that comes when a disrupter enters the market and, as a brilliant retailer knows only too well, how the dead hand of government can hold us back.

Picture by Charlie Bard /

“Brexit was a snarl of white, working class alienation – something the new prime minister picked up on in her first speech”

Theresa May

major macro issues means the politicians will be too preoccupied and will therefore allow us to get on with business, then think again. The real message of Brexit was not what it says about our views on the EU but more an expression of public dissatisfaction – with continued austerity politics, with ruling elites and corruption within them, with the behaviour of banks and big business. Unlike our continental neighbours, Britain has never experienced full revolution and while the same frustrations in Greece, France and other countries have boiled over into anarchic rioting in the streets, here they found expression in a referendum. Brexit was a snarl of white, working class alienation – something the new prime minister picked up on in her first speech. Addressing this is clearly as important to Theresa May as getting the right deal in Europe – hence the setting up of a government within a government to negotiate Brexit and allow ministers to get on with their day jobs. It is here where we may feel the real smack of Brexit – with more intrusive intervention and nanny statism – unless we have a strong counter narrative.

Radical opportunity Brexit is a clear signal of a national desire for reform – and therefore an opportunity for radical thinking. That has to be encouraged and sustained so we need all stakeholders to

What we need now are radical budgets to re-establish the government – and Britain – as a business-friendly champion. A signalled slashing of corporation tax gives a welcome signal to foreign investors but it is of scant benefit to businesses struggling to make a profit to be taxed on in the first place. A business rates and rents double whammy will be compounded by a double National Minimum Wage increase and a second successive 6% hike in the National Living Wage to leave businesses reeling in April next year. Margins have already taken a hit and ministers need to understand this is not short-hand for fat cat profits but rather the cushion businesses have to fund investment in new openings, training and their people. We need an urgent rethink on rates and wages to reflect the fact we have a two-year dip to contend with.

Red tape

“Brexit is a clear signal of a national desire for reform – and therefore an opportunity for radical thinking. That has to be encouraged and sustained so we need all stakeholders to set out the ingredients we believe are essential to deliver it”

Red tape needs to be cut in earnest. Planning, employment law, health and safety, and environmental and energy legislation should all be revisited and streamlined. European rules have long held politicians back from creative solutions on excise duty and VAT rates – blue sky thinking could be encouraged. And we should also play to our strengths – tourism already represents more than 8% of the UK economy and a weaker pound may well stimulate additional growth. Our creative industries – our music, clubbing, fashion, entertainment, food scenes – are a key driver of tourism. Supporting licensed hospitality will drive a key engine of future growth. A VAT cut stimulated demand the last time we suffered a seismic shock in 2008 and could do so again. This is the ALMR manifesto for reform, which we will be taking to government during the next critical six months as the Brexit positions are hardened. We need as many likeminded pubs, bars, nightclubs and restaurants to add their voices to ours to secure it. Join us – carpe diem!

Kate Nicholls is chief executive of the Association of Licensed Multiple Retailers ¡ AUTUMN 2016 ¡ Propel Quarterly


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Conference Overview




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Propel Multi Club Conference and summer party Thursday, 7 July – Oxford Belfrey Hotel, Thame

Our next Our next conference is conference is on on 20th June 2013 3 November 2016 The Oxford atat Congress Hall, Belfry Hotel London

Chris Gerard


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Peach, pubs, pulled pork and pilgrims

Speakers at the annual Propel Multi-Club Conference at Oxford Belfry Hotel in July gave delegates a fascinating inside view of the foodservice sector. Martin Cooper picks out a few highlights Paul Chantler

He said technology was also behind the massive growth in deliveries in the industry – up 7.2% year-on-year and 40% over the past seven or eight years, amid ever-increasing competition between companies such as Deliveroo and Just Eat, which showed the sector was “clearly a game changer”. Lavenant also told delegates “customisation” was becoming more common because this was something millenials were calling out for. He said: “We’re all different. We don’t want to eat or drink To remain competitive, operators have to provide a “360 the same things, so offering consumers the choice to really customise experience” through great service, NPD Group’s Cyril Lavenant their food and beverage is becoming increasingly important.” told Propel Multi-Club Conference delegates. He said the He hailed the UK foodservice sector for placing importance on experience meant offering consumers the opportunity for “try and share”, such as being encouraged to taste a new “customisation and experimentation” with their food and beer. He added that “try and share” made a customer beverages, while providing “super convenience” via feel valued and food was starting to move in a similar technology and without forgetting the basics of direction with smaller portions and sharing plates. quality and value for money. “You combine Lavenant said operators were responding to He pointed to the impact on the sector of the atmosphere, ever-increasing consumer need for the “360 millenials (16 to 34-year-olds), who make up culture and flavours experience”, which included customisation, a third of traffic and were “really pushing all “super convenience” and a “great experience” of us to evolve and grow into more modern of memphis, it’s a in the restaurant. He said NPD Group statistics ways of operating”. He said operators had to no-brainer to bring revealed 54% customer satisfaction of the differentiate in this highly competitive market that to london, it overall restaurant experience in 2008. That figure by making the experience “super convenient”. fits perfectly” had risen to 70% by 2015. He said: “Just to be ‘convenient’ is not He said getting service right was the first step in enough any more. Ten years ago, people chose creating a great customer experience, with staff seen a place close to home where they always ate. Those as “brand ambassadors”. He said training and motivating times are over. Because we’ve changed our habits, we staff was essential because 70% of consumers who rated quality don’t eat out and drink out as often as we used to and, because of service as “excellent” said they would definitely revisit within a so many operators offer a comparable quality of experience, month, compared with 47% who rated the service as “very good”. food and beverage, we have a lot of choice.” Lavenant admitted no one could tell how the Brexit vote, Lavenant pointed to technology as the way to provide super which took place a few weeks before the conference, would convenience, with apps allowing time-hungry consumers to pay affect foodservice sector trends but added: “The market has faster and avoid queues. He said 27% of visits to chains were evolved so much in the past few years and is so diversified – rated “excellent” for speed of service, compared with 22% in everyone in the market is doing so many amazing things to make 2010. He added that with the high cost of developing apps, sure consumers find a reason to eat out and drink out – we are simple texting was a great way to let customers know when a still quite confident for the coming months.” ▲ table was available.

CYril laVenanT director of foodservice for the uK nPd Group ¡ autuMN 2016 ¡ ProPel Quarterly


Conference Overview Thom and James Elliot Co-founders Pizza Pilgrims Pizza Pilgrims co-founders Thom and James Elliot told delegates the lessons they learned during their humble beginnings in a mobile van and market stall had helped them to build the business to its current position of operating five London restaurants. The brothers said they had built Pizza Pilgrims’ foundations on principles such as “simplicity”, “adaptability”, and being “where the action is”. As with the best ideas, the Elliot brothers formed their pizza business plan over a pint – despite having no background in the foodservice industry. Setting their hearts on operating from a Piaggio Apé – an Italian three-wheeled van – the Elliots went to Italy in 2012, bought the van and drove it back to Britain on their first “pilgrimage”, which took six weeks due to a top speed of 18mph, including “being overtaken by a jogger”! Pizza Pilgrims then opened as a pop-up in Borough Market in Soho. After working seven days a week for a year at as many events as they could, the brothers opened their first permanent site, also in Soho, in August 2013.

“We now have ten managers and assistant managers. Of those, we’ve recruited only one, all other nine have come up through the company” The Elliots said their first business principle is simplicity: “We import all our ingredients from Italy and ensure our pizzas are the best they can possibly be. Keeping a simple model allows us to scale it quicker. The other massive advantage is it allows us to hire people on attitude rather than skillset so we don’t have a complicated order of service in which you need to know 20 wines. We literally have red, white and pink on the menu – and that’s it. That allows us to build a team who are fun and really up for it. We now have ten managers and assistant managers. Of those, we’ve recruited only one, all other nine have come up through the company – some literally from the

Jonathan Simon Investor Business Growth Fund Jonathan Simon outlined criteria the Business Growth Fund (BGF) looks for regarding companies it is seeking to invest in. He told Propel Multi-Club Conference delegates the BGF, which has investments in hospitality companies including Boost Juice Bars, Camino, Giggling Squid, Peyton & Byrne, Barburrito, Coaching Inn Group and Wear Inns, put its faith in “best-in-practice management teams” and “one or two key individuals” capable of “really scaling the business”. He said: “Primarily, (we’re looking for) a great management team. Most investors will say this but for us the key difference is we’re a minority partner so alignment with that management team is paramount. It doesn’t need to be a complete team, we’re happy to help build a team, but it does need to include one or two key individuals who we think are capable of really scaling the business. Outlining BGF’s approach, Simon said: “We’re looking to back best-in-practice management teams that want to grow their business without losing control. Minority for us can be anything up to 40% of the equity. We want to be involved as a partner, we want to be involved in key strategic decisions – typically that means boardlevel participation. What we’re not doing is seeing ourselves as operationally running the business – we want to let managers manage.


market.” The company now also employs “adults” in the form of a finance director, operations director and property director. The brothers said other maxims, learnt when attending events, were to “be where the action is” – by maximising collaborations alongside larger companies – and “flexibility”, which has seen the Elliots adapt each Pizza Pilgrim venue to fit its location and clientele. The brothers have also branched out into producing a “frying pan pizza kit” and their own limoncello.

Regarding future plans, the Elliots told the conference: “We’re looking to expand and we’ve more ambition for the business than ever, but we want to make sure we’re doing the ones that are right for us and not the ones that tick the spreadsheet box.” The brothers said their next Pizza Pilgrims site would be in West India Quay, next to Canary Wharf. They added that the venue, larger than all five of their other sites combined, would be a “pizza playground” with console games and bowling. Regarding property, they said: “We’ve seen people move from the pop-up space into something that doesn’t have the right lease structure behind it. They create something phenomenal and because they don’t have a piece of paper that says they can stay there for ten years, they lose it. We’ve been really conscious we’re not building something that will only last a year.”

He pointed to Mexican brand Barburrito as a good example. He said: “We first invested £3.3m in Barburrito in March 2012. We thought it had a fantastic entrepreneur in Morgan Davies. It had first-mover advantage – it was the first burrito bar in the UK – and had grown to six sites outside London at a time when a lot of the operators we were speaking to were struggling to prove their brand would work outside London.”

“Over the past three years, it’s those businesses with five to 25 sites – the type of company we’ve got in our portfolio – that have seen the greatest expansion” Moving on to BGF’s appetite for further investment in the foodservice sector, Simon told delegates: “Despite competition, there is always opportunity for innovative operators. Over the past three years, it’s those businesses with five to 25 sites – the type of company we’ve got in our portfolio – that have seen the greatest expansion. And they’ve grown, between them, more than 40% in terms of new sites. We’ve got less than 10% of our fund in the wider hospitality and leisure space and about 5% in food and beverage across eight operators. We’re keen to grow that further.” Simon added that BGF’s Ventures team recently invested £3m in technology startup Gousto – a subscription service that delivers ingredients and recipe cards for consumers, who don’t have time to go shopping, to cook their own meals at home. ▲

Propel Quarterly ¡ AUTUMN 2016 ¡

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Conference Overview simon BriGG Co-founder Porky’s BBQ Simon Brigg, co-founder of five-strong Porky’s BBQ, said bringing his brand of Memphis-focused food to Britain was a “no-brainer”. He told delegates the beauty of the concept was that “barbecue is for everybody – from eight to 80”. Brigg said while the US was the home of barbecue, where it is a “religion to some people”, Memphis pitmasters told him during a cooking competition that they were impressed with the quality of barbecue food in the UK. He said: “We’re getting better quality products and we’re innovating it and making it better than some of the stuff you can get in the US. We’re taking their philosophies and saying, ‘how can we do this as perfectly as possible?’” Brigg was inspired to found Porky’s by a trip to Beale Street in downtown Memphis, famous for three things – blues, bourbon and barbecue – and the brand offers traditional, low-smoked barbecue food, focused on ribs and pulled pork, and has 30 brands of bourbon at its Bankside venue. He added: “The other big thing for us (wife and co-founder Joy) is music – and having fun, enjoying yourself. At the end of the day, that’s why you go out. We like the blues – Muddy Waters, BB King. There’s a theme at all our restaurants of imagery of famous people from Memphis. A lot of other barbecue brands in the UK tend to do a mixture of styles but we stick to our guns.

CliVe WaTson Founder and chairman City Pub Company The market differentiation that helps City Pub Company stand out in a crowded market is its feeling of “independence”, founder and chairman Clive Watson told delegates at the Propel Multi-Club Conference, while its USP is how the company treats its staff, including a profit share initiative. Watson said individual fit-outs, a lack of ties, and freedom of autonomy for staff regarding menus and promotions meant the company could open two pubs within 200 yards of each other without “cannibalising” trade at either venue, while customers would have “no idea” the pubs were owned by the same company. He said: “All our pubs are completely different. You would not know, for instance, that our three pubs in Cambridge or those in Bath were owned by the same company. That independence is very important and one distinction is each pub has a different menu, meaning our chefs have a lot of autonomy in creating the menu they want. “We have no ties regarding our beer list – we do a lot with Heineken because they are a good supplier but beyond that we are a genuine free trade operator. All the promotions are done individually as well. There’s no pack that comes down from head office saying ‘you must do this for Bonfire Night’, each pub runs the promotions it wants to do. The advantage of this is the ideas often spring from the staff and they get behind it and get their friends to come down.” Regarding fit-outs at the company’s pubs, Watson added: “A lot of the fit-outs aren’t carried out to a set formula. We’re basically putting in the ambience, putting in the feeling of the place, in the way we think it suits that particular area. We like going around our estate and seeing the independence in our pubs and we can literally open pubs within 200 yards of each other and it doesn’t cannibalise their trade in the same way it would do if a branded operator opened two sites so close to each other.” Asked what he regarded as City Pub Company’s USP that distinguished it from the competition, Watson replied “how we look after our staff”, adding: “The staff are such an important part of any industry where it’s so labour-intensive. As I said, we give them a lot of autonomy in their operations and they can make a difference on a daily basis – they can send out their own tweets,


We do Memphis – from the food to the music, style and cocktails. You combine the atmosphere, culture and flavours of Memphis, it’s a no-brainer to bring that to London, it fits perfectly.” Brigg added there was another “b” involved with the Porky’s concept alongside blues, barbecue and bourbon – beer – with an emphasis on craft beer and beer pong at his sites. Talking about the Porky’s BBQ Lab, Brigg explained: “Really it’s a prep kitchen. We smoke all our meat on-site apart from our pulled pork. We smoke that for 18 hours and, due to planning restrictions, we can’t do that at every site. We go through two tonnes of pulled pork a week. The laboratory also allows me to play and come up with new sauces and techniques.” Looking to the future, Brigg told delegates: “We’ve got two new sites in the pipeline. We’re basically just agreeing a price. One should be in September and the other late this year or early 2017. They’re pretty much a done deal. “We’ve got another two sites we’re negotiating on for the pipeline next year and we’re still going to produce our recipe book. We want to get into the retail market – we’ve got a great range of sauces we’re producing at our sites and just need to find a route to market.” Talking about Porky’s failed £650,000 fund-raise on crowdfunding platform Crowdcube, Brigg said: “It’s not the end of the world. We’re three years in, we’ve got five sites, we only opened two of the sites in the last eight or nine months. I think one of the reasons we were unsuccessful (with the Crowdcube campaign) was Brexit. There was panic and caution. I think we timed it badly.” Brigg warned anyone thinking of starting a crowdfunding campaign to think about their budget up front and to “seek outside advice”.

do their own promotions. They also have a lot of choice in the beers, we essentially negotiate the beers but they choose which ones they want to put behind the bar. “The managers get 10% of the profits on a monthly basis, so each month is a new challenge. And it’s not capped, so if they do really well and create lots of goodwill for the pub, they continue to share in that goodwill. It’s a very good way of not only incentivising managers but retaining managers, and all our managers, assistant managers and head chefs, if they’ve been with us for more than one year, are given share options, so they actually have a stake in the business they’re working in. Watson told delegates the best recent initiative was a profit share, where 2% of the company’s profits were equally shared among all employees who had been with City Pub Company for more than 12 months – be they kitchen porter, cleaner or someone at head office. He added: “If we hit budget for 2016, it will be a 3% profit share which, on current calculations, could mean £750 for each employee – that makes a big difference to people on £20,000 a year and it shares the fun and benefits for everyone.” The company has 27 sites (more than 85% freehold) in the south of England split into two divisions – City Pub Company East and City Pub Company West – as EIS-funded firms can only raise a maximum of £15m. However, a short time after the conference, City Pub Company secured a new and improved £20m banking facility to fund its expansion plans to between 40 and 50 pubs over the next three years. The new agreement was funded by Barclays until 2021. The company also plans AIM flotation at the end of its EIS qualifying period – October 2017 – when Watson said it would merge its East and West divisions at the same time as listing. ▲

“We can literally open pubs within 200 yards of each other and it doesn’t cannibalise their trade”

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Conference Overview Paul Chantler Founder FrogPubs French brewpub company FrogPubs had to “up its game” regarding its beer and burger offering after “other people started doing it better”, founder Paul Chantler told the Propel Multi-Club Conference. Treating delegates to samples of FrogPubs ales, Chantler revealed the problems he faced being a beer pioneer in a “poor beer-drinking country”, while the rise of the craft beer market and better burger concepts had forced the company to invest and change tack to stave off increasing competition. Chantler, who started brewing cask ales at his first Paris pub – The Frog & Rosbif – in 1993, said: “France is a big malt producer but a very poor beer-drinking country, it’s 26th out of 28 EU countries in terms of beer consumption. Beer has a bad image in France, it’s something you drink with a pizza watching the football on the telly. However, the French love an underdog, which we certainly were, and were surprised to find someone making beer in a city centre basement as no-one was doing that at the time.” By 2012, the number of breweries in France had soared to 300 and with the craft beer market making inroads in the country, Chantler realised FrogPubs had to “get its act together” to stay ahead of the competition.

“There’s a big space between the top ten brewers in France and the rest – in the 10,000 to 200,000HL-a-year range. We’d like to get ourselves into that space” He said: “Being the only people doing what we were doing had worked very well until others decided they could do it better – and they were doing it better. We had to completely overhaul our range, which hadn’t really evolved, and we had to start making much better beers. The same thing (competition) was going on around our other core product – the burger. We’d always served burgers and by 2012 were selling 250,000 of them a year – about half of our main core sales. We spent about six months completely reworking our burgers and figuring out how we could make them a lot better. “We were fortunate most of our competition at that stage were startups, and didn’t have the scale we had, which meant we could tell our suppliers we needed them to work on specific recipes and enabled us to get a much better product quickly. That was a very good investment as, although it cost us three or four points in margin, it meant we managed to secure our sales and we’ve opened three burger restaurants since. It was interesting to take a product apart and build it up really well and that was clearly something we hadn’t done enough of in the past.” Chantler then started applying the same process to FrogPubs’ beer offering that he had used to turn around its burger offer – brewing ales to complement its Frogburgers and opening its first dedicated brewery outside Paris in which “we could just concentrate on making great beer”. Employing a couple of “can do” brewers to build momentum and set values, Chantler also hired design and PR teams to promote awareness of changes the company was making. He added: “In the three or four years since then we’ve brewed 30 or so beers, doubled our sales volume, and spent half a million euros on the brewery with another half a million to go. We’ve won a dozen awards for the beers and had to learn to filter, keg and bottle.” As well as the three Frogburger sites – all in Paris – FrogPubs now operates eight bars in the French capital and one each in Bordeaux and Toulouse. Asked what the future held for the company, Chantler told delegates: “We’ve got a lot of work to do on growing our brewing capacity and we’re starting to sell into supermarkets – we’re looking to build sales of our beers outside our pubs into a substantial business over the next six or seven years in France and exporting as well. We think a lot of the breweries will stay two or three-man operations so there is a big space between the top ten brewers and the rest – in the range of about 10,000 to 200,000HL a year. We’d like to get ourselves into that space.”


Hamish Stoddart Co-founder Peach Pub Company Peach Pub Company’s current growth target has an off-thewall connection with a Hollywood movie, while its philosophy has been partly built on advice from serial sector investor Luke Johnson, co-founder Hamish Stoddart revealed at the Propel Multi-Club Conference. He told delegates the 17-strong pub company’s target of 22 pubs came from a business meeting with fellow co-founder Lee Cash. He explained: “At our first business planning meeting we couldn’t come up with a goal for our business – we had six pubs at the time so we weren’t doing too badly – but because Lee had watched Ocean’s Eleven the night before, we said ‘we’ll go for Peaches Eleven and do 11 pubs – and we’ll do 11% net’! When we got to ten pubs we decided to double that target and go for 22.” Despite this unusual method, Stoddart said there was logic in the idea as Peach would have a “proper” management team in place by the time it got to 22 pubs by adding two or three pubs a year. He added: “What we’re looking for now is more pubs and partners. We’ve got some funding in place – we’re lucky enough to be bank funded – and my intention is that we are not looking to deal with anyone except the BGF (Business Growth Fund). I wouldn’t go near private equity in a business with a strong culture that’s got lots of independent venues.”

Moving on to the figures Johnson quoted him ten years ago while Stoddart was running small catering businesses, he told delegates: “Johnson said you need to watch the numbers seven and 17. Seven is when the original operating team has done the first six (sites) with loads of energy then, at seven, you definitely need to do something different to carry on.” Stoddart added that Peach “somehow flew through that particular chasm” but then Johnson talked about the figure 17 – the number of sites Peach currently operates. Stoddart said: “Johnson says that (at 17 sites) you’ve got to corporatise and change your way of working – and I think we’re there now. What we’re trying to do differently is we’re trying to preserve the original culture that we, the founders, got together over a beer and put together 13 years ago and trying to get us through this stage.” Looking beyond the 17 figure to the 22-site target, Stoddart added: “I think at 22 pubs we can prove you can use shared ownership and culture to stay away from being a chain. The last thing I want is for our team to think they are working in a chain and our guests to think they are arriving in a chain, so the ‘c word’ is banned in our business.” Stoddart also issued a unique invite to smaller companies to share Peach Pub Company’s central support function, plug into its existing platform and access areas such as IT, purchasing, sales and marketing function, and controls. Stoddart said: “I’d love a smaller business with similar values to come and share the advantages of our scale, and to take them through the six to 15-pub pain barrier.” The invitation to mentor a smaller company is in line with Peach’s business philosophy, which has been built on recruiting a series of equity partners who run the business in collective fashion with Stoddart and Cash. Peach also opened its first boutique hotel – The High Field Town House – next door to its gastro-pub The High Field in Edgbaston, Birmingham, in June.

Propel Quarterly ¡ AUTUMN 2016 ¡

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Showing you the money


t was a sceptic belonging to auditors that are now a Venners client who first referred to their new consultancy as “retail porn” – because it’s “revealing, illuminating and highly profitable”! While his pithy reference is definitely misleading, his description is certainly true. Venners characterises its new consultancy service as “following and showing you the money”. Respecting the skillset of employees, it points out it’s impossible to objectively analyse your own business in the same way an external expert can, even if it were possible to replicate their cross-sector skills and experience. While the consultancy has now launched as a standalone service, the firm has practised the principle of “following and showing you the money” for a number of years, with some unnerving discoveries. The principle identifies 18 critical areas for improving profit and control. The in-depth consultancy pinpoints issues, opportunities and solutions, and finds ways of improving already “good” process across the entire spectrum of a hospitality business. Food consultancy has delivered straight to the bottom line. For example, a small, familyrun business saved 5% in food costs within two months, while a large, four-star hotel operator saved £44,000 in food costs after two days of intensive analysis – without diminishing its offer. It only requires practical solutions – be it mentoring kitchen teams, tuning protein preparation, implementing processes to stop diners catching a freebie from the buffet breakfast or subtly adjusting the thickness of your toast – and operators are laughing all the way to the bank.

David Fitzgerald outlines how stocktaking and audit expert Venners’ new standalone consultancy can help operators ‘follow the money’, with five examples of ‘unnerving’ staff-led scams to look out for

Health and safety is no longer just an audit process, it has also become a way of controlling cost. The “critical areas” aren’t quite the same as food and beverage, but the practice of “following” a journey is similar. Better risk management reduces compensation payouts and insurance premiums. One small hotel group, classed as high risk by insurers, reduced their premiums by £8,000 per year by using Venners Consulting to improve its risk management.

“It’s impossible to objectively analyse your own business in the same way an external expert can” Large companies servicing major events and festivals have improved like-for-like margins by 8%. Consultation identifies and closes operational loopholes to maximise profit, while Venners’ Event Profit Control team addresses the challenge of a temporary workforce with staff monitoring and immediate stock-to-cash data. Reporting, whatever the brief, provides an accurate, independent reflection of a business and its monetary position as a minimum. Venners said every instance of consulting it has completed so far has offered a potential return on investment of between 3% and 10% – the implementation is down to the operator, of course. Eradicating stock and cash fraud is one of the 18 “critical areas”. Operators often find it ▲ ¡ AUTUMN 2016 ¡ Propel Quarterly


Insight difficult to admit the degree to which they are victims of fraud, let alone identify the persons responsible and deal with them. In an effort to highlight limitless, unimaginable exposure to fraud, Venners will describe five cases that needed intervention to identify and solve. They encourage all operators to consider whether they have enough systems in place to prevent or catch a thief. Client confidentiality is paramount, so some details have been changed to protect anonymity.

The ‘perfect business’ The “pub within a pub” is a scenario we commonly uncover and resolve. Perhaps, most surprisingly, is one such case involving systemic fraud of £2m over ten years – a frightening example to multi-site operators of the dark possibilities of fraud. Conceding there might be a slight problem or at least some good lessons to be learned, owners of this managed house called in Venners to investigate. Analysis of till receipts raised suspicion over the cash to credit card transaction ratio. Before 6pm cash sales were 76%, after 6pm they were only 33% of sales. Applying the daytime ratio, suspicions were that 64% of evening cash sales were missing, a potential loss of £15,000 per week. Stocks were perfect but undercover observations confirmed the pub had Sunday deliveries, credit card sales were stopped after 9pm, and staff were manually recording sales on “cheat sheets”. Receiving reports of an epic problem was a moment of horror for the company, which had held the “perfect business” in such esteem. However, it quickly gave Venners the green light to “move in”, which led to the managers been caught “red-handed”. The post-mortem revealed staff receiving “bonuses” of £30 cash per week, which was all it took to keep them on-side. The till was used in training mode during the evening, transactions that are never recorded on reports but can be used to produce a shopping list to cover the fraud. In short, managers extracted millions of pounds by hiding a “pub within a pub” – simply by keeping their heads down and never having a holiday.

great team spirit and commitment, even team members “helping” after they had clocked off. Always suspicious. Noting transactions, methods of payment, precise times – and comparing with what was recorded – there was a big gap. Staff drinking, orders allocated to “management”, and missing transactions were just part of the problem. In total, this one shift alone cost business owners £170. Extrapolated over a year, this equated to £44,700 in losses. Staff cheerfully calculated how much they had “earned” at the end of the evening, but were less jubilant when confronted with their scam, P45 and a police investigation.

The ‘saintly assistant’

A reliable and trusted deputy manager, who now serves as a reminder to never underestimate the sheer audacity of some people, unnervingly walked away with £40,000 in cash. This saintly assistant managed to confuse administrators after erratically depositing sums of £20,000 and the weekly balance later in the week. Late one bank holiday, head office chased only to be told banking was “on the way”. She then bluffed head office and the general manager into believing a subsequent £20,000 banked was the original they were looking for. She attempted and a four-star almost got away with this scam twice! hotel operator saved in However, on attempting to bluff them food costs after two The ‘weakest link’ for a second £20,000, management asked This was an innocent mistake resulting in a Venners to investigate – and jointly took days of intensive major scam involving nine employees, proving action when they rumbled the issue. The analysis ” no matter how robust systems are, they will be deputy was made to open the safe… but never tested as people discover the “weakest link”. made it back from the toilet. An employee accidentally transposed cash and Police discovered flight tickets at the deputy’s voucher income on the cash sheet, under-banking house and, although she was arrested, she skipped bail £10. Expecting a call when posted vouchers didn’t match the and is still on the run. It transpired another three constabularies declared figure, nothing happened. want the woman for the same offence! The employee did it again, this time declaring an inflated Unfortunately, multiple key safe holders confused the issue voucher income to cream off more cash. Again and again he did – everyone responsible but no-one accountable. The manager it, each time telling another employee, until nine were regularly trusted the deputy; other key holders trusted each other; no-one stealing thousands of pounds. suspected a thing. Again, this is an all too common scenario. The scam got rumbled and all nine now have a criminal In fact, on sharing this case at the Propel Multi-Club Confernce record. This was allowed to happen, though, because someone in July, three business owners openly admitted to having been at head office was on maternity leave, and her task of matching victims of a similar sting. vouchers received against vouchers declared was never taken on by anyone else.

The ‘entrepreneur’

Everyone loves a bit of entrepreneurial spirit – unless it’s not channelled in the right way. A “shots bar” located between a club entrance and the main bar, capturing arrivals and increasing spend per head, is a great idea – unless it’s not actually your bar! An observational audit as part of a consultancy project revealed a manager sourcing supermarket shots and pocketing the cash. The estimated lost revenue was £336 per night – without mentioning the bottles of champagne “amount being flogged from the DJ box.


The ‘five-star fiddlers’ A bit of under-ringing here, the odd staff drink there. Who would have thought that could add up to £44,700 in annualised losses? In a five-hour under-over observation, there was certainly


David Fitzgerald is business development director at stocktaking and audit expert Venners, which recently launched its standalone consultancy practice in the company’s 120th year of business

Propel Quarterly ¡ AUTUMN 2016 ¡

Make theirs a Frobishers. It’s never been more vital to offer your customers an inspiring soft drink selection. Treat them to a trade up with the premium taste of Frobishers Juices. Fantastic flavour for them. More money in the till for you. To discover the profit margin potential of stocking premium soft drinks, come and explore our full range of fruit juices, still and sparkling juice drinks and smoothies. It’s now ‘inexusable’ for on-trade premises to offer uninspiring soft drinks menus (Mintel 2015) Alcohol sales are declining, with one in five drinkers choosing soft drinks over alcohol (ONS 2015)



Brexit and booze a glass half full or half empty? Paul Chase weighs up how the EU referendum result will affect the alcoholic drinks sector in the longer term


rime minister Harold Wilson coined the phrase: “A week is a long time in politics.” As I sit here writing this article, only three weeks have passed since the UK voted to leave the European Union and, because so much has changed, it seems like a lifetime. Perhaps the near-term market turbulence was to be expected, but the long-term changes caused by Brexit are much more difficult to predict for the alcoholic drinks sector, never mind the UK economy as a whole. In the short term there may well be a postBrexit boom in exports, as sterling crashes to its lowest level since 1985. Tourist visits may increase for the same reason. The UK’s longer term prospects will depend crucially on two things – what kind of a trade deal we strike with the EU now we’ve left, and what prospects there will be for doing trade deals with nonEU countries. What is beyond doubt is that negotiating the terms of our exit is a fearsomely complicated task.

Wine industry Here are just a few examples. The UK wine industry has grown strongly during the past decade and is now worth £100m annually, according to the Wine and Spirit Association. The fall in the value of the pound, which will make these exports more price-competitive, may well create a boom in exports of British wine. But it is also the case that Britain is the largest wine importer in the world and the EU the largest wine-producing region. Last year, Italy and Spain alone supplied 60% of the UK’s wine and all these imports will become more expensive as the pound declines in value, driving up UK inflation. This will make UK wines more price-competitive here in the


“The EU is the biggest market for scotch whisky – and more scotch is sold in France in one month than Cognac in a year”

Propel Quarterly ¡ AUTUMN 2016 ¡

UK, but will people change their continental wine drinking habits and buy British? Is the glass half full or half empty? In my judgement – more than half empty! The position of Scotch whisky is also a matter of great concern. Whisky from Scottish distilleries makes up the majority of UK spirits exports. It is Scotland’s biggest export by value of anything, and it makes up a quarter of all our food and drink exports. While scotch is exported to more than 200 markets around the world, the EU is the biggest market for scotch whisky – and more scotch is sold in France in one month than Cognac in a year! The numbers are huge – exports of Scotch generated £3.95bn for the UK balance of trade; more than 10,000 people are directly employed in the scotch whisky industry – many in deprived areas – while more than 40,000 jobs across the UK are supported by the industry, if we include the supply chain. And no less important, exports of scotch contribute about £1bn a year to the exchequer in taxes. And what about beer? Beer exports generate about £630m annually – with Belgium alone accounting for £93m of an exporting success story that has seen more than 1.1 billion pints of British beer being consumed around the world.

As good as it gets So how will Brexit affect all this? A recent analysis by Rabobank made this point: “For a trade agreement with the EU itself it is difficult to see how the current situation for the UK can improve.” The current trade tariff of 0% is “as good as it gets”, the report added. Another matter of concern is what happens when, as a result of Brexit, we are no longer subject to the jurisdiction of the European Court of Justice (ECJ). In December last year, ▲

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Boris Johnson the ECJ ruled that the Scottish government’s desire to impose minimum unit pricing (MUP) ran contrary to EU free movement of goods rules unless there was no other, less traderestrictive way the Scottish government could achieve its health objectives. The matter is now with the Scottish courts, and the Scottish government and Scotch Whisky Association remain locked in conflict over the issue. Will this decision matter when we leave? Yes it will – because if we impose MUP just because we are legally free to do so but ignore the interests of European nations that export wine to the UK, then the EU will be in a position to impose trade sanctions against scotch and other British drinks products. Against this backdrop the notion that leaving the EU means we are no longer subject to the “diktats of foreign courts” sounds as hopelessly naive as it always was.

Hospitality workers I return to the enormous complexity and uncertainty Brexit has and will continue to cause. Most of this detail is lost on the British public, who fell for the sophistry of “let’s take back control”. Nowhere is this false prospectus more obvious than in the area of immigration. Recent research carried out by Oxford University’s Migration Observatory suggests as many as 94% of EU workers currently employed in UK hotels and restaurants would fail to meet existing entry requirements we apply to non-EU applicants seeking permission to work here. While it will probably be the case that no EU citizens currently working here would be sent back, what are the prospects going forward for an industry that is already desperately short of skills? All this illustrates the scale of the challenge employers in our sector will face in order to appease those who think it’s fine to sacrifice


“My feeling is [Boris Johnson] never really wanted to leave the EU but wanted to negotiate a better deal in return for staying in”

Propel Quarterly ¡ AUTUMN 2016 ¡

some economic growth if it means we can reduce immigration. These are the trade-offs we will now have to negotiate. Glass half full or half empty? Having said all this, we’ve made the decision to leave and we have to come out the other side. So who will be batting for us? Prime minister Theresa May has just completed her cabinet and we now have the “Three Brexiteers” in post – Boris Johnson, foreign secretary; David Davis “Brexit secretary”; and Liam Fox, international trade secretary. While I can see that Mrs May’s selection represents a masterclass in Conservative Party management, I also think her choice of Brexiteers represents a political risk. First, consider Boris Johnson, who has never been in national government. My feeling is he never really wanted to leave the EU but wanted to negotiate a better deal in return for staying in. Then there is David Davis – charged specifically with negotiating Brexit and our new trade relationship with the EU. Davis has also never been in government, only in the shadow cabinet, but strikes me as being a street-wise negotiator. And finally Fox – a libertarian Tory who was previously defence secretary and is known for his transatlantic contacts. What unites the three of them is they are trenchant critics of the EU or Cameron’s Tory administration. Now they are expected to step up to the plate and deliver change – transitioning from critics to authors. These three politicians now have the opportunity to make something of Brexit. We should wish them well. Here’s hoping!

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

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Asking the right questions of the right people, in the right places


In a world of new brands and behaviours, David Martin says a change of approach might be needed to get the best feedback

’m a life-long researcher, but I admit we are getting saturated by surveys nowadays. They seem to follow almost every commercial transaction or interaction. We’re close to feedback overkill – I got asked for my views by a crematorium recently. But of course quantity doesn’t mean quality, and it’s worth asking if we are posing the right questions to the right people. Industrialised feedback systems have opened up previously unimagined volumes of customer sentiment data, and they’ve made it feasible for businesses of all sizes and budgets. It’s a boon, but industrialised processes can come with standardised questions – off the shelf dashboard digits that drive senior management metrics but which may also fail to pick up warning signals in an increasingly crowded and disrupted market.

terms of consumer usage, in a fragmented market where most brands fail to reach 10% of the eating out population. Large numbers of their customers said they were likely to revisit them. But for Frankie & Benny’s and Harvester, despite such competitively favourable brand-level consumer KPIs and formerly upbeat expansion plans, the corporate outlook seems to have recently changed. To risk stating the obvious, big brands are more exposed to attack from new openings because of their bigger geographical footprint. Both these brands defend about 250 local market positions, where every trial visit to a new competitor risks the permanent loss of a customer. Plus, they defend these established positions in the social media era, which amplifies the self-publicity value of novelty and discovery for the individual diner.

Customer data-driven commerce

“It’s dangerously simplistic to assume that your current customers are ‘loyal’ – still less that they might ‘love’ your brand”

Tesco was always cited as the master of customer data-driven commerce. It knew what its shoppers bought from its stores. In 2007 it had a grocery market share of almost 32%, and it appeared invincible. Now its share stands about 28%, as Aldi and Lidl have advanced to 10% of the market, and their future roll-out plans remain aggressive. Despite all its Clubcard data, and its presumed insight advantage, the biggest beast of food retailing was attacked and weakened by these new intruders. We thought it knew all about its customers, but it probably didn’t know enough about their competitive purchasing patterns and brand attitudes, particularly in the local markets where the discounters were invading their space. The incumbent big food retail brands faced these new entrants just as consumers enthusiastically adopted home delivery, and during an expansionary era of “land grab” – in some uncomfortably parallel storylines for our own market. Recent months saw newsworthy status changes for two of the biggest and bestknown eating out brands – and they were somewhat surprising given their apparent standing with the out-of-home dining consumer. Consider the evidence: CGA Peach Brand Track data showed they were both top 20 brands in terms of consumer awareness, in an eating-out market where most brands fail to reach 50% prompted awareness. It showed they were top 20 brands in


Board-report consumer feedback metrics will naturally tend to focus on national, brand-level results. But it’s in local markets where diners make their decisions, and a hard fact about today’s environment is individual consumers are becoming aware of more and more branded dining options – about 30 on average according to CGA Peach, and this number has tended to grow over time. How often does your unit-level feedback data focus on areas of new competitive intrusion? For the big beasts in eating out, the undoubted benefits of brand scale and salience are not enough, and comforting brand awareness and satisfaction scores can mislead. To defend against customer defection, there’s a growing need to remain interesting, to inject variety and positive surprise into the experience, traits not necessarily picked up in standard feedback questions. Take “likely to recommend” for example – a survey staple, particularly for organisations devoted to Net Promoter Scores. Whilst it’s long been justifiably argued that customer “satisfaction” is an uncritical test, it’s also worth asking whether the same can be said

Propel Quarterly ¡ AUTUMN 2016 ¡

of recommendation. It’s very easy, from behind the anonymity of your keypad, to say you would recommend a brand or venue whilst at the same time being totally open to defect to a new and potentially more interesting local competitor, something that is rather less likely to be measured. There are clearly graded levels of brand “attachment” and usage, and it’s dangerously simplistic to assume that your current customers are “loyal” – still less that they might “love” your brand. The Ehrenberg-Bass Institute for Marketing Science at the University of South Australia recently cited research showing only 4% of Australian males said they “loved” their favourite beer brand – and if you wanted an acid test, that’s surely it. The Institute’s plain-speaking Aussie view is that “too many marketers want their customers to love their brands when the stark reality is most couldn’t give a stuff”. That’s especially true in what it more academically describes as the “option proliferation” of markets nowadays – all the more reason to try to develop feedback metrics that are sensitive to potential customer defection.

Ultimate question There’s a supposedly “ultimate question” posed by business author/guru Seth Godin: “Would they miss you, if you were gone?” You could ask that of your customers, but even then, they might say they’d miss you, but that doesn’t equate to spending. I’d wager that brand sentiment levels for Marks & Spencer are deceptively flattering in relation to present-day spending behaviour. Similarly, a recent Verdict Retail survey on BHS suggested 55% of adults said they would miss the brand – but only four in ten said they had shopped there in the past six months. And that’s something they won’t be doing in future. The out-of-home market is a chaotic and crowded world of new channels, new brands, and new behaviours. It demands new management responses, so perhaps it’s also time to think about sharpening your feedback focus. Big data doesn’t equal smart data – consider whether you’re looking at the right questions, and asking the right people, in the right places.

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

Crunch Time How restaurant booking systems can boost restaurant profitability Restaurant booking systems can make restaurants run more smoothly and profitably, thanks to leaps and bounds in technology. But not all restaurants are cashing in on the opportunities on offer.

What’s more, there are industry stories of restaurants getting tied into systems that impose cover charges, escalating end-of-month bills, and even an element of competition to their business. Here are five key reasons why a good restaurant booking system could be the right solution for your business:

1. Managing bookings A unified, online booking management system is essential for any modern restaurant. Customers expect to be able to make reservations online, and restaurants should be able to access an up-to-date picture of all bookings at the tap of a finger.

2. Controlling costs Ad hoc bookings, overbooking and last minute cancellations all mean costs for your business, but you can address this with the right restaurant booking system. Free yourself from unnecessary spending with the ability to accurately predict and plan.

4. Operational efficiency Many restaurants still run a mixture of online and offline bookings. This can wreak havoc with the diary and lead to disappointed customers. Scrapping the silos and allowing all bookings to feed into one simple system is a no-brainer for efficiency. It also means a greater chance of filling any empty space, as availability is online.

5. Data collection and marketing Knowledge is power. With an integrated booking system you know who your customers are, when they came and what they bought from you.

Head to the Food for Thought blog for more free resources on how restaurant managers can harness technology

3. Reselling tables & filling empty space With a good IT system, even late cancellations can be refilled. A table management system linked to online bookings will make those seats instantly available to be reserved by other customers, or taken up by walk-ins. With diners increasingly making last minute bookings via smartphone, it’s crucial to leave availability open online.

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Through the looking glass HospitalityGEM managing director Steven Pike predicts what the future may hold for the pub industry


he pace of change in the pub industry has probably been greater in the past ten years than at any other point in the sector’s history. This has led to uncertainty for some but great opportunities for others. But where is it heading? I believe pubs will remain a distinct and substantial part of both the hospitality industry and the social fabric of our country. The pub has always been an informal place for people to socialise and this hasn’t changed; it’s just the customer demographic and their respective demands that have. In the past, when thinking of a stereotypical pub-goer, most would have imagined an older male, visiting primarily for drinking. However, today’s customer comes from a much wider section of society.

Child-friendly facilities

need to quickly feel part of, and express, the specific culture of the pub, as well as deliver efficient and friendly service. The best-run pubs make it look easy, but dig beneath the surface and you’ll find a clear set of operational processes that team members can first learn and then relax into. This gives them room to express themselves and enjoy being at work, while guests can benefit from both personality and effortless service. This trajectory is likely to continue. Pubs will still be a favoured location for meeting friends and family in a casual environment. However, the way pubs are run will no doubt evolve further. Operators are starting to look closely at which aspects of a visit will get in the way of the aforementioned purpose; and then looking at ways to assist with this. For example, to save people from having of families expect to queue at the bar, pubs are utilising to see a separate technology that allows ordering and paying from table. children’s menu



Families are particularly keen to visit pubs, so much so that 91% expect to see a separate children’s menu in addition when they Brand ambassadors to child-friendly facilities. The number of visit pubs The focus on a single person or couple as women visiting pubs on their own has also an amazing host is still important in some risen as these sites become increasingly formats, but in much of the market the role of team female-friendly. members as an ambassador for the brand has become Pubs have evolved to meet this new demographic – more important – it’s a team effort. broadening the drinks range, investing in decor and facilities, This suggests pubs are becoming bigger operations, and prioritising food. Indeed, a food offering is now key to the and that may be true, but there is room in the market for survival of many pubs, but there is still vast differentiation in operations of many different sizes. The challenge for many terms of the style of food served. operators is finding the space, so it may be that innovative micro-pubs may evolve to offer something different and take Training and development advantage of smaller spaces. There is no longer a single pub market, instead there is a I also believe pubs will continue to take inspiration from broad range of sectors. Gastro-pub, wine bar, family-friendly the casual dining sector when it comes to their food offering. pub – all aim to attract a certain style of customer. Pubs are It’s interesting to note that, while street food is growing in also much more aware of how they appear to customers and popularity in that sector, pubs have yet to follow suit. Given what behaviours are important to their guests. the informal nature of a pub, and the fact customers often Training and development is more of a priority, particularly stand, this may be a trend to watch for. ▲ given high levels of staff turnover, which mean employees ¡ autuMN 2016 ¡ ProPel Quarterly


Feature Insight

“Commercially there are still good incentives to create new businesses and grow existing ones, and the appetite is there among consumers”

Staffing The cost of staffing a pub represents a substantial part of the overall cost, and it’s impossible to imagine pubs without any form of human interaction with staff. But that doesn’t mean there is no room for innovations that might both benefit the guest experience and the cost of delivering it. Think of the labour involved in making a decent coffee, for example – it would be hard to argue that none of this could be automated once cultural preferences and product quality allow it (remember the horror when self-checkouts were introduced, yet they soon became commonplace).

“The cost of staffing a pub represents a substantial part of the overall cost, and it’s impossible to imagine pubs without any form of human interaction with staff” And perhaps mixing your own drinks with your friends might be more fun than trying to catch someone’s attention at the bar. But if things like this do start to materialise it will probably start with payment processes – there are increasingly convenient ways to pay for your food and drink, and new payment apps are competing for our attention. There has been concern in some corners that the British


pub will die out – but it won’t (take note the US-based journalist who called me recently and was surprised to hear this was not an unstoppable trend). Commercially there are still good incentives to create new businesses and grow existing ones, and the appetite is there among consumers, particularly for a strong food offering. There will always be a need for people to come together to eat, drink and socialise, and pubs are the ideal location. The key to success is keeping your ear to the ground – not just listening to what guests think but pre-empting what they might think in the future – and by having a clear set of operational processes that support your brand promise, backed by effective ways of measuring them.

Steven Pike is managing director of HospitalityGEM HospitalityGEM 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:

Propel Quarterly ¡ AUTUMN 2016 ¡

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Invest in technology for an appy ending


Recouping your research and development investment is tough in an increasingly price-sensitive hospitality sector, says Intelligent Business Systems managing director Gareth Powell

Failed loyalty app Droplet

a lot of operators switching back to more robust and reliable hose of us involved in the hospitality technology sector built-for-purpose systems. Pad-based “arrive by post” and “set were given a stark reminder of the thin line between up yourself” systems simply cannot cope with the complexities success and failure when Propel Morning Briefing required in a hospitality environment. revealed loyalty app Droplet had closed. Owners Steffan Aquarone and Will Grant admitted they failed to build a profitable A third option has seen a growth in online wholesalers. These business and “never got to the scale to make Droplet viable as a guys are simply box shifters happy to sell discounted individual profit-making business” despite the support of investors, tens of terminal and software combinations for an eye-catching price. thousands of customers and hundreds of paying merchants. These look super value until you add the various extras. They are marketed and sold “online only” and again they arrive by courier They are not the only ones who find it difficult to make and more often than not you have to configure them yourselves. developing apps pay dividends. Forbes technology writer Connie Then the price suddenly looks a lot less attractive. What’s the old Guglielmo says only a minuscule 0.01% of consumer apps will saying? “Buy cheap, buy twice”. actually be considered a financial success by their creators by the end of 2018. In mitigation, she does point out many mobile apps We’re increasingly competing with providers who are having have alternative strategic objectives such as building “brand two bites at the cherry. They are quoting a lower up-front, one-off recognition and product awareness or are just for fun”. payment but add annual renewal fees for all software licences. Of course, it’s different for us operating in the business-toIt can be a challenge when you explain to a potential business software world. Designing and developing products customer you are the more cost-effective option so I always ask for fun or to increase our profile is a luxury most of us cannot clients to aggregate the price over three or five years for a true afford, especially when you’re talking about spending millions on like-for-like cost comparison. bringing new cloud-based products to market. Currently we sell our core hospitality management solutions as a one-off purchase. Additional modules, such as loyalty, Zonal Retail Data Systems, one of the UK hospitality bedroom bookings and online shopping, are usually industry’s biggest solutions providers, recently told monthly rentals. Propel Morning Briefing it had invested “circa £4m Does it work for us? As I write this article we’re in research and development… including the taking delivery of 200 terminals. We have a busy launch of Kitchen iQ”. At Intelligent Business installation schedule coming up for existing Systems, we regularly reinvest between 20% of consumer apps clients such as Harry Ramsden’s, Gourmet and 25% of our annual profits in new product will be considered a Burger Kitchen and Rick Stein, as well as new development and have done so throughout our additions such as Arc Inspirations, Pieminister 25-year history. financial success by and Pug Pubs. Without committing to this investment, their creators by Our pricing structure might change in the we would not have been able to migrate to an the end of future but only if it corresponds to what operators exclusively cloud-based product offering, a move 2018 want. My advice to any newcomers in the sector is which has given us a huge advantage over many to find out what works for you and stick to it, without rivals unable to match the depth of functionality ever resting on your laurels. As the old saying goes you from one single solution. For example, I was speaking either innovate, reinvent or lose. This maxim applies not just to to a multi-site pub client who was recently bought by a bigger technology but the entire hospitality sector. operator. We were chatting about the benefits of two competing That is why it is great to see innovators such as Hamish systems and whether they would change over to the new parent Stoddart, co-founder of our long-standing client Peach Pub company’s solution. They were reluctant because our existing Company, continue to think outside the box. His latest idea, system has 30,000 members signed up to their loyalty scheme, unveiled at this summer’s Propel Multi-Club conference in a bedroom booking system integrated to their EPOS terminals, Oxford, is to share head office resources with like-minded pub and an online shopping option for customers – functionality the operators and entrepreneurs. other system cannot fully match. Recouping your research and development investment is Stoddart has issued an open invitation to smaller companies very tough in an increasingly price-sensitive sector where we are to share the company’s central support function and to plug into rarely able to compare like-for-like, despite one or two operators existing platform and access areas such as IT, purchasing, sales and employing technology consultants to do this for them. marketing function, and controls. Stoddart told Propel he would Different pricing models mean a headline price can look lower “love a smaller business with similar values to come and share the on paper but cost a lot more in the long run. At one end of the advantages of our scale, and to take them through the six to 15spectrum we have the traditional capital expenditure model. This pub pain barrier”. normally involves a substantial five or six-figure initial financial We’re here to do the same for our clients to ensure they get outlay for a multi-site operator with 20 to 100 sites and is backed the most of every pound they spend on technology – and get a up by a modest service level agreement. great return on their investment. At the opposite end is the rental model. Here operators rent the hardware and/or software over a period for a fixed monthly Gareth Powell is managing director of intelligent fee. The boom in iPad usage in restaurant businesses shows Business systems – the popularity of this pricing model, although we are finding



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News Digest

News Digest siBa predicts Brexit boost for craft beer The Society of Independent Brewers (SIBA) is predicting a boost in consumer passion for local beers from Britain’s craft breweries as past experience of economic downturn shows consumers opt to “trade-up on treats”. Mike Benner, managing director of SIBA, said: “There is plenty of doom and gloom following Brexit and while it may be the case that many consumers will look for better deals on household spending generally, for beer there are some important lessons to be had from recent history. In the 2008-09 recession we saw many consumers applying ‘quality over quantity’, choosing premium local ales over mainstream beers. We also saw a strong ‘community comfort’ effect, whereby in times of uncertainty people tend to associate themselves more with their own local communities. In many ways it was these consumer trends that drove the continuing growth of local craft beer. We expect that trend to continue in the coming months of uncertainty. These effects could be positive for British craft-brewed beer in both the on and off-trade.” While the biggest market for SIBA brewers is local, about 17% of members exported beer in 2015 and

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

SIBA expects this to increase in response to a weaker pound. Benner said: “British beer is unique in this booming global market place and craft brewers will see opportunities arising from this.”

horizons – latest uK menu analysis shows rise of healthy food dishes, fall in burgers Healthy food dishes are fighting “dude food”, such as burgers, burritos and barbecue foods for menu space as consumers’ appetite for dishes made with nutritious ingredients continues to grow. According to Horizons’ latest biannual Menu Trends survey, which tracks changes on 800 high street menus, trends in foods and ingredients are translated into dishes on high street menus quicker than ever as operators acknowledge the importance of keeping up with fast-moving food fashions, many of which are currently for healthier options and novel ingredients. The survey revealed main course salads have had a surge in popularity – up 54% on last year and now number four in the top 20 most frequently listed main course dishes. The use of pulses and fruit has seen one of the largest year-on-

Jd Wetherspoon and stonegate sign deals with suffolk brewery to trial alcohol-free beer range JD Wetherspoon and Stonegate have signed deals with Suffolk brewery St Peter’s in a bid to tap into a rise in teetotalism among younger drinkers. St Peter’s, which already makes cask ales and bottled beers for pubs and supermarkets, has spent three years and nearly £1m developing its “Without” alcohol-free beer in a bid to counteract falling alcohol sales. It has now signed supply

deals with Stonegate and Wetherspoon, which will begin trialling the draft and bottled beers from September. St Peter’s chief executive Steve Magnall said younger drinkers had a “completely different attitude to alcohol”, which the leisure industry needed to respond to. About 21% of Britons are teetotal, according to the Office for National Statistics, which has crept up from 19% five years ago.

Brewdog to invest $22.5m in opening us brewpubs if $50m raised BrewDog will invest $22.5m in opening brewpubs in the US if its Equity for Punks USA fund-raise hits the full $50m target – $50m is the maximum BrewDog can raise under regulations. The net proceeds from the offering, assuming it is fully subscribed, are expected to be about $46.6m after the payment of offering costs including broker-dealer and selling commissions, printing, mailing, legal and accounting costs, and other compliance and professional fees that may be incurred. The company stated: “We have finalised two distribution deals and are negotiating others in several states with craft beer distributors in the US ready and waiting for our beers. Our first BrewDog bar in America will be the on-site bar at our Columbus brewery and is scheduled to open in

late 2016. In addition, we are negotiating to open a second location in the Franklinton area, near downtown Columbus. American bars all have to be brewpubs so each bar we have in the US will have small batch brewing equipment on site and will brew its own special beers to sit on tap alongside the beers we will brew at the Columbus brewery.” The US operation lost $252,760 in the six months to the end of 2015. BrewDog owns 100% of BrewDog USA and at the end of Equity for Punks USA BrewDog will still own at least 80% of the American company with the remaining balance being held by investors in Equity for Punks USA.

year increases, and the term “superfood” is being used 75% more often than it was this time last year. Vegetarian dishes now have twice the share they had in 2010, while vegan dishes are on the up, with 21% of the

eating out brands surveyed now offering a vegan option. Gluten-free terminology is also more common, having risen 89% over the past two years and wheat-free options are up 80% on menus since last year.

Magnall said the drinks market was rapidly moving towards lowercalorie and soft drinks but “blokes in particular want to stand there holding a pint in their hand, not an orange juice or a coke”. At 0.009% alcohol, according to the brewery’s latest test, Magnall said there was more alcohol in a glass of orange juice than a bottle of Without.

healthy recipe box startup mindful Chef completes crowdfunding campaign having raised more than £1m Healthy recipe box startup Mindful Chef has closed its campaign on crowdfunding platform Seedrs having raised more than £1m. The “farm to fork” business, founded last year by Robert GriegGran, Giles Humphries and Myles Hopper, was looking to raise £400,013 in return for an 11.76% equity stake to expand marketing efforts and ¡ autuMN 2016 ¡ ProPel Quarterly


News Digest develop an app. It has now closed the campaign having raised £1,020,563, with its investors including Tossed founder Vincent McKevitt, tennis star Andy Murray and Rugby World Cup winner Will Greenwood. The company’s aim is to promote convenient, healthy eating through a range of gluten-free, organic items delivered to consumer’s homes. Users select recipes online, noting any dietary preferences, and Mindful Chef sources and delivers the relevant produce, which consumers cook at their own convenience. Recipes rotate weekly and are created by head chef Louise Mitchell. The pitch stated: “We focus on the healthy and premium end of the recipe box market and ship all the ingredients you need to make two-to-five evening meals – all with fresh organic produce and no refined carbs (no pasta, no white rice, no bread). We pride ourselves on our innovative uses of vegetables in evening meals that are both gluten-free and dairy-free. We ship nationwide, and cater for one-person, twoperson and four-person boxes. To our knowledge, we also offer the UK’s first and only vegan recipe box, alongside our meat and fish options.”

Luke Johnson – operators confident to expand in wake of Brexit will have more opportunities available Sector investor Luke Johnson has criticised negative thinking in the wake of the Brexit vote. He said: “Entrepreneurs and leaders of business need to remain optimistic and encouraging to motivate their teams. There is no point in remaining gloomy or dwelling on what might have happened. If investment in the sector drops, then those who are confident enough to expand have more opportunities available. We bought control of PizzaExpress during the deep recession of the early 1990s, and grew Patisserie Valerie right through the last recession, taking advantage of lower rents, more property availability, and keen builders. The better operators will continue to succeed – those with distinctive offerings will always take share. Banks are still willing to lend for sensible propositions and interest rates are at record lows. Restaurateurs and publicans are in low ticket, affordable treat territory – eating and

Wagamama adds 22.9% to like-for-likes in two years after site managers set sales targets:


drinking out are such an established part of consumers’ lifestyles I believe the public will continue to spend even if the economy is uncertain for a period. I do not want migrant workers in the hotel, restaurant and bar sector to depart, but we must prepare for the possibility that some will go. The industry should train more of the indigenous population in the skills of the hospitality trade – it makes no sense for us to rely so heavily on an immigrant workforce when there are able-bodied, unemployed workers here already. I have co-founded two career colleges in Liverpool and south London specialising in the hospitality industry and offering vocational training, but we must all do more to make a difference.”

Enterprise Inns and Marylebone Leisure launch Marmalade Pub Company Enterprise Inns, the largest pub owner in the UK, has teamed up with The Marylebone Leisure Group (MLG) to launch Marmalade Pub Company. The new venture will be Enterprise’s fifth ‘managed expert’

Wagamama has posted a 22.9% increase in like-for-like sales in two years after asking site managers to set budgets. The company saw 13.1% added to like-for-like sales in the year to 24 April 2016, while its four US stores saw a 11.3% increase in like-for-likes, with 25.2% achieved in the fourth quarter. Like-for-like sales growth in the UK hit 16.2% in the fourth quarter of the most recent financial year. The UK business saw an increase in covers and spend per head. Deliveroo was in 76 of its sites at the year-end and delivering “strong sales and profit growth”. Chief operating officer Jane Holbrook told Propel the executive team were “shocked” by how ambitious the site managers’ sales targets had been, but targets had consistently been beaten. She said general manager turnover at Wagamama was now below

Propel Quarterly ¡ AUTUMN 2016 ¡

agreement as the group partners with industry-leading managed house operators to benefit from their retailing flair and capability. MLG focuses on infused spirits and liqueurs which are hand-made in its in-house laboratories. MLG operates six sites across the capital, including the Marylebone, Clerkenwell & Social, Bar Italia in Uxbridge and The Princess of Wales in Primrose Hill. The group was founded by Ben Avigdori and Lawrence Santi in 2011 and won the Neighbourhood Bar of the Year 2015 award for Barsmith in Farringdon. Simon Townsend, chief executive of Enterprise Inns, said: “We are delighted to be working with the MLG team who have quickly built a reputation for quality sites that offer customers a great experience. This is further evidence of the progress we are making in developing our managed house estate at Enterprise.” Santi said: “We have always felt our business and brand potential was bigger than our current exposure to the market and with Enterprise as a partner, we now have a clearly defined path for our continued growth.”

10%, while general turnover was at about 60%. Wagamama is targeting 15 new openings a year in the UK to add to its existing estate of 120 – ten were opened in the most recent year. Holbrook reported its most recent openings in Staines and Bromley were producing “amazing” numbers. The company expects to open a flagship site in New York in the autumn. The company has also signed franchise agreements in the past year for four key European countries – France, Spain, Portugal and Italy – and has a total of 38 restaurants internationally. Turnover increased 19% to £228.1m in the most recent year and adjusted Ebitda was up 28% to £38.7m. Turnover at its existing four US sites rose to £6.2m, compared with £5.2m the year before. ▲




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LT Management Services Limited (LT) manages around 1,000 licensed retail and foodservice properties including restaurants, hotels, nightclubs and both managed and tenanted pubs, across the UK. LT provides a range of services to cater for the needs of each client, including full financial back office services, procurement, payroll, IT, telesales, credit control, operational support and caretaking services for closed premises. The company has been able to grow to the largest of its type in the UK through its policy and practice of open book management which assures the clients, ranging from property-owning companies through to banks and insolvency practitioners, complete transparency of all costs associated with its business. With its substantial buying power, LT passes on to its clients keen pricing for all goods and services supplied into client estates. Just recently, for example, LT won the contract to manage 43 Rileys Sports Bars for the new investor. Working with administrators has meant that LT has created a complete set of systems and controls that are centred around cash management, facility maintenance and compliance. LT also supports its clients with sales and marketing support and strong operational processes and practices. LT will react quickly and take on new business at short notice when required and will manage businesses for

clients on either a short term temporary basis or for the longer term. LT has been able to grow turnover and improve margins in most of the businesses that it has been asked to manage on behalf of clients. With a dedicated recruitment resource available, LT seeks to appoint strong managers into all clients’ units with a view to maximising performance. Hands on operational management and strong head office financial controls ensure that the client’s financial performance is maximised. What we do: We run managed and tenanted pubs and bars, restaurants, hotels and nightclubs on behalf of owners, banks and insolvency practitioners. We provide everything from business development solutions, independent business reviews on sites or whole businesses to closed site management and caretaker services.


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News Digest Liberation Group boss announces pipeline of West Country sites are lined up to grow Butcombe business: Liberation Group chief executive Mark Crowther has told Propel it has a pipeline of sites lined up in the West Country to grow its Butcombe business following the company’s £118m acquisition by Caledonia Investments. Crowther said the Channel Islands-based brewer and retailer, which has 94 pubs, was looking to grow its UK footprint by concentrating its acquisitions within a radius stretching from Hampshire up to the Cotswolds and down to Exeter. He added it was looking at high quality pubs, predominately freehold, to add to the 20-strong Butcombe estate on both a managed and tenanted basis as part of the £40m funding available following the deal. Crowther said food-led pubs would play an important part in the growth, with 45% of the group’s turnover in its managed estate coming from food, while accommodation would also be a key area. Crowther said: “The Channel Islands remains our heartland but there are limited growth opportunities for us there. Butcombe is a fantastic business for us to grow and a strong brand, so it makes sense for us to grow that business rather than start another one. We’re looking for quality sites, not ‘turnaround’ pubs, with or without accommodation. We’ve got a pipeline of sites, both individual and as a group, and we will be having conversations over the next couple of years. We’ve said before we’d like to double the size of the estate in that time.”

Punch rolling out Falcon retail agreement at rate of three pubs a week, Mighty Local sees average 25% uplift in beer volumes on conversion Punch chief executive Duncan Garrood has told Propel its Falcon retail agreement is being rolled out at the rate of three pubs a week and would be a “significant” part of its estate

in the future. The company has 70 Falcon sites and Garrood, who is celebrating his first anniversary in charge, said the company had noticed a “higher degree of satisfaction” from its publicans using the agreement. Under the terms, publicans earn a percentage of the turnover and are able to concentrate on running the pub, with Punch dealing with all “administrative” duties. Garrood added: “It’s a very straightforward and administratively light way of running a pub. It’s quite a change in the way our business model works but if you look at what it’s doing for our publicans we are very encouraged indeed. We are seeing a much higher degree of satisfaction from publicans taking on this agreement.” Punch operates almost 30 Mighty Local sites and Garrood said it had identified 200 pubs that could benefit from the format. He revealed pubs converting to Mighty Local had seen a 25% uplift in beer volumes on average. However, at its Gardeners Arms pub in Lofthouse, near Wakefield, volumes had risen 107% since it was refurbished.

‘Volatile’ Irish commercial property market is slowing JD Wetherspoon growth JD Wetherspoon chairman Tim Martin has said “volatile” commercial property prices were putting the brakes on the company’s growth plans in Ireland. Martin said the company’s five Irish pubs were currently performing well and the group remained committed to expanding in Ireland. However, he said the wait for planning permission for acquired sites and high prices being quoted for potential new sites were slowing Wetherspoon’s growth there. “If you have a volatile property market, you are unable to dictate the pace [of growth] unless you over-pay,” Martin said, refusing to say the group’s Irish plans were now effectively on hold. Wetherspoon has four sites – two in central Dublin and one each in Waterford and Carlow – either in varying stages of development or awaiting planning approval.

Draft House founder –’we’re generally keeping our powder dry for opportunistic acquisitions’: Draft House founder Charlie McVeigh, who has announced his first opening outside of London in Milton Keynes, has told Propel he is generally “keeping his powder dry looking for opportunistic acquisitions”. He said: “It has reached the point where (landlords) are coming to us (with sites). But we’re generally keeping our powder dry for opportunistic stuff.” McVeigh reported like-forlike sales were up in the mid single digits at the moment but trading was “bumpy”

from week-to-week. The two most recent openings had, however, been “strong”, with the company’s Chancery site producing “amazing” trading. The move into Milton Keynes required a “huge amount of thinking about”, he said, but the pub sits in the middle of a busy corporate headquarter area and JD Wetherspoon sales particulars for the site showed it had been taking £30,000 a week. “We will reopen the site for a lot less than it would cost to fit-out a shell unit,” McVeigh said.

has reported pre-tax losses of £281,000 in the year to the end of September 2015 after making a profit of £140,000 a year earlier. The company will be hoping for an improved performance in the current year – it has exited Stanmer House, near Brighton, which is thought to have been loss-making, opened The Rose & Crown in Orpington, and will enjoy a full-year contribution from the Blue Ball in Surrey. Turnover in the last financial year fell 7.2% to £9.3m after the loss of income from the Old Dunnings Mill in East Grinstead, West Sussex, which returned to its owner Harveys & Son when Whiting & Hammond Whiting & Hammond’s tenancy slips into red after ran out in 2014. Owner Brian head office expansion Whiting said this was in large Gastro-pub operator Whiting part offset by the continuing & Hammond, which operates eight pubs, mainly in west Kent, progress of the King’s Head, ▲ “The Irish property market has heated up a lot in the past year and it’s a very tight market, particularly in Dublin.” Martin said approval for the two Dublin sites, in Camden Street and Rathmines, would provide a major boost for the company, but any new opening in Ireland remained some way off. He said the group continued to look for a number of new Irish sites and could still grow its portfolio there to 30 pubs. However, he said reaching that kind of number would take a “good few years” and things were slow regarding new site acquisitions. ¡ AUTUMN 2016 ¡ Propel Quarterly


News Digest

Simon Emeny – ‘residential developments provide us with good opportunity’, plans £40m investment in estate Fuller’s chief executive Simon Emeny has told Propel opening more pubs on residential developments provided a good opportunity for the group, while it planned to invest £40m in the estate in this financial year. Fuller’s opened The Sail Loft at the new Greenwich Reach development on the banks of the Thames in February and Emeny said the company was always looking to grow the portfolio and new-build pubs on residential estates were a way of doing so. He said: “Greenwich Reach is an outstanding development in a growing area and we think there are more opportunities for the company with these types of developments. We will continue to look for

opportunities to grow, whether that is in London or outside. More than 50% of our estate is outside of London.” Emeny said the company planned to invest £40m in the estate in this financial year, which includes carrying out “more major refurbishments”. He added: “We will be investing in our sites and our food to help attract new customers. These refurbishments have proved to be well received in the pubs we have done so far.” The company has also increased its share in artisan pizza and cider brand The Stable by 25% – to 76%. It has two more sites lined up to open this year – at Exeter and Bournemouth, which will take the brand to 17 venues.

near Sevenoaks, and the opening of the Blue Ball, a Star Pubs & Bars site, which he said had immediately performed “well beyond expectations”. Gross profit margins slipped from 30% to 28%, according to its latest accounts for the year, mainly because of the cost of launching the Blue Ball and the

expansion of the head office team. Underlying food and drink margins remained stable. Whiting & Hammond, which employs about 300 people, also owns the Cricketers Inn in Meopham, the Chaser Inn in Shipbourne, the Little Brown Jug in Tonbridge, and the Kings Head at Bessels


Green. Whiting said: “Trading conditions remain competitive with town-based chains offering an alternative dining experience, particularly in poorer weather. However, the company remains focused on its offering of excellent food and service in a pub environment such that the underlying customer base remains firm.” Whiting added in his report: “Whilst further sites are always under consideration it is anticipated that much of the current year will be spent ensuring the recent additions to the estate are making a strong contribution to the overall business.” Whiting & Hammond opened its latest pub, for which it raised £200,000 in 24 hours on peerto-peer lending platform Funding Circle, in March. The Rose & Crown is a former Young’s managed pub. As well as a new oak-framed extension and expanded kitchen, the venue features four heated “tiki” huts in the newly landscaped garden. In June, Whiting & Hammond ended its four-year tenure of Stanmer House. Brighton-born entrepreneur Alex Proud has unveiled plans to transform Stanmer House into a near Michelin-level restaurant and boutique hotel. Proud signed a long lease for a “significant” sum on the country house.

BII partners with Propel to launch industry-wide training awards The British Institute of Innkeeping (BII) has partnered with Propel to launch the industry’s premier awards night for training achievement in the pub and restaurant sector. Entries are now open for the National Innovation in Training Awards (NITAs), with the ceremony taking place on Monday, 21 November at Café de Paris in central London. The NITAs recognise those companies and individuals that really care about their employees, helping them to achieve improvements in training and standards. The categories are: licensee trainer of the year; professional independent trainer of the

Propel Quarterly ¡ SPRING 2014 ¡

year; training company of the year; best development programme (leased and tenanted companies); best managed company for training (fewer than 30 outlets); and best managed company for training (more than 30 outlets). Candidates can enter more than one category for consideration. Each category will have a judging panel consisting of an industry expert, a senior person from the BII and the sponsor. Judging visits to those progressing to the final stage in each category will occur in October, with the winner announced at the ceremony in November. In addition, The Franca Knowles Lifetime Achievement Award (sponsored by Sky, the lead partner for the event) will be chosen by a panel led by Keith Knowles, chief executive and founder of Beds and Bars. This award will identify and recognise an individual working in the on-licensed retail sector who leads by example and demonstrates training and people are at the core of what they do. This is an industry recognition award rather than a category open for entries, and is in memory of the late Franca Knowles, Keith Knowles’ wife, who herself was a multiple winner of NITA awards and was passionate about people and training. BII chief executive Mike Clist said: “The NITAs were originally launched in 1991 to recognise the best in training excellence and innovation and we’re delighted to relaunch the awards to a new generation in the industry. Training our workforce is vital to the sector and we encourage licensees to invest in supporting and educating their team. The more you invest the more you get back from your workforce, while also encouraging staff retention and satisfaction.” David Rey, managing director of Sky Business, added: “These awards will help to demonstrate the value and importance of training, particularly to those who are new to the industry and keen to explore the career development opportunities it offers.” Category sponsors include Sky, Star Pubs & Bars, Admiral Taverns and CPL Training.

“From day one, Venners Consulting gave us an immediate return on investment of over £14K p/a” Richard Bradford, UK Operations Manager, Beds and Bars


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