Propel Quarterly Summer 2015

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ISSUE 11 • SUMMER 2015

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uarterly The essential information resource for pub, restaurant & food service operators

Adding apps to pizzas spells pizzazz

Inside: James Lousada interviewed Widening the wallop Two steps to guest experience Tom Ryan and Tim Lowthery interviewed The woman behind Bill’s Nigel Lambe interviewed Ten top tips for building brands Small plates, big opportunities


ISSUE 11 • SUMMER 2015




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Editor’s Opinion

Dear Reader,

Editor’s Opinion

News from the beer world Consider two pieces of recent news in the world of beer. One was that BrewDog, the iconoclastic Scottish guerrilla marker, brewer and retailer, was coming together with three other brewers, Beavertown, Camden Town and Magic Rock – two in London, one in Yorkshire – and the distributor James Clay to form a new organisation called the United Craft Brewers Association. The other was that Carlsberg is reviving its still fondly remembered "Probably" advertising campaign. Which one of these is going to have the most impact on the bar trade? With respect to the United Craft Brewers, while their news certainly excited the beer geeks, the answer is, obviously, the Carlsberg initiative. The Copenhagen-cum-Northampton brewer has some 15% of the total UK beer market, or more than 8 million hectolitres – that is to say, more than twice as much as the entire "craft" sector, defined as broadly as possible, put together. As James Lousada, chief executive of Carlsberg UK, underlined when Propel met him for the questionand-answer session we are running in this issue of PQ, the company is going to spend £12m on Carlsberg this year just on media – television advertising, mostly. That's three times BrewDog's operating profits, used just to promote one brand. Nor is Carlsberg some lumbering giant when it comes to advertising impact. The "guerrilla marketing" event of the year, so far, wasn't any stunt by BrewDog, famous for being able to garner masses of media attention for very little spend, but the Carlsberg "Probably the best poster in the world" day in April in Brick Lane, East London – the heart, incidentally, of craft beer hipsterdom – when a Carlsberg poster was pouring free beer for passers-by. The stunt had 60 million YouTube views around the world, newspapers up and around the UK covered the story, Time magazine wrote about it, and sent a tweet to eight million people – all for the price of a 48-sheet poster site for a day, several kegs of lager and a security guard on hand to make sure the event did not run away with itself. Operators, those at the rockface, know how hugely important big brands still are to the pub market, despite all the noise made by the BrewDogs and their like, and that is a fact we in the media are sometimes guilty of forgetting. The average punter will never hear of the United Craft Brewers Association, and while he or she might possibly have heard of one or two of its members, it is much more likely they will be ordering a pint of Carlsberg the next time they are in a bar than that they will be ordering anything by BrewDog. The standard lager market may be falling overall, but again, as James Lousada emphasised to us, the standard Carlsberg brand is seeing growth in the on-trade, and the company is very far from any sort of "management of decline" strategy. "Carlsberg is our bread and butter, and remains our bread and butter," Lousada told us. "We're investing this year in Carlsberg in a way that we haven't in the past five years. We fundamentally believe that Carlsberg has a major role with consumers and in our business." The return of the "Probably" campaign, five years after the company dropped it, is a vote of confidence in the brand's strength, rather than a desperate attempt to return to something that worked once in the hope that it can work again. Carlsberg was perhaps surprised, and certainly delighted, to discover through research that consumers still remembered their favourite ads from a campaign that first started more than 40 years ago. Advertising agencies do not normally like working with something that they never thought up themselves, but marketers are entirely happy to use the tools that do the job, and if drinkers still associate "Carlsberg" with the word "probably", and remembrance of witty, clever ads from times past still puts a warm halo around the brand when they think of it, it would be positively wrong not to try to capitalise on that legacy. Not that Carlsberg intends to push its mainstream brands at the expense of the rest of the market. Its powerful position in logistics and porterage to the pub trade is an area that, again, Lousada told us the company is determined to take advantage of. Thus we have initiatives such as its "Crafted" range, the promotion for which includes a 96-page book written by the former Beer Writer of the Year, Pete Brown, and which includes nearly 40 craft beers, most of which the snootiest hipster bar would be happy to take. At the same time, Carlsberg's market knowledge enables it to see that, in fact, craft is not necessarily the area with the greatest potential for growth. It is lucky to be in a position to take advantage of the fact that "world beer" continues to boom – the San Miguel brand "has been an absolute train for us in the last three or four years", Lousada told us. It is also trying to ensure, perhaps belatedly, that it does not miss out on the flavoured cider boom, via the Somersby range, launched 18 months ago. All in all, then, the reaction has to be: " United Craft Brewers Association? Meh. But Carlsberg – now that IS interesting." Probably the best Q&A session in the world – see pages 30 to 36.

Best wishes,

Paul Paul Charity ¡ SUMMER 2015 ¡ PROPEL QUARTERLY



Contents 8


A smashing idea Martyn Cornell interviews Tom Ryan and Tim Lowther


Widening the wallop


Adding apps to pizzas spells pizzazz


Two steps to guest experience heaven


The Best Q&A Interview in the World … Probably

by John Porter

by John Porter

by Steven Pike

Martyn Cornell interviews James Lousada



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

A market changing by degrees


Lambe’s not lying down


Being both manager and leader


Cooking with Gas Street


Propel Multi Club Conference


Propel Multi Club Conference Highlights


Are you experienced?


The woman behind Bill’s


Keeping hospitality on the political menu


Ten top tips for building brands


What’s cooking in European foodservice?


The colouring-in department


Tailoring the technology


Small plates, big opportunities

by David Martin

Sonya Hook interviews Nigel Lambe

by Chris Muller

Martyn Cornell interviews Adam Freeth

in pictures

by Sonya Hook

by Ann Elliott

Sonya Hook interviews Tanya Webb

by Kate Nicholls

by Chris Edger and Tony Hughes

by Maria Bertoch

by James Hacon

by Gareth Powell

by Mark Brandau

Director Jo Charity T: 01444 810304 E:

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Commercial Director Sharon Dickinson T: 01444 810305 E:

Managing Director Paul Charity T: 01444 810306 E:

Events & Marketing Executive Adam Dickinson E:

Managing Editor Martyn Cornell E: T: 07950 291326



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A smashing idea The men behind the latest American ‘better burger’ chain to plan a landing on UK stores, Tom Ryan and Tim Lowther of Smashburger, tell Martyn Cornell why they think the chain will be a smash hit


hen Tim Lowther first met Tom Ryan, inventor says. His early career was in FMCG, with Procter & Gamble, of the Smashburger, in a burger restaurant in where he worked on "high-tech roasting technology to develop Lakewood, near Denver, Colorado, within five proprietary flavours", before he moved over to Pillsbury, where minutes they were in the kitchen together, he was a brand manager for frozen microwavable lines. "We aprons on, "smashing" Angus beef patties on a grill, as were chasing restaurant trends, to try to figure out what would Ryan demonstrated the Smashburger way of cooking the be the next set of products to put on the shelves," he says. perfect burger. "Before the internet that was kind of laborious, getting all these For Lowther, who started his career in foodservice in 1986 new product newsletters. After six months of that, I thought, as a self-confessed "nervous new crewmember" in a shiny new 'Chasing these trends makes a lot less sense than making them,' McDonald’s restaurant in Bognor Regis, it might have seemed so I made a transition and went to Pepsico, worked for Pizza Hut he was back where he started, flipping burgers – except this for a decade. I got into product development and marketing at was clearly something very different. Lowther was in the US on Pizza Hut." McDonald's came next, but "back in the late 1990s/ behalf of MSG Group, the Domino's Pizza franchisee, which early 2000s I had gotten displaced from doing creative work, and was looking at acquiring the franchise for Smashburger in the wanted to be a little more entrepreneurial, so I moved to Denver, UK. Seeing Ryan in action with the special Smashburger burger Colorado, and formed the partnership that owns Smashburger. smashing tool, Lowther says, "that was the moment I thought, My first job as part of that team was to create new concepts, 'This is going to fire.' The passion behind the quality and Smashburger was the first of those." The chain, and the execution convinced me this was the right which is backed by the private equity firm Consumer direction to go." Capital Partners, has grown to just under 300 “We built the Lowther's employment history has included restaurants in the United States since it started concept not just to involvement with TGI Friday's, SSP, Burger King, in 2007, with another 17 in six other countries, have a great burger Steak ’n Shake, Five Guys and Shake Shack, including Canada, Saudi Arabia and Panama. helping those last three in their own assaults but to bring burgers Smashing on the UK market, as well as McDonald's. back to people and The "smash" was Ryan's idea: "What most Now, sitting on one end of a sofa in a room in occasions where they people recognise in today's really interesting Claridge's in London, with the Smashburger haven't been relevant food landscape is that food is half art and half man at the other end, both in "smart casual" for a long time” science," he says. "So applying culinary tricks jackets and jeans, being interviewed by Propel, of the trade, if you will, to develop a lot of flavour he says Ryan is "the only founder of a burger but to do that in a very precise way so that you can chain I've met – and I've met a few – who I have seen replicate it in a lot of stores, was the science behind it. physically getting into the kitchen and cooking burgers, It was a littler serendipitous: we started out by assessing cook to show me how great they are. I'm an operator, I make things platforms, so first we had to decide, 'what are we going to cook work, I cook burgers, that's pretty much what I've done for the this on?' Then we had to figure out what was the raw material we past 30 years, and that resonates with me, that the founder of the were actually going to cook. That led us to this whole certified business is that passionate about his quality and execution that Angus beef platform, which just has this tremendous buttery he wants to show me personally. That was what made me think, richness to it, relative to any other strain of meat. Then the flat 'We're going to make this work.'" grill gave us the ability to caramelise and sear, and at the same Ryan has worked for McDonald's, too, as menu manager time have a lot of capacity. The smashing was actually part of a for the United States, then as chief marketing officer, and he cook process development that was focused on developing a then eventually became the worldwide chief concept officer, tremendous amount of flavour, maintaining a lot of the integrity overseeing menus, store design and marketing around the of the overall burger, so we keep everything in, all the juices stay world. He had started out with an undergraduate degree in in the burger with this technique. And it also facilitates the ability food science and a master's in lipid toxicology, while he did to cook big burgers very quickly, which is important in fast-casual. his doctoral work in flavour and fragrance chemistry – "I've The smashing technique gives us a burger that nobody else has – always been interested in the relationship between consumer it's a juicy, flavourful burger robust in every bite. ▲ and market-place appeal and the technology of food," Ryan



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Feature "So the combination of those things, the great flavour, the all in regular or large sizes. And the we have a pretty expansive keeping all the juiciness in the burger and at the same time 'create your own' feature. About a third of all burger eaters just cooking big burgers in about two and a half minutes, was very, very know exactly what they want, so if they want to come in and get successful. That's where the smashing magic, came in, that scintilla a bacon and egg burger, we don't take the real estate up on of a creative moment. There's a certain amount of theatre in it: it's our menu board to do something that nichey, but we actually highly visual. But it's highly engineered behind the scenes. The sell quite a few of those kinds of burgers. Our 'create your own', void volume, the cavity we have embedded in the smashing tool where you choose your bun, choose your toppings, choose your is a direct function of the weight and density of the beef, so you sauces, choose your cheese, has become a pretty big part of the get a little bit of the back-pressure, that's what gives us that great mix. I think you really have to have that to cover the market well. caramelised sear, which sets us up to get that burger you can taste Our fixed point on the horizon is to be the burger choice for the in every bite. That's the art and the precision of the science next generation of burger lovers. Customers at Smashburger restaurants order behind the whole thing. We like to cook things at the counter, "and then you don't have to very quickly and very evenly, so that you get come back, we run the food to you," Ryan this pristine temperature, texture and flavour. says. "We spend a lot of time training We pound our chicken out very thinly for that counter interaction, so that we can both frying and grilling, so we are able guide people, particularly as we're so to cook five to five-and-a-half ounce new. We do a lot of training on the chicken breasts in about the same consumer interface, to help people amount of time it takes to cook navigate their first or second time burgers – which is about half the through the menu, to point out key time of what the industry norm differentiators, of which there are is for cooking whole chicken many, and how the service system breasts. We get a lot more surface works. Our food is served restaurantarea to develop flavour – but that style – it's only wrapped in paper bags if whole idea of cooking fast and evenly you order it to take away. It's real silverware, to get that pristine texture, juiciness and real glassware, the beers are served in flavour is one of our principles." frosted mugs when that's appropriate." The attention to detail goes right down Buffalo Burger Sides include veggie frites, green beans and carrots flash-fried, to the buns, which are all the chain's own recipes. "We butterand Smash fries, tossed in rosemary and garlic, shakes are "handtoast all of our buns, to create a little nuance of flavour, but more spun" with Haagen-Dazs ice-cream, and while stores have "an importantly, the butter toasting creates another seal on the surface anchor of beers for the everyday person", the craft beer offer, often of both the crown and the heel of the bun that keeps the juices hyper-local, is "a big part of our business", Ryan says. In the UK, inside the burger, it doesn't wick any of the juices out," Ryan says. "there's no reason for us to have any different philosophy," Lowther "Our buns run on the very moist and tender side, so you get a adds. "There's a heap of fantastic craft brewers up and down the lot of compression when you bite into it, you get this really great country, and as we open in each town and each city, I'll be looking for mouthfeel. We have three core buns in the US: an egg bun, which is the local expertise. So I plan on drinking a lot of beer!" basically our white bread bun, it's a little bit tinted yellow, we do a Restaurant interiors are "aesthetically bold but at the same whole multi-grain bun, which is typically used in more healthy time very comfortable" with a red, chocolate brown and choices, particularly our chicken sandwiches, and the tan colour scheme, lots of soft surfaces, a combination we have a chipotle bun: we think that every menu of high and low seats, and where possible flexible needs to have something spicy, for that person in “Our fixed point tables with banquettes as well as booths. "Families the group. We use chipotle, which are smoked want booths then can peg the kids in, but young jalapenos, but we found in the first draw of that on the horizon is adults want some freedom of movement," Ryan formula that the jalapeno flavour was a little to be the burger says. "What I love about our look is that in the pointed. It wasn't very balanced. So we found choice for the daytime it's very bright and energetic and at this secondary pepper, the guajillo, which takes next generation of night, with the right kind of rheostatting on our on the nuance of cured tobacco – if you open up burger lovers” lighting, we actually can take on a much greater a can of great pipe tobacco and put your nose in lounge effect, which really helps with our late-night it, you get this great nose of raisins, prunes, almost business, driving those date-night or after-a-movie sweet but a little bit smoky. When we put macerated occasions." The average visit time in the US is about 20 guajillo into the dough along with the chipotle, we got to 25 minutes, the average bill is "way below adult casual, but this beautiful colour, we got this really great top-note and at a couple of dollars above fast food. It's a new balance of time, and the same time we got this building heat level that works." spend, and experience. Smashburger customises its menu for every market in the US, "We built the concept not just to have a great burger but to and "our plan is to do the same thing here where it makes sense," bring burgers back to people and occasions where they haven't Ryan says. "We often add a fourth bun: in Chicago we do a pretzel been relevant for a long time," Ryan says. "The vast majority of bun, in Minneapolis we do an onion bun, because people really our business when we come to the UK will not come from Five like onion rolls there. In our Hispanic markets we do something Guys or Shake Shack, it will come from a variety of different called the telera roll, which is a sweeter Hispanic bread that's occasions. That is probably one of our biggest differentiators. typical in tortas, Mexican street food. The we have a sourdough ciabatta in San Francisco, as you might imagine, and we do a brioche on the East Coast. I think buns are a really important part of a great and modern burger, so we spend a lot of time on that "

Berger-centric Smashburger is "very burger-centric", with about eight out of every ten main meals sold being burgers, but it also has "a cadre of chicken recipes and some nice entrée salads. But it's really all about the burgers. We typically have a core menu of eight recipes including a local burger. We do a classic, which is the quintessential California burger, lots of fresh produce and bright and vinegary sauces. We do a barbecue bacon cheddar, which is one of our signature burgers, we do a truffle mushroom Swiss, we do the spicy jalapeno baja on the chipotle bun, we do an avocado bacon club, we do something called the All-American, which is basically ketchup, pickles, mustard and American cheese,

Smashburger shakes ¡ SUMMER 2015 ¡ PROPEL QUARTERLY


Feature Create your own burger

Tom Ryan explains the secrets of a Smashburger

"We use certified Angus beef which is gently processed, so it's a much gentler grind. It's fresh, not frozen, because freezing does what extrusion does, only slower, and every morning our crews open up fresh bags of Angus beef and form it into loosely packed meatballs and line the refrigerated draws below the grill with them. When a person orders a burger, we paint the grill with unsalted melted butter, place the burger ball on the butter, place a piece of parchment paper over the burger. "Then we use this specially designed tool that we smash down on the burger, ten seconds, metal to metal. That does three things: it forms a meat-candy sear on the bottom of the burger, with the butter, that is remarkably flavourful, relative to the way a nascent lay on the grill will get you flavour development. That's really magic. The loose texture inside this mould that we put on top of it spreads it out, and the combination of that loose texture and the caramelised layer gives us a very loose bite that releases everything at once, so you really don't have to chew your way through the burger to get the flavour to come out. "The third thing is that the layer on the bottom acts like a physical shell that keeps the juices cooking up instead of out. Most places that have pre-formed patties, they're packed so tight for weight control that by the time the inside is cooked, the outside is overcooked, and things get a little grainy and gritty and tough. We didn't want that. The shell forces the melted fat and juices to cook up through the burgers. These burgers baste themselves in their own juice. On the flip, that shell becomes a roof that keeps those circulating juices in there. When we take those burgers off the grill, there is nothing on the grill – even the butter has dissipated up into the burger. Our burgers are remarkably different because of that process."


"The ability to order at the counter and sit down and start socialising allows us to get date-night, and girls' night out, and boys' night out, and two young couples coming out before a movie. Versus Five Guys, where you sit down, you order, your name comes over a speaker, you go get two bags and hand it to your date – you're probably not going to get a second date. Just sayin'. There's a huge occasion-based perspective in the way we designed our restaurants, in the way we designed our service system. The whole ambience and vibe is much more social and much more a broader set of occasion relevance."

UK expansion Lowther, who is managing director of Smashburger UK, says the partners hope to open their first restaurants in Britain before the start of 2016. "We are looking nation-wide, we are looking in all the areas that the industry would expect us to be looking, we are close on a couple," he says. "The question comes up, 'Is London going to be your first,' and the answer is, 'We don't know. It could be.' We're certainly in discussions in London, but it equally could be anywhere else in the UK as well, and we're in discussions on those too. We're looking for places between 2,000 and 3,000 sq ft – some of the sites we're looking at are bigger than that, some are slightly smaller. "We have the ability to adapt wherever we are. What we won't do is slow down the brand development while we wait for a first location in Central London. Predominantly right now we're looking at high streets and shopping centres. But we'll look at what's there. We want to be locked and loaded with the first two by Christmas, and then look to develop a further four or five next year. Then we'll take a look, and review, but the aim is to get to 30 or 35 stores within the next few years, in a measured, balanced way. I think we've got something different and unique here, and it's a really exciting time."


Does not contain Gluten

fries that get attention

The season never ends on With The Ashes, every Formula 1速 race live and so much more live sport this summer, no-one else comes close.

Bring the summer’s best sport to your venue

Formula 1®

The Ashes 2015


European Championship Qualifiers

Widnes Vikings v Hull FC

Yorkshire v Lancashire

First Utility Super League

Natwest T20 Blast

Thursday 4 June

Friday 5 June

Pro 12 Rugby

Cheetahs v Waratahs

Canadian Grand Prix

Super Rugby

2015 Formula 1®

Saturday 6 June

Sunday 7 June


Call 08448 245 720

The F1 Logo, F1, Formula 1, FIA FORMULA ONE WORLD CHAMPIONSHIP, GRAND PRIX and related marks are trade marks of Formula One Licensing BV, a Formula One group company. All rights reserved. Number of league games quoted is total shown on Sky Sports from 2014/2015 season as a whole. Scheduling may be subject to change. Terms apply. Calls to Sky cost up to 5.1p per minute (plus 15.97p connection fee) for BT customers. Calls from other providers may vary. Sky Sports comparison: Comparison against other broadcasters live UK sports rights from Feb 2015 to June 2015 Correct at time of supply: 08.05.2015


Lazy Bones, Farringdon

Widening the wallop It may be a City of London institution, but Davy's, purveyor of wine to the capital's financial community for almost a century and a half, is not a company content merely to sit on its bar-stool and let time pass it by, John Porter discovers


he London market, operators will always tell you, is "different". At times of the day or week when most businesses are quiet, the City’s pubs have vertical drinkers spilling out onto the streets, while West End restaurants struggle to find seats for high-spending customers demanding to be fed. Thing are, of course, rarely as simple as that, and the challenges of trading in the capital are also well documented, including spiralling rents, higher fixed costs, a transient workforce and intense competition for customers. So when an established and successful London specialist starts signalling changes to its approach, however minor, interest levels perk up. Late last year, James Davy, chief executive and fifth-generation custodian of the operator best known for the Davy’s Wine Bar chain, said that the business was considering sites outside its London heartland, in the outer suburbs and the wider South East. While such a move would not be the first time Davy’s has traded beyond the capital in its 145-year history, in recent years, Greenwich, in South East London, where the company’s head office is located, is the furthest it has ventured. The business currently consists of 25 wine bars and restaurants, mainly in the City, south of the river in Southwark, and across to the West End. There are also three wine shops, offering a take-home option for the much-admired Davy’s wine range. The business has been known to be in the market for new


sites for some time, and it was no real surprise that James Davy attributed "ridiculous" rents being asked by London landlords to a need to look further afield. However, behind the scenes, considerable groundwork has been put in place over the past year, which should stand the business in good stead. New trading formats have been developed which complement the established wine bar and dining room offer. These include Lazy Bones, a bar and diner with a focus on burgers and chicken wings, which opened in Farringdon, central London in 2013, and Salt Point, a bar and casual dining format which replaced a previous concept, Steak Exchange, at Exchange Square, near Liverpool Street, on the eastern side of the City, last autumn. October saw the opening of the first Davy's Wine House, at a site in Holborn, on the City's western approaches. There is a dining room in the basement, while the ground floor of the site has a self-service bar which allows customers to choose from a range of more than 30 fine wines by the glass. The wine is dispensed in a choice of measures from Enomatic machines, using a prepaid chip-and-PIN card. Just as fundamental as new formats to changes underway at Davy’s was the appointment of Sarah Weir as commercial director in January 2014. Weir, with a career background including stints with Mitchells & Butlers, PizzaExpress and most recently Bramwell Pub Company, undoubtedly brings a fresh perspective to a family business. However, as she sits in Davy’s venerable ▲


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Feature Davy's Wine Shop

Davy's Wine House, Holborn

Boot & Flogger dining room near London Bridge a year after joining the company, she stresses that from the start, her brief from James Davy was “evolution, not revolution”. The goal is to broaden Davy’s customer base, while retaining its value of tradition, heritage and service as well as, crucially, the fierce loyalty of its existing customers. “One of my challenges is getting new people to try the brand, to try our businesses,” Weir says. “That’s a real tightrope to walk. If a business is going to have a revolutionary change in direction, in many ways that’s easier, but when you’re trying to continue all the good as well as to bring in new people, it’s exciting, but it’s harder.” The business, she adds, “has a customer base that is very brand-loyal, and who notice when you change something. They’re very keen to talk to you about what they like, what they don’t like, and what they think.” The other side of the same coin is Davy’s 300 employees, who are just as passionate about the business. The overall staff turnover rate is 30% for managers and 55% for team members, levels which other London operators would envy, and within that figure are many key personnel who have put in long service. Weir describes “the values which live and breathe through the business”, which include customer service and product knowledge, as a key strength “I’ve never worked in a business with such strong values. These guys all singing from the same hymn-sheet, without the need for intensive training. It’s part of the culture,” she says. While she concedes that the prospect of implementing change in such a culture was daunting, Weir says: “We’ve come a long way in a year.” As well as the arrival of several new managers and some key internal promotions, some established managers have changed venues, in order to spread good practice and extend experience, for example between food-led and drink-led businesses. “Because it was a small company, it was traditionally quite a simple operation." Weir says. "Technology makes it more complicated, with a new sales system introduced this year. Food’s getting more complicated, and while wine is still at the heart of the drinks range, we’ve now got beer, cocktails and coffee. Every business evolves, and ours is much more complex than it used to be.” On Weir’s watch, the flow of communication has become more of a two-way process, with managers encouraged to share their ideas and take more responsibility, supported by training which has given them a firmer grasp of commercial and business planning to complement their operational strengths. Crosscompany communication has also been enhanced through quarterly managers’ forums. Weir speaks fondly of seeing managers now enthusiastically manipulating flip charts and undertaking SWOT analyses of the competition with their peers. “It isn’t just ‘here’s a budget’, it’s a plan you’ve developed with your area manager and me, and you feel responsible for that plan,” she says. In customer-facing terms, key challenges have been to attract a younger demographic, which for Davy’s still primarily means 30-years-old and above, as well as strengthening the appeal to women. Weir makes the point that when the Davy’s Wine Bar format was established, its only real competition was traditional pubs: “Today you can eat, you can drink, you can do practically anything you want to do in any venue.” In response, the Davy’s model has been flexed over the past year, enhancing the offer without damaging the core appeal to existing customers. These innovations include:

An expanded menu While the chain has retained the core offer of classic British food such steak, burgers and fish & chips, “we just added some light touches around the edges,” Weir says. These included more side dishes, snack and sharing-style food to appeal to evening drinkers and, crucially, salads. “We don’t have enough women in our businesses as customers, and there wasn’t a salad on the menu,” she says. The new menu, launched last August, features three salads, and “the superfood salad is now our third best-selling main course.” Menu development is undertaken inhouse by executive chef Sean Davies, and the head of sales and marketing, Simon Gaske, who joined Davy’s in March 2014. ▲



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Feature Breakfast Helped by an improved hot drinks range, Davy’s launched a breakfast menu in May last year, targeting the business meeting market. One of the major selling points of the offer is the fact that there are more than 50 private rooms across the business, with meeting space for anything from four to 40 people, something the mainstream coffee bars lack. “That’s one more thing I think is really quite special about our business," Weir says. "There are lots of cubbyholes for fours and sixes, and they are a massive strength, particularly in the City. You can get your papers out, have a meeting over breakfast or a coffee, away from the office.”

Craft beer While Davy’s Old Wallop cask ale, the rebadged Courage Directors offered by the business for decades, retains a strong following, in October last year the company added London Lager and London Pale Ale from Davy’s close neighbour in Greenwich, Meantime Brewing. Brewery-fresh tank beer is offered at the wine bar in Woolgate in the City as well as at Lazybones in Farringdon. “I was really keen to get decent beer on the bar,” Weir says, describing Meantime as “a brand that’s cool enough without being ubercool. There are some amazing craft beer brands in London that just wouldn’t be a fit with Davy’s.” She continues: “I think that brewery-fresh beer is going to be something of the future, and Meantime are investing in it heavily. You get a fresher product, and because it can be unpasteurised and unfiltered, you get much more flavour in a lager/pilsner product – and, quite frankly, the tanks look beautiful.”

the all-important Christmas period. “Premier Cru will be very big this year," she says. "We want to continue to drive our customer recruitment, and it’s a very strong way to build loyalty. We don’t put loads of PoS on the tables or at the tills, so it will all be driven by the teams.” As for those expansion plans, “the perennial challenge is property and that’s not going to go away. We’re constantly looking at sites in London,” Weir says. Citing the Wine House format at Holborn, she says: “We have a smaller square footage model, and a basement model, which we are good at and not many other brands are. Necessity is the mother of invention. With some of the formats that we’re trying, we’re also thinking that a smaller version would work on a suburban high street.” With gastropubs, restaurants and bars proliferating in commuter towns, “we could definitely be relevant in Surrey or even further afield. Once you get an operational model and a customer model that works, you’ve got something you can take off the shelf and put into a range of different style sites.“

Davy’s Founded: 1870, when F.E. Davy opened the Rising Sun wine house on the Strand in London. Chairman James Davy is the fifth generation of the family to head the business.

Number of outlets: 25 plus three wine shops Performance: Turnover up 3.9% to £12,293,000 in the year to 29 March 2014, pre-tax profit up 15% to £813,000. Likefor-like increase of 6.5% in the six months to April 2015. Wet/dry sales split: 65%/35% across the business, with a spread from 80%/20% in wet led bars to 50%/50% in dining rooms.

Some innovation is more tactical – “we opened on Christmas Eve past 3 o’clock in the afternoon for the first time,” Weir says. While some Davy’s businesses were busy until late into the evening and others quiet by 5pm, “I come from a culture of giving everyone the same opportunities, set a high standard, with challenging targets, and then work out the nuances. If you fall into the trap of ‘that wouldn’t work for me’, you never quite realise your potential,” she says. Davy’s database, which has 55,000 customer signed up to receive email updates, 11,500 of whom are holders of Davy’s Premier Cru loyalty card, is helping to drive take-up of the expanded offer. The loyalty card currently allows points accrued through spend in the bars to be redeemed for wine to be enjoyed at home, and there are plans to expand the offer to allow holders to redeem points for food and drink in the bars. As with other aspects of the business, there is a cautious approach to direct marketing. In order to retain the goodwill of customers, James Davy checks all the emails sent out to the customer database, and writes many of them himself. “He understands the tone of voice, nobody can do it quite like him, and ultimately it’s his name above the door,“ Weir says. As far as next steps go, Weir believes “we’re now at the right pace” in terms of employee engagement, “and our trading results have been really strong,” with the wine bars reporting a 6.5% like-for-like uplift in the six months to April 2015, including an 8.6% uplift for the five-week period to January 2015, covering

Sarah Weir, commercial director, Davy’s Favourite pub: The Last Drop, Edinburgh. "I spent too many hours wasting away my student grant here, in the days when Scottish pubs were the only ones open past 11pm. Thank goodness I chose Edinburgh to go to university. Best years of my life." Favourite film: "I know I should say something deep, but can't get past the ‘Ice Age’ films. Sid the sloth is a genius character with cracking one-liners: 'You know, this whole ice age thing is getting old. You know what I could go for? A global warming.' As for Diego, Buck, Scrat and love interest Scratte – genius. The long winter nights just fly by in my house!" Favourite book: "‘A Fraction of the Whole’ by Steve Toltz – I read this in my book club and was probably the only person who loved it, which might say more about me. Shortlisted for the 2008 Man Booker prize, it's very funny, irrelevant and eccentric but also it tells the story of a dysfunctional family and how to survive it, and I suspect we all can empathise with that." ¡ SUMMER 2015 ¡ PROPEL QUARTERLY


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Hat-trick for Westminster Kingsway at Nestlé Professional Toque d’Or® Awards

From left: Josie, Rebecca, Vince and Chris

Westminster Kingsway at the 02

The prestigious Nestlé Professional Toque d’Or® Competition has seen an unprecedented Àrst as Westminster Kingsway College taking home the highly coveted Toque d’Or Trophy for an incredible THIRD time. The team of three front and back of house students took their prize - and walked into a place in ‘Toque d’Or’ history – at an emotionally charged Awards Dinner at London’s prestigious Dorchester Hotel. New Nestlé Professional® Managing Director, George Vezza, described the Änalist teams as ‘inspirational’, and said that “if this is the future of our industry – then we are in good hands”. The 2015 Toque d’Or journey and Grand Finals challenge was witnessed by many of the most respected names in Hospitality who turned out en masse for this annual celebration of young talent and achievement. “Incredible, life-changing, awe inspiring…” were just some of the words the winning team used to describe their experience, which saw them beat oɈ Äve other colleges (chosen from a record number of 120-plus team entries in 2015), and representing the crème de la crème of the next generation of Hospitality stars.


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of Vince Cottam – Chef Lecturer at Westminster Kingsway - in a series of Finals’ challenges, which tested the mettle of each individual, putting them through their paces in a unique learning and development programme for which Nestlé Professional Toque d’Or® has become renowned.

“Westminster Kingsway proved they really had what it takes to go the whole way ”

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This year, challenges included a masterclass with renowned chef Simon Hulstone, who took the back of house students through the nuances of preparing and serving a three-course Gala Dinner. The front of house students were mentored by Will Smith, co-owner of Arbutus group, and enjoyed the cocktail session hosted by Helder Pinheiro, bar manager at Charlotte Street Hotel. A sustainability master class delivered

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Toque d’Or 2015 winners

by Cyrus Todiwala quickly followed this, along with a butchery lesson from Aubrey Allen designed to drive awareness amongst the students of the importance of reducing food waste. The students then crossed London to the O2 arena where they were tasked with creating and bringing to life a street food concept, which they then marketed to the public. With no time to rest of their laurels, the intense four days were topped oɈ by a Änal masterclass delivered by The Wolseley on the secrets to brunch success. The students then re-created the Wolseley brunch for 40 VIP guests.

The Judging Process... It was no easy task for the judges to make the Änal decision. Tasked with assessing the teams on their practical and theoretical knowledge and skill, the panel – headed up by celebrity chef James Tanner – picked Westminster Kingsway for their “overall professionalism, wonderful Åexibility, highly developed skill sets and their clear passion for the industry”. Tanner added: “It takes a special kind of person to commit to a career in hospitality – it can be tough at times and to succeed, future chefs and managers must be able to work under pressure yet still produce

Chris Davis

a smile at the end of their shift. These skills are as important as being passionate about cooking and service and reÅect the best of the best delivering the whole package. Every team performed incredibly – you’d never have known that some were just 18 or only had one or two years of experience under their belts – but in the end Westminster Kingsway proved they really had what it takes to go the whole way. We are all sure that they can look forward to very bright futures.”

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The Prize... The team from Westminster Kingsway College will all receive a ‘money can’t buy’ prize, which will include a range of CV enhancing experiences, delivered over the coming year. The team will be cooking, and presented to guests, at the upcoming Footprint Awards, enjoy works experience at the Dorchester under Henri Brossi, share in a master class at Billingsgate as well as cook and serve for the renowned Sovereigns Parade 3 course lunch for 1,000 guests at Sandhurst. That’s in addition to joining Nestlé Professional as guests in its VIP box at the 02 and enjoying a celebratory dinner hosted by Anton Mosimann at the world-renowned, Mosimanns of Belgravia.



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Adding apps to pizzas spells pizzazz One in eight people in the UK have a Domino’s Pizza app on their smartphone or other mobile device and, unsurprisingly, the company’s mobile sales are booming – but it’s not being complacent, John Porter finds


he World Wide Web – the modern internet – notched up its 25th anniversary last year, while the start of 2015 marked the 30th anniversary of the UK’s first mobile phone call. Both those developments, reliant on the most advanced technology, have dramatically changed the way that brands communicate with their customers. So it is almost ironic that one of the companies in Britain at the spearhead of the revolution in business-to-customer communications, not simply to talk to customers, but to develop new sales channels, is making a product almost as low-tech as could be – pizza. Domino's Pizza's ten-year sponsorship in the UK of the Simpsons on Sky TV, which began in 1997, used pioneering technology to allow viewers to order a pizza via the red button on their remote control. Domino's franchisees soon had to start gearing up for the "Simpsons effect", when high volumes of orders would come in during the programme’s first ad break. The sponsorship was ultimately undone by tighter advertising rules aimed at preventing certain foods being promoted to children, despite the Simpsons largely appealing to an adult audience. However, with the UK pizza delivery market underdeveloped compared to the high penetration levels in countries such as the United States and Australia, Domino's successfully introduced a generation of consumers to the

ordering habit, and, crucially, did so during a period when its franchisee numbers grew substantially. Nor has the business rested on its digital laurels since. The UK company's results for 2014 showed the business on the brink of an important tipping point. Orders accounting for 69.4% of all delivered sales in the UK and Ireland were placed online – a figure which includes website, mobile phones, tablets and other digital channels such as the Xbox One games console, for which there is a bespoke Domino's app, to go alongside the free iPhone, iPad and Android apps the company has released from which customers can place an order, and which a staggering one in eight of the UK population has downloaded. In all, 8.2 million customers had one or other of Domino's apps in 2014 on their devices, up from 3.2 million at the start of the year.

Online shift Unsurprisingly, then, of Domino's digital sales last year, close to half – 44.2% – were placed through mobile devices, a rise of almost 50% on 2013. Domino's head of digital, Nick Dutch, is confident that with the year-on-year growth rate of sales through apps running between 150% and 200%, sales through mobile will be Domino's dominant sales platform by the end of 2015. Meanwhile the whole business is on an increasingly upward ▲ ¡ SUMMER 2015 ¡ PROPEL QUARTERLY


Feature journey. Sales rose 14.6% to £766.6m for the 52 weeks ended 28 December 2014, with like-for-like sales growth of 11.3% at the company's 724 UK mature stores, rising from 2013's 7% increase in like-forlike sales at 670 mature stores. Despite the online shift from the PC to the app, bringing the Domino's website up to speed has been a major focus for Dutch and his colleagues over the past year, leading up to the launch of a revamped new website last September. “Essentially, our old website was designed circa 1998 and had developed organically,” Dutch says. “While it was exceptionally successful from an e-commerce perspective, ie taking sales, we felt it could be improved in a number of different ways. “In a relatively deal-oriented market, it’s important to demonstrate value. It’s now easier for customers to see the value they’re getting online. The old website was a little bit cold, a bit like a menu, whereas the new one is a bit more current in terms of design. There’s better imagery, and it’s a bit bolder in terms of the brand statement.” The home page now features links to everything from nutritional information to videos of the latest brand advertising, carefully planned so that customers can linger with brand messages if they wish, or get straight down to the business of ordering food.

“The big difference between us and the likes of Just Eat is that we are responsible for the product, where they are essentially selling a service” “When you land on the home page, you see the brand a bit better," Dutch says. "When you come to the food photography, it’s a bit more appetising, and bigger – but the focus, once you’ve decided you want to order a pizza, is to make sure it’s easy to get stuff into the basket, easy to add more items, and easy to complete the transaction. That’s very important. To add something to you basket and then have a YouTube video played of how a pizza is made is the wrong thing to do.”

Higher spend online The importance of the web both in establishing the brand’s relationship with its customers and in generating sales is demonstrated by the fact that the average time a customer spends online on the website, from arrival through to completing an order, is around seven minutes, against less than a minute spent when ordering a pizza on the phone. This contributes to a typically higher average spend online, partly because customers have more time to make their selection and add extras. While it used to be possible for canny customers to get a better discount by ordering offline, using leaflets and local


offers, “you can now get the same deals online and offline, so there’s no price disparity,” Dutch says. “Without being too stereotypical, online there’s a perhaps a more affluent customer.” When a customer calls a store, he says, “the guy on the phone is trying to get you through the process as quickly as possible because there are other phone calls to answer. When you’re doing it in your own time, people have more time to upsell to themselves, rather than us upselling to them.”

Pizza Legends As part of its "making the customer's interaction more fun" approach, this spring Domino’s UK launched a new digital platform to offer customers the chance to personalise their pizza. The idea of "Pizza Legends" was to try to transforming a functional decision-making process into an "engaging, entertaining and shareable experience". Through the platform, customers can build their own "pizza legend" by selecting from a range of bases, sauces and toppings. Users are invited to name their creation, which is then transformed into a short animated video. They can choose to share their pizza legend with friends on Facebook and Twitter and enter it into the League of Pizza Legends, where anyone can view, "like" and even order other people’s pizza masterpieces. The most popular and creative entries in the league will win their pizza creation free for a year. All customers receive 30% discount off every pizza legend ordered through the platform. Simon Wallis, marketing director at Domino’s Pizza UK said: “Customers love to make things their own, and that doesn’t stop at pizza toppings. We wanted to make the personalisation process as fun and engaging as possible – with a competitive twist.” Domino's does not, of course, have the UK pizza home delivery market all to itself. Its biggest branded rivals are Papa Johns, which has been franchising in the UK for more than a decade, and Pizza Hut, acquired from Yum! Brands in 2012 by the private equity group Rutland Partners. The growth of the takeaway aggregators Hungry House and Just Eat, which bring independent delivery operators together on a single digital platform, has added a new competitive element to the mix. However, Dutch says: “The big difference between us and the likes of Just Eat is that we are responsible for the product, where they are essentially selling a service. If you look at the aggregators outside our sector, such as Money Supermarket and CompareTheMarket, they’ve moved away from the commoditised space they were in five or six years ago, and they’ve started building really big brands. “Just Eat and Hungry House have got the ability to just focus on building a brand, because they haven’t got a product to sell. On the flipside, one of the benefits you have if you’re a Pizza Hut, Papa Johns or Domino's is that we own order to fulfilment – it’s all our responsibility. “



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Dutch believes that Domino's investment in digital sales and marketing is keeping it ahead of the competition, both pizza specialists and aggregators, as well as keeping up with its customers’ expectations. “The DNA of the brand, being a franchise-led organisation, is very much about entrepreneurial spirit. We’ve thrown ourselves into this new situation quite early on, which means we’ve managed to stay ahead of customer demand,” he says.

“Social media allows us to share things that are appealing to our customer, on a regular basis at a low cost” After the focus on the website last year, there is now a push to ensure the mobile side of the operation is kept up to date. In terms of the shift to mobile ordering, “there’s no slowdown at all. It’s happening at pace," Dutch says. "Some of that is people crossing over from desktop to mobile, and some of it is people coming straight into mobile.” With separate Domino's apps for, iPhone, iPad, Android, and Xbox, “they are quite a different user experience to the web platform, because they essentially play to the strength of the device they’re on. So, you’ll have a couple of iPhone-specific features you can’t get in the web,” he says. Ultimately, of course, all online orders have to end with a pizza, made to spec and delivered on time by a Domino's store. “Our franchisees are very savvy guys, and they can certainly see the benefit that the digital platforms bring in terms of saving labour, increased ticket and increased profit," Dutch says. "Once it's completed in the digital space, the order gets pushed down to the store, which makes the order and delivers it to the customer.”

behaved badly to a customer publically, so it weeds out bad brands quickly. “On the flip side, when you handle things well, when you turn negatives into positives, that can catch like wildfire. We’ve had examples where we’ve handled a complaint or a challenge in a respectful way, and the next thing you know it’s trending on Twitter. If you’re conscious of what you’re doing, that public dialogue can be really powerful. “In terms of the broader category, the bigger difference is between deliveredto-home operators and the wider QSR sector such as McDonald's, Burger King and KFC. For them, the role of social media is very different, because they can’t drive people to a transactional website and get them to buy.” Dutch expects to see these QSR brands increasingly start to play digital catch-up during 2015. “It’ll be about, ‘How do we improve the convenience of finding stores, how do we communicate the provenance of our ingredients?’ The role is different, because they’re trying to get people to go in-store to order." For Domino's, Dutch emphasises that all three order routes – digital, telephone and collection in store – remain important: “There’ll always be a mix. We are a very mature digital market in the UK, but we’re still not a very mature pizza market. As you get more stores, you get smaller catchment areas, so it’s more likely that people will collect rather than have it delivered. “Overall digital sales will continue to grow for us, as well as continuing to grow as a percentage of sales. Mobile will continue to overtake the web and will become, by some way, our number one sales channel by the end of this year.”

Nick Dutch, head of digital, Domino’s UK and Ireland

Social media boom Alongside the growth of digital communication has come the boom in social media, which Domino's has also embraced. “It’s created a new kind of behaviour. Social media allows us to share interesting information and content, things that are appealing to our customer, on a regular basis at a low cost," Dutch says. “It also enables us to have a two-way dialogue in a way that was never available in the past. We try and man our Facebook and Twitter accounts nearly 24/7 – not quite, but nearly – so we can handle customer concerns and queries. They might just tweet to say, ‘Hey Domino's, my pizza’s late,’ where in the past they’d have rung the store.“ The public nature of that dialogue has, of course, caught out some brand owners. Dutch take the view that “it makes you a much more honest brand. You have to have the mentality that everything you say can be seen by the rest of the world. That’s a good thing for customers. No brand wants to have

Favourite pizza: "Our Pepperoni Passion on an Italian base." Favourite book: "64 Things You Need to Know Now for Then: How to Face the Digital Future without Fear. I think I’ve given that book to at least four people – it’s superb!" Favourite film: "Pulp Fiction and Forrest Gump. 1994 was a vintage year for films!" ¡ SUMMER 2015 ¡ PROPEL QUARTERLY



Two steps to guest experience heaven Brand standards are still the foundation to a great guest experience, says Steven Pike, and staff do not have to be robots in order to stick to one and then deliver the other


or many operators, "brand standards" has almost become a dirty phrase, as they look to offer customers an individual, unique experience, whether they are an independent restaurant or a chain of 300 venues. Furthermore, as we all know, increased table turns means increased sales. Staff must thus be able to maximise covers without negatively impacting on the guest experience and giving your site a bad reputation. Brands have evolved from Generation Robot, where every site looks the same, all the staff act the same, and so the guest’s experience is the same every time: bland, repetitive and boring. However, smart operators recognise that a robust set of brand standards is what underpins the guest experience – which, in turn, defines the brand standards and how they are differentiated from the competition. It is a "chicken and egg" scenario – the brand standards are the framework that the experience is wrapped around. You cannot have one without the other. If you have the framework of brand and operational standards in place and your staff know what is expected of them (you want them to almost be able to do the fundamentals of their role in their sleep) then you can leave them to focus on proper engagement with the guest, reading their needs, communicating with them in a personal manner, and all those things that you cannot do if you use a robot.

robust. But even in a grab ’n’ go environment, businesses will operate within a certain framework and expect certain things from their employees. From established brands such as Pret A Manger to the crop of challengers, such as Leon and Apostrophe, they know that, even if they are the busiest place in town, customers should not have to queue and should always be served with a smile. This does not happen by accident. It is because of the standards the business sets and the efficiency of the operational guidelines functioning behind the scenes. However, when defining your brand standards, always begin with your expectations of what the guest will remember of their experience. If you went back several years, there were fewer ways of running your operation, no matter how many sites you had. But this has changed.

Originality If your brand standards do not facilitate or motivate teams to be creative, then the experience is not going to be memorable for the customer, it is not going to be talked about and you are not going to get people coming back in. Vice-versa, if you just focus on employing people who are happy and great at engaging with people but not actually efficient behind the scenes, then it will be an uphill struggle to get the experience right in the first place. These two aspects of the business have to work in tandem: it is like a dance. Memorability is what will make you stand out and cause guests to return or recommend. But beware the negative impact of not being dependable, for this will surely get shared too.

“The brand standards are the framework that the experience is wrapped around. You cannot have one without the other”

Vital If there are three steps to heaven, as Showaddywaddy tried to persuade us, there are only two steps to guest experience bliss. Step one: operators need to have the brand standards in place, based on the kind of experience they want guests to have. Step two: the guest experience will follow. It will not work in the opposite direction. We do quite often see businesses who think it can – they say, “We’ll just find out if people are happy at the end of their experience, and if they are, that’s great. If they’re not, we’ll see what we can learn from it.” This is a risky approach: without the right foundations in place, it is difficult to ensure key learnings are applied and the way your team operates changes. There are also some valuable standards that may not be considered if you simply worked backwards from a guest experience but which can both positively impact it and improve your bottom line; suggestive selling is one example. Measurement is vital here. It is very hard to articulate the link between brand standards and guest experience without a means of measurement. Evaluating the execution of your brand standards, and how this impacts on the guest experience is important, whatever your type of operation. If you are offering a full-service environment, then you are going to have lots of steps of service to manage, so clearly, standards should be


Every company is different; what makes one successful is different to what makes another successful and you need to have that balance between both the originality of the guest experience and the efficiency of the brand standards. But both are part of the same continuum, each reinforcing the other. Be sure to measure them, then continually reflect, learn and evolve, for the market will not stand still.

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's services include mystery guest visits, online feedback, social advocacy, performance analysis and learning management. Clients include Wagamama, Brasserie Blanc, Spirit Pub Company, Malmaison and Peach Pubs. For more information, visit:



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The Best Q&A Interview in the World … Probably

James Lousada, who joined the Northampton-based Carlsberg UK as sales director in 2013 and was appointed chief executive in January 2014, talks to Martyn Cornell about a career that has covered everything from selling Marmite to selling Budweiser, including a swerve sideways into mobile media, the difference between selling wine and selling beer, the disappearance of 'water cooler' advertising and bringing back the 'Probably' advertising campaign, invented more than 40 years ago by Saatchi & Saatchi, still remembered with great affection by the British public



Feature MC: What's your background – where were you born, where were you educated, and what was your early career? JL: It's full circle: I was actually born in Northampton, I won't say how long ago – many years ago – and my parents have always been around this area. But we quickly went and lived in Teheran – Dad was posted out there, he was running an FMCG business, Bristol Myers, in the region. Then we came back to England, and I went to school at Bedford School. I read economics at Reading University: rowing was my thing, and that's partly why I chose Reading. I was thinking about going into the City, but this was the time of the 1987 crash. I had a choice of waiting until the economy picked up, and take a year out, or get a job. I chose the latter, and got a job as a graduate trainee with St Ivel, the FMCG dairy business then part of Unigate. I spent four years with St Ivel, primarily in marketing roles, but also in sales, the classic graduate trainee scheme where you're sent round the business. I went from there to Best Foods, which became part of Unilever just as I was exiting that business. It was a marketing role, running fairly mainstream brands in the world of grocery – Hellmann's mayonnaise, Marmite, the old staples, a fairly classic branded business. After that came my first foray into the drinks business: I was recruited to become marketing controller, but very quickly marketing director of Anheuser-Busch. That was in 1995. As a marketing man you're always looking for brands that are on the up, and being asked to run Budweiser in the mid-1990s was manna from heaven, it was a fantastic time to be joining that business, which was just beginning to get on its legs. I spent six years with Anheuser-Busch, as marketing director for the UK and ultimately European marketing director, it was a great time for Budweiser, it was on a huge growth curve, a very young, dynamic business. We had just taken the brand back from Grand Met and were running it ourselves, and it was probably one of the few brands that managed to break through and really appeal to a young audience. We had some classic blues advertising for Bud, we followed that up with frogs and lizards, then the 'Wassup' campaign, and they were, at the time, the campaigns that people talked about. It had a fantastic flywheel effect, you did interesting new stuff, people were inspired to do new things, and the business was very committed to investing in the brand. Digital was in its very early days, we were thirsting to do vital-type activity, a whole plethora of media and PR was in our gift and we had a fantastic time. MC: That was a time, indeed, when beer advertising was talked about, it was almost water-cooler moments, 'did you see the latest so-and-so beer ad' – that's been lost now, if I may suggest it. Why is that? JL: People are spending less money on their advertising – that's probably the nub of it. The old model of big TV advertising as the way to get to your audience has been challenged, audiences have been fragmented, and no longer can you buy a spot on Coronation Street and reach 30% of the UK population. So people are looking at building their brands in

different ways, and spending a million quid producing a high-resolution TV ad is probably challenging for many businesses. The Guinness 'White Horses' ad [from 1998] had a millionpound production budget – for most brands that's the media budget, not the production budget. I still think it's important and it has its place. One of the reasons we've brought back the 'Carlsberg Probably' campaign is that we know what impact it had historically, and we're still confident that if we get the right advertising through the medium of TV and then taking it through the line into other media forms, whether it's digital or in-outlet, we can have a really strong impact on consumers. I don't think consumers have lost interest in watching great advertising – they just don't see it very often, and people aren't producing it in the same way they used to. Part of my challenge to this organisation is to get people to think differently, be a big courageous about the stuff we do, it's quite hard – in most businesses people are a little bit stuck in their ways. But we had a great stunt in April where we put a 48-sheet up in the City saying 'Probably the best poster in the world', which gave away free beer, and the response to that has been fantastic. It has 60 million views around the world, Time magazine wrote about it, and sent a tweet to eight million people. So if you get the right idea, it resonates with people. That's the power of digital – it doesn't give you the broader, deeper message you can get through other media, but for us it was a signal of how we want to do thinks a bit differently, and shake up what was, for me, the standard template we've used for years. And we've got to do something different, because we need to be different in the market place. MC: Your father had been a seller of brands – is that what made you follow on? JL: I have to say, the choice when I decided not to go into the City was definitely to go into a branded business. I'd seen him work with great soft drinks brands in the UK and around the world, such as Schweppes, and that appealed – it absolutely does appeal. At the time, FMCG was the place to be, there wasn't a digital world, so people graduating weren't looking for jobs in the technology sector as they would be, potentially, today.

MC: Which part of your career as you came up was the most formative in channelling you to where you are now? JL: From a discipline point of view, and learning how to build brands, it was the likes of Best Foods, who were classic, blue-chip organisations who knew about basic brand-building. The inspiration for me, though, was definitely working for Anheuser-Busch. It was a brand on the early stages of a very positive growth cycle, and a business prepared to invest in the brand, so that we were able to try many different angles with consumers, and just stand out from the crowd. That was important. And thirdly, I was working, not directly, but one away or two away from August Busch III, who was the key driver of Anheuser-Busch from the 1950s onwards. He was incredibly dynamic, incredibly passionate about the business, and that rubbed off on me, and the people in the organisation. The charisma from someone like him was just incredible. It felt like a family business, despite being, at the time, the biggest beer business in the world. It was listed in New York, but you still had a patriarch who would come into the UK and challenge us, push us – I found that incredibly motivating. He'd still come over and challenge me about why my share in east Scotland was declining – that attention to detail, that attention to making things a success, I think rubbed off on me, gave me some cues as to how I should manage my team in future. MC: You moved into the drinks business, and then you swerved sideways in 2000 – what was that all about? JL: I was hoping to take over at AnheuserBusch as the UK MD – that didn't happen, and I chose to look elsewhere. The dotcom boom was close to its peak, and like many businesses they were looking for marketeers out of classic blue-chip backgrounds. I was headhunted into Vizzavi, which was a joint venture between Vodafone, which was the biggest mobile operator at the time, and Vivendi Universal, the French business that owns Universal Studios. It was bringing together the technology and connectivity of Vodafone with the content of Vivendi Universal, in theory to create the stuff we see today on an iPad or a laptop or a phone. My role there was to build a brand from scratch, and recruit customers across the European ▲ ¡ SUMMER 2015 ¡ PROPEL QUARTERLY


Feature network. The day I started there were 15 people in the business – there were 800 a year later. We had budgets of over a billion to start the business. So it was incredibly well-funded, and as a brand guy that felt really interesting, to try to create something from nothing. I spent a year and a half with them – the business doesn't exist any more in that form, but the Vodafone Live portal is what we started. It was, again, fantastic learning. Vodafone at that time had 40 million customers across Europe and we were recruiting people to pay a monthly fee to get content. I left because the technology wasn't good enough – we were building this great promise for consumers, for example, 'see the Premiership goals on your phone ten minutes after they happen', but the technology at the time just couldn't do it. We had this vision of what we wanted it to be, and it couldn't do it. So we were disappointing consumers, phones were WAP-enabled and things were incredibly slow, a text message took a minute to send – it bears no resemblance to what you see today. I got frustrated as a brand guy who'd been offering a promise of a product and then not being able to deliver – I found that incredibly difficult. So I chose to leave and went back into the drinks industry, into the wine industry. That was really to help out a mate, who was the European head of Southcorp Wines, and wanted a marketing director, and seven years later I was still part of Southcorp and Fosters Group, running European marketing. MC: Did you learn anything from going outside the drinks industry? JL: Oh, definitely. The pace was infections, way ahead of what we saw in a classic branded business. And while the technology was slow to get there, the vision of people to get stuff done and build and invest in a brand was there. But the other key learning was to make sure your branded proposition delivers. If it fails, you're going to lose customers very quickly. MC: How different is selling beer to selling wines? JL: In beer you've got big brands. In wine, we had a few key brands in my old business, such as Hardys, but you're not classically building them as brands in the same way you would Carlsberg. But fundamentally I think they're getting closer. The growth of smaller, niche, craft, world beers, talking about heritage, talking about provenance, talking about the people behind the beer, the brewers, flavour profiles, that's growing, and that's exactly what wine did 20 or 25 years ago. So we demystified wine from a time where no one had a clue about it to helping people understand what a grape variety and where a wine came from was going to suggest about its taste, and now with, say, India Pale Ale, people are beginning to understand, 'it should look like this, it should taste a bit like this.' There are a lot of parallels, and certainly as I see craft beer explode over the past couple of years, it gets closer and closer to what we see on the wine shelves. You just have to look at the space given to it, whether it's in the supermarket or in the pubs. The beer fixture is now much more akin to wine than it was two or three years ago. There's interest, innovation and diversity – not a few bottles and some big slabs of cans.


MC: Do you think there's any cross-over between the consumers of wine and beer? JL: Certainly – the dual penetration of both is very high. People will be drinking on different occasions and making choices between beer and wine, there's no question. In terms of interest, I do think we have an opportunity in the world of beer now to reappraise the category, and penetration has the chance to go deeper as people get excited by what's happening – I think it's a great time to be part of the beer industry at the moment. You never before, or very rarely would have been able to walk down the high street and be able to find three pubs all with blackboards outside talking about their beer offering, with craft clearly a key driver of that. That's going to get more people in pubs – and that's not just going to affect the craft sector, it's going to get people drinking beer again. That's great news for all of us. MC: Swerving to one side for a moment, as I'm sure you're aware, there's a huge argument in the 'geeky' end of things in the beer world about 'what is craft'. My personal feeling is that that is totally irrelevant to the consumer – I don't know how you feel about that. JL: People don't even mention the word. Some do – the guys who are further along the spectrum in terms of interest and understanding will be there. Just like wine, there are people at one end who'll say, 'I like a rosé' and some who'll say, 'I like something from this vineyard in this part of the world,' and so you'll have some craft beer guys who are right up at the top end. But for most people this is just about diversity and points of difference, something that makes them go. 'Oh, that's different, I'll try that.' They'll learn a little bit, that they like a pale ale, or an IPA or a amber ale, or whatever, but actually, I don't think it's a phrase that matters to them. We know that in the US – the IPA explosion has come because people walk into a bar and they go, 'I want a beer, I think I like IPA, I'll order the first IPA I see on the list.' Now, the fact is, there's a huge diversity of products that sits under the banner of IPAs, but it's a guide – it's like people will now order 'a Chardonnay', although they're all very different. MC: All the same, it's very easy for someone like me, greatly interested in craft beers, to forget, but of course, the vast majority of beer sales are still to the big brands – that's as true today as it was 20 years ago. JL: Yes, we're seeing a change in the dynamic, and we're seeing a growth of craft, but it's still from a very, very small level. I think what we have seen is that the big brands are under pressure, there's no question of that. The big lager brands, of which Carlsberg is clearly one, are under pressure, the classic old ale brands are under pressure. They're all in slow decline, and that's clearly an issue for us as a business. But there's an opportunity – and what springs out of that opportunity is not really craft, the first driver is world beers, and for us that's the critical driver – that's still in double-digit growth. For us, a brand like San Miguel, which has grown incredibly well over the past four or five years, we


Gary Graham and Alan Place see huge potential for in the future. So that 'world' area, which is a broader church than craft, is an important driver, and a big change in the past five or ten years. Clearly craft adds some interest and dynamism at a lower level. But it's still small. The prediction of what it could get to – if you look at the US, it's 16 or 17% of the market, clearly in the UK it's much, much behind that, so whether it gets to 10%, 15% … but it will be a key influencer in the future. But the majority of beer consumers still want to drink mainstream brands and we're absolutely confident that the likes of Carlsberg will be critical for us in ten years' time as it is today. We're investing this year in Carlsberg in a way that we haven't in the past five years. We fundamentally believe that Carlsberg has a major role with consumers and in our business. Bringing back the 'Probably' campaign is a big step forward for us. We know that resonated brilliantly five years ago, and even if we talk to consumers now, about ads they remember, that's still top-of-mind for them. So for us, reinvigorating that is important. But Carlsberg is our bread and butter, and remains our bread and butter, and we have to make it a success in the future, and buck the trend of the decline of standard lager. And we're seeing that in the on-trade. The other standard lager brands in the on-trade are all in decline, but we're getting growth for mainstream Carlsberg in the on trade – in the last couple of years we're been growing share, and in the last 12 months we're actually up one per cent. That's about being truthful to it, investing, and investing with our customers to make sure it's successful. It's not just about investing in the brand, it's investing in people – getting more people on the streets, pushing into the free trade, pushing into distribution. Working with the multiple pub operators. ▲

Feature MC: Talking of the multiple pub operators, do you see the potential changes if the 'market rent only' option comes through the way many people suggest it's going to work and large numbers of current tenants of the big pub companies are suddenly able to choose for themselves, is that going to be a good thing for the brands or a bad thing – is it going to mean that you are going to have to have so many more people that you have to try to sell into, rather than one single place? JL: Naturally we've been looking at this and trying to work it out ourselves. The reality is, we can't predict it, we're not sure. But we're pretty confident we can win in both environments. Even in the old world where we had a listing at head office with Punch and Enterprise, the reality is that we still had to call on every outlet to encourage people to take our brands. We still had a sales force calling on those outlets. Fundamentally, whether they remain tied in some way or whether they go into a free pub or a managed estate, we still have to go and talk to those guys. We're confident our brands will sell, and for us it's still going to be about offering the right proposition when we go and knock on the door. We have very strong relationships with the likes of Punch – we manage their logistics and porterage – and that's a relationship we'll maintain. But fundamentally, where the outlet sits in the future, for us, doesn't make any difference. M A personal MC: q question – if you had to choose, which of your own brands would you drink? JL: As a pint, Carlsberg Export, still the most under-rated brand in our portfolio. It's a great beer. New stuff, it's Bee 17 from [the Carlsberg-owned Falcon brewery in] Sweden, it's a pilsner, a and Lawn Mower, also from Sweden, it's an amber lager. These are just adding a little bit of interest to us – a lot of our staff now, when they put in a staff order, they're buying stuff like that – it's part of that craft revolution, different flavours, different to the core of our business. So at a barbecue I'd have some of those hanging around. They're from a micro-brewery on the back of a big brewery in Sweden, Falconberg. It's called the Back Yard Brewery, because it was built in the back yard of the Falconberg brewery, and it has a brewer there who is creating interesting stuff. So we'll have a continuous stream of innovation coming from that and other micro-breweries we have. MC: How does Carlsberg deal with the demand for craft beer in the UK? JL: We launched a proposition called Crafted last year, which is what we sell to our free trade guys, and to multiple operators. It includes some of our brands, but it includes competitors' brands, and it allows independents to have a choice of 50-odd products. It tries to give a diverse look at craft and what's moving in craft. We update it every year, and we had a fantastic response to that last year.


[Beer writer] Pete Brown helped us put it together, write a 96-page handbook, and launch it, and it's given us great credibility. When I talked about our offer to the trade, that is the thing that sets us apart. We're not just about selling Carlsberg, we're about selling the range to licensees which will make their pub successful, and craft beer is one of the things that will help them do that. We also have Tapsters – we have a core range of 100 cask ales, and at any one time we'll have 50 guest cask ales which we'll be rotating. Currently one in five cask ales in the UK comes through a Carlsberg depot, whether that's sold by us to our free trade outlets or through our logistics business, and our porterage business. That was our first foray into demystifying the category for landlords and licensees. We then did that with our wine range, we now have over 700 wines available for licensees, and we then did it again with the Crafted range. Each of these is trying to help licensees understand the proposition and what they should be thinking about when they start merchandising. Depending on the knowledge of the licensee, we'll have different guys going to talk to tem. If it's someone who just wants some basic help with a winelist, the free trade guys are very well equipped to do that. If it's someone who's looking for a very extensive range, then we'll send our wine specialist in. On the beer side, there will be some who will be quite nervous about it, and their craft beer range might only extend to a Brooklyn lager and a Meantime pale ale. For many, they want to take a much broader view of the world, and our Crafted handbook will help them – if they only want two or three it will help guide them, if they want a more extensive range it will help them there as well.

MC: Looking at the consumer experience, is there more that brewers and retailers ought to be doing to enhance that experience? JL: Our research is very clear – the most important drivers for people of all demographics is the right quality environment, people are much more interested now in what it looks like and feels like when they walk into an outlet, a great quality proposition, whether that's food or drink – seems obvious, but you know … Value is important, not pure price, but does it feel like a value proposition. But there are some add-ons that are important, so things like wi-fi – only 32% of people think it's important, but when we did the same survey a year ago, only 18% of people thought it was important. That's 77% growth in one year. So finding some hooks like that are going to be really important to people. Go to a meeting in London,. Go to a pub, and if the pub doesn't have Wi-Fi, people walk out, or go somewhere else. This is about understanding your clientele, and how they change during the day, and making sure you have the right proposition. Things like that at the moment are differentiators, but in time everyone's going to have to have them. But probably the biggest area we see as an opportunity is event-led activity. If you ask people, if they don't go to a pub, why they would go to one, mostly it's for an event of some sort, a birthday or a key event in the calendar, a quiz night or whatever. I think taking advantage of those opportunities is still not done to its best. So helping them to do that, giving them the tools to do that, giving tem, for example, as we do on our We Deliver More platform, ready-made point-of-sale materials, marketing materials, that they just put their pub name in and it's printed and delivered to them.

Carlsberg supermarket MC: Presumably your sales guys have to be aware of the demographics round a pub that they are selling into, and, for example, warn landlords, 'you don't want to take too great a range of craft beers in this area, you're not going to sell them.' JL: Completely. We're building a tool now that says, 'Here's the pub, this is the postcode that it sits in, this is the demographic around that postcode, therefore the likely range that you need looks like that.' And then it's a conversation with the licensee about how the see their pub, how they want to see their pub positioned and marketed. We're in the early days of developing that, but that's the sort of tools that our free trade guys will have and should be armed with to make sure that we're successful as we talk to the customers. That's the key to success – helping partner with a pub to ensure that they can be as successful as they can be. Their success is our success.


MC: Pulling back and looking at the industry, there are issues such as VAT, such as the pressures from the health lobby, where retailers and manufacturers need to speak to the government – is enough being done to unite the industry so that it can speak with one voice? JL: I sit on the council and the board of the British Beer and Pubs Association, and I'd say the BBPA has represented both sides, brewers and retailers, pretty effectively through the last two or three years. Yes, you could argue that an area like VAT is still an outstanding issue, but it terms of lobbying for cuts in excise duty, which we've now had three of, and aligning the industry behind a number of initiatives, I think they've done a good job. The investment of the five major brewers into There's a Beer for hat is an initiative you never would have seen five years ago. To have five businesses investing £5m for three years behind a ▲

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MC: How did you find the culture at Carlsberg when you arrived? Was it what you expected? JL: I came here expecting more of a global business, with more of a global feel to it. What I found was a place with a great commitment to people. Most people in the company have been here 15 or 20 years, so they're lifers. Therefore the commitment and passion for the business is incredibly strong. The bit I'm trying to add on top of that is the courage to look outside, to try new stuff. To be adventurous. It's an incredibly challenging market, and our core business is under pressure. In that environment, doing the same thing next year as you did this year is not going to make for a successful business. So it means looking outside at other businesses, in completely different sectors, and thinking, 'what are they doing differently, what can we steal, borrow and bring in? And that probably means bringing some people in as well, who are also different thinkers. We've done a bit of that: we've also moved people, so Darren Britton, who has been marketing director for the past 12 years, brilliant guy in our business, brilliant thinker, I've asked him to go and run the on-trade sales organisation. That's quite a challenge for him, a different role, but he's a guy full of ideas. Putting someone different in charge of key elements of the business makes for a different organisation. MC: What were the other challenges you had when you came as sales director? JL: For me, getting the right tools for the job for the sales guys was important. The on-trade, and the free trade in particular, had a massive potential for us: we've been growing our share in the free trade for five years now, consistently, ands we've been very committed to the free trade, unlike some of our competitors, but we've spent the last 18 months working on selling tools, route planning, new customer acquisition and the tools that allow our sales people to service their exiting customer set, but also spend more time and be more effective as they


MC: Talking of the portfolio, some others have decided that the best way to widen the offer is to buy the producer – and when you look at something like DoomBar that's clearly been very successful. Is that something you've looked at? JL: If the right opportunity came up, at the right price, then we'd be interested. But we can take part in the growth of smaller beer brands by our wholesale proposition. There's a lot of noise around the multiples people are paying for small brewers, which make your eyes water. MC: Indeed. How did promotion to CEO come about? Was it something you expected? JL: I'd been running Accolade's European business for five years, so I'd been in a general manager's position before I joined Carlsberg, and I came in as sales director on the basis that Benet Slay, the then CEO, was going to be leaving within a year or a year and a half. I obviously had to do the right job within the first year, Benet had to decide he was definitely going, which he did, everyone honoured their commitments, and it worked out brilliantly for me. I feel very privileged to be running Carlsberg UK. It's a great business. MC: What do you think your particular unique style is as a CEO? What do you think you bring to the party? JL: If you look at my values, number one is people, it's putting people first – I know that sounds trite, but I'm not going to make this business successful, it's having 1,800 people pointing in the right direction, motivated and enthused by what we're doing. That's what is going to make us successful. I try to bring to the sales people in particular a bit more clarity about what is going to make us successful. We talk about the six things that are going to make us win – that's what we measure, that's what people know. If you went round the business and said, 'what are our important "how to wins",' most people would be able to tell you what they are. I think that's helped, because we were trying to do a hundred and one things, and you're never going to do any of them successfully. Then, it's discipline and rigour, So, tell ’em where we're going, be really clear about the few things that are going to get us there, and then measure them and monitor what you're doing against each of them, and make sure everybody's got objectives and you get after those. I spend more of my time in this past six months than I did in the first year trying to get out to our organisation. For me as chief exec, the first thing is to have everybody excited about being part of Carlsberg. MC: What are your aims as chief executive for the company? JL: The key things for us in building our business is, number one, get Carlsberg back in significant growth, and that means committing resources – we're going to


spend £12m on Carlsberg this year just on media, we're bringing back the old 'Probably' campaign, we're innovating with new products. Eighty per cent of that spend is on TV, that's been a key part of the relaunch. Number two is about our World Beer portfolio. That's about building San Miguel, which has been an absolute train for us in the last three or four years, but also building brands around that, whether that's Mahou, or our own brands, Grimbergen or Jacobsen, for example. The third product area is about cider – Somersby is a product we launched 18 months ago, we've now launched a range of flavoured ciders which came out this year. Winning in the cider category is important – it's clearly taken a lot of the beer category in the past five or ten years, and we never had a real share of that. The fourth commercial pillar is about winning in the free trade. It's absolutely critical for us that we win in the on-trade, it's been a success in the past five years, but we see much more growth potential in the free trade. There supported by a couple of areas about managing value within the organisation and about getting the right tools and processes and systems within the business.

Somersby Blackberry Cider

MC: Back to yourself for another question – who do you admire in the industry? JL: Pulling out individuals is difficult. But I would say the leaders of the family brewers – I admire many of those. Jonathan Neame is an example – they run great businesses, they run their businesses for the long term, they've got a very clear vision of what they want to be, they've got a very consistent strategy and they don't really deviate from that. They also see a responsibility to the broader industry, so they take a very active role in a lot of the industry bodies, in lobbying government – they take their responsibilities much beyond their own business. That's got to be admired.

try to bring on new customers. There's a whole series of things that we've been working on since I joined the business and most of them have gone live at the beginning of this year. So the guys have got new technology to support them, we're prioritising the field force more to the south than to the north, we're putting more people into the business. Our plan will be to put another 50% of heads into the business over the next 18 months.

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campaign that is generic industry-growing is impressive, and important for the industry. The challenge for There's a Beer for That is to now get that in to retail, the on and the off-trade. Tesco ran with it in their beer festival in the spring, and we're hoping to see similar activity into the on-trade. To me, that the sort of stuff we need to be doing together within the industry, both lobbying the government and also talking to the consumer. About the category and making the category exciting, relevant and dynamic.

MC: I ought to know this – you're not using the same ad agency for the new 'Probably' campaign as you did previously? Because my impression is that ad men don't like having to go back to something someone else created and do it again. JL: No, we're not. And that is a challenge. But I think that when you've got a campaign that's been so successful, the opportunity to work on it, as a young creative, is probably pretty good. It was originally felt at the time that it was dropped [in 2011] that it had run its course and it was time to move on. But I do think there was a massive passion for that campaign here in the UK. We've had qualitative groups that have been remembering ads that we ran ten years ago. And it's not just about the TV ads, it's about our ability to take that and execute it in multi-channels. That's the strength of it. The first new ad came out in March, 'Supermarket', and the second one is due out in June. We've just had the tracking back for the first ad, and it's performed incredibly well – in line with some of the old campaigns we had. We're pleased with the way that's going, we'll try and build bigger and better every time.



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A market changing by degrees Where once the mass market meant bluecollar workers with minimal education, today graduates make up almost half the workforce, something consumer-facing companies have to take on board, says David Martin


was lucky. In my youth, I was among the one in 20 of my industries, where jobs have been replaced by lower-skilled, more generation fortunate enough to get a university education. routine employment, places like Burnley, Bradford and Birkenhead. Nowadays, to borrow the title of a recent Economist article, “the On-trade outlet data for these two sets of sharply contrasting sets world is going to university”. of towns is telling. Figures from CGA Peach shows that the number After a tripling of the number of full-time undergraduate of food-led outlets in Brighton, Cambridge and Reading grew by students in the UK since 1970, over 40% of people currently aged 18% from 2005 to 2014, while in Burnley, Bradford and Birkenhead 25 to 34 in England and Wales have achieved at least degree-level they declined by 2%, despite the societal trend to more eating out. Away from the supply side, there are hugely significant qualifications, against only 23% among the over-50s. demand consequences of the rapid rise of the higher-educated, More reasons I was lucky: I did not have to live with my parents and they are inextricably linked to the macro-trends of into my late 20s, I had no student debt, and I didn’t have to take individualisation, independence, and aspiration. a "non-graduate job". But, setting aside those contemporary If we accept that higher education teaches and empowers you to problems, in the Trajectory Partnership’s words, we now have “the think for yourself, then logically it cultivates the confidence to fashion best educated generation in history” and while many things are your own identity, to have less need to be part of the crowd, or to be attributed to "Millennial" consumers, this educational step-change is told what to buy, or when to buy it. Hence we see Millennials’ interest arguably the significant driver behind their behaviour and attitudes. As they mature, the influence of the higher-educated in society, in unique and diverse products – multiple choice is their mode – and and their market power, will therefore grow significantly. But these their social media-enabled self-sufficient approach to "self-service" consequences are far from equal across different categories, product knowledge. Perhaps most obviously, more education sows brands and retailers. the seeds for more discernment and for higher aspirations, fuelling Data on the exact significance of graduate consumers in the outthe premiumisation trend evident in so many markets. For a category case-study, consider the transformation of of-home market is not easily available but let us keep it simple and coffee consumption in the UK where, in the view of Jeffrey make a reasonable assumption that in the mid-1970s, graduates Young, managing director of Allegra Strategies, accounted for a very small proportion of on trade-business, “artisan cafe culture is becoming the norm”, and and now they could account for 40 to 50%. But that is just the numbers. We have to load where the instant coffee category, skewed to the “Graduates in two other powerful factors: first, attitudes and older generations, is in retreat. increasingly Similarly these factors have been key preaspirations, and second, influence – or in current set the agenda. conditions for the growth in craft beer, a category parlance, "social capital". Put simply, graduates They will become skewed to higher-income, younger consumers, increasingly set the agenda. They will become, who are also likely to be higher-educated. Part if they have not already become, the dominant the dominant of the success of "craft" beer is that it enables its consumer voice. Move over Boomers. Here come consumer drinkers ("us") to position themselves away from The Graduates. voice” The mainstream "blue collar" market may have mainstream brands ("them"). been dominant in the past, but brands and categories This is just as relevant to fast food, or soft drinks, as that align with, or are still associated with it, are now facing it is to beer. There is no shortage of evidence that the big a serious challenge. Just consider the evident changes in the beasts of the brand world are facing a market share challenge beer market for example. This argument carries weight both sides from a myriad of small, emerging and often more premium of the bar. An age-old adage is that your staff (and management) alternatives, an explosion of choice that has been facilitated by the should mirror your customers. As the pub market steadily moves boom in receptive, higher-educated consumers. We are essentially seeing the consumption consequences of Tony away from its historical blue collar roots, not least because of the Blair’s mantra, “Education, Education, Education”. The graduate long-term rising real price of pub drink, it is worth asking whether boom is, so far, still specific to the younger age-cohorts, but unless enough graduates have yet been attracted into unit management. Recent news coverage of the Campaign for Real Ale's National we see an unlikely reversal of the strategy by future governments, Pub of the Year winner, The Salutation in Gloucestershire, noted ultimately the symptoms described here will apply to all generations. That is not just going to be a tough examination for that the licensee is a 31-year-old psychology graduate. His businesses, categories and brands that were traditionally strong thoughtful views on the pub (individually and generically) featured among the old blue collar population, but also for those that in a Daily Telegraph piece, which duly observed that his success "overtrade" with the mainstream over-50s, such as pub dining. “may speak more to the trade’s future than its past.” There is a geographical dimension to this issue, too. It was put You can start your answer now … in sharp focus by a recent Centre for Cities report, identifying the (Sources) for graduate jobs to cluster in advantaged cities with Salutation-Britains-best-pub.html knowledge-based economies – those that have prospered most, and continue to do so, due to the quality of their employment base. Century-of-Cities.pdf Outside the capital, these prospering cities are the routine base camps for growing chains coming out of London, such as Brighton, David Martin is managing director of Red Circle Cambridge, and Reading. At the other extreme are Northern and Insight, a market and customer insight resource Midlands towns historically dominated by declining low-knowledge





Advertising Feature

Say yes to One From Me and it will be extra for you ‘Cheers, mate – have one from me.’ Heartwarming words. But until now, you could only buy someone a drink to congratulate them, thank them or cheer them up if you were right there with them. Now, however, anyone can send a drink from anywhere with the One From Me app – and pub and bar operators are queuing up to capture a slice of the estimated £664m One From Me can generate.


very day many millions of people say “Happy birthday”,“Good luck”, “Well done”,“Congratulations” or “I’m sorry” with a card or a gift. Now there is the opportunity to put the pub at the heart of those everyday gifting occasions, and bring hundreds of millions of pounds of incremental income into the pub trade. One From Me is an app available on Android and iPhone that lets a company or user instantly send a drink credit to their friends or customers. The recipient can only pick up their drink in a local participating pub, and can choose any standard drink, be it a pint, a glass of wine, a spirit or a soft drink. The real beauty of this program is that every time someone receives a drink, they have an incentive to go to the pub. Not surprisingly, they will normally invite friends and go on to buy a few more drinks and often food or snacks. Pubs who join One From Me do not need any expensive hardware behind the bar. All that happens is that recipients of a drink look up their nearest One From Me venue on the app, and present their phone to the bartender, who approves the transaction and pours the drink. Every week One From Me issues a report to each venue detailing the number of new customers the app drove to that pub. The pub or bar keeps 100% of what those customers spend, and there are no setup charges, subscription fees or commission. One From Me users are urban, active socially, regularly drink and eat out with friends, like weekday events and have a high disposable income. Using the latest 6 months of data from One From Me, each


drink redeemed has led to an average of £40 being spent by the One From Me guest and their friends. In addition, 80% of One From Me users who have redeemed a drink will return to the same pub or bar for a second visit.

“Every year there are 1.8 billion small gifting occasions in the UK” Bar owners have quickly become enthusiasts for the app. Patrick O’Looney, director of operations at All Our Bars, which runs outlets across the South of England, said: “The concept clicked immediately. I guess one thing that appealed to us is that there is no effort on our part to get it up and running – it is all organised for us. We started with three pubs involved, and now there are eight.” Raj Dhillon, landlord of the Uxbridge Arms in Elephant and Castle, South London, said: “I’ve seen many apps come and go, but this one makes sense. My customers, buying their mate a beer when they aren’t even in my pub – sounds good!” In May, Ted Baker promoted One From Me to their two million customers, and handed out One From Me cards in store to over 5,000 customers. One From Me is sponsoring the “player of the match” for four social sports leagues over the summer, who have 12,000 participants every week. And that is just the start – Spareroom, Just Eat, Hailo and Argos have more than five million customers that would love to receive a One From Me drink. One From Me is already working with iNTERTAIN, All Our Bars, Yummy Pub


Co, Authentic Pub Co and a range of other forward-thinking independent operators who want to make a drink the best way to say “Happy birthday”, “Congrats”, “Thanks for your help”, or “Sorry, I can’t make it.” Drink credits can only be redeemed in a participating pub or bar – and if your pub or bar isn’t participating, someone who has received a One From Me drink is going to walk past you to a venue that is, to pick up their gift drink, and will most likely take friends with them to spend time and money in that venue. One From Me has calculated that if companies and users sent a drink on just 1% of the 1.8 billion small gifting occasions, then people coming in to redeem a One From Me drink would spend an extra £664m every year in the licensed trade. Above all, One From Me puts the licensed trade at the heart of everyday occasions. Where companies and individuals currently buy greeting cards or small gifts from High Street retailers, now they can say: “Have One From Me!”

Join One From Me and bring people to your pub One From Me is free to join, there is no hardware, and we provide all of the POS marketing materials, training and user marketing. A One From Me drink avoids long till codes or vouchers that you have to send off. Call us, email us, send us a letter or a carrier pigeon. We are here to help you get more customers. Email, ring 07856 061639 or go to

Feature Nigel Lamb

The Urchin Craft Beer and Shellfish pub, Hove

Lambe’s not lying down


igel Lambe has a background in food and drink; he was once the managing director of the Grampian Country Food Group, and he also gained experience with companies such as PepsiCo. He also has a love of cycling and in recent years he started to take the sport more seriously. “Around the time I rediscovered cycling, I had had enough of my daily commute to London, but I still wanted to do something in the food sector," Lambe says. "But rather than working with big global brands I wanted to focus on small local companies that had a real passion for what they do.” At the start of his non-commuting life Lambe was fortunate enough to become a director and part owner in both the WJ King microbrewery in Horsham (now sold) and the Brighton-based Small Batch Coffee Company. But how did his involvement with these two successful Sussex companies lead to the creation of a cyclingthemed cafe, a shellfish and craft beer pub and a local gin?

Velo Cafe

Nigel Lambe has his finger in a lot of pies; his impressive list of job titles includes founder and chief executive of Velo Cafes and executive chairman of Small Batch Coffee. He tells Sonya Hook why he has now ventured into the worlds of pubs and gin

His heavy involvement in the roll-out of the Small Batch Coffee concept in Brighton means Lambe has a good understanding of the Brighton food and drink scene. The concept for Velo came about quite simply when Lambe decided he wanted to unite his two passions of coffee and cycling. “I wanted a place I could go to with my cycling friends as well as my children and family,” he admits. The first Velo cafe opened in Brighton in November 2013, with the core values revolving around having a strong and reasonably-priced food and drink offer for the family market. Alongside the cafe is a bike workshop, and Velo also serves as a venue for community events (which are not necessarily cycling related). It also has sustainability credentials, with a green, wildlife-friendly roof, solar thermal and PV panels and a rainwater harvesting system. Naturally the cafe serves Small Batch Coffee, but it also has a breakfast, lunch and dinner menu, with pizzas to eat in or take away, as well as sandwiches, toasties, wraps and soups, and beers from Sussex's Dark Star Brewery. Velo’s location, in a central Brighton park and playground, has been essential in attracting both families and also cyclists of all standards. “Cycling is very weather-dependent but we are still getting more and more people through the doors throughout the year," Lambe says. "Cyclists actually make terrible customers. A lot of them will meet here but they don’t have breakfast before they go and we wouldn’t expect them to. Really, Velo depends on the family market, and there are plenty of children and families here. It is a difficult concept to get into the coffee market so we have had to tweak it a few times, but it is getting more popular all the time.” Lambe is the chief executive of Velo, which was set up along with business partner Brad Jacobsen (founder of Small Batch Coffee). ▲ ¡ SUMMER 2015 ¡ PROPEL QUARTERLY


Opinion Feature opened; I thought this was the honeymoon effect, but we’ve been busy ever since,” Lambe says.

Brighton Gin Along with the Urchin, Lambe’s other recent project has been the launch of Brighton Gin, which came out in November last year. “The still for this is in the Urchin pub now and we make it in 50-bottle batches. It is going incredibly well, and we sell everything we produce,” Lambe says. The team is ready to replace the still with a larger version, he says: “There’s lots of demand and we need to have top-up stock. We are stocked in local off-licences such as Quaff and Twenty One Wines, and the Brighton ethical supermarket HiSbe [How It Should Be] has also sold a lot of it, too. We are getting listings all the time in more and more outlets. The Fiddler’s Elbow and the Office pubs both have a huge range of gins and they sell a lot of it, and we are also now listed in the popular restaurant 64 Degrees.”

The future The team always planned to open more than one Velo, and a second is nearly ready to go at Brighton station, though this time it will target commuters. “Our Brighton station venue is a different concept,” Lambe says. “We have a couple of Small Batch takeaway venues, and this will be similar, but it will be a takeaway cafe and cycle repair offer. We hope it will be busy, and we expect people to drop off their bikes in the morning on their way to their train and to collect later when they get the train home.”

The Urchin Alongside Velo, Lambe has announced a new venture, the Urchin Craft Beer and Shellfish pub in Belfast Street, Hove. “It seemed natural to make the move into pubs,” Lambe says “It’s another branch of retail, and it’s fantastic to have Nick Jerrim on board.” Jerrim, who ran the popular Royal Oak pub in Poynings, a village to the north of Brighton, now manages the Urchin, while Small Batch’s Jacobson has also been involved. “A popular food offering is what people wanted right now,” Lambe says. “Quality pubs and restaurants in the city are doing really well. It’s a great area and it is good to have lots of local pub competition, all offering good food, such as the Ginger Pig [part of the Gingerman Restaurant Group], the Foragers [run by exGroucho Club manager Paul Hutchison] and the Connaught Pub & Kitchen. We are really delighted to be part of it.” The pub has a separate restaurant area which has 30 covers. The menu includes oysters, prawns, lobster, crab and scallops, all matched to craft beers. “I have always loved craft and local beers, and now finally people are waking up and discovering there is a lot more to beer,” Lambe says. “We created a list of 100 different beers and we were pleased to find that in the first week of opening we sold at least one of 96 of these and we completely sold out of an obscure Japanese one – both men and women are really trying these beers.” The Urchin deliberately serves beers in its own branded schooner glass. “We feel these are less blokey,” Lambe says. “The price points for these beers are pretty competitive too.” The pub opened in February this year, and it has been a hit with the locals so far. “We were booked out for the first ten days before we even


“It seemed natural to make the move into pubs. It’s another branch of retail”

Nigel Lamb


Lambe seems content to juggle all of his projects at once, while also continuing to look for more opportunities. The premium Brighton coffee roaster Small Batch is still expanding, although the focus for the future will be with wholesale rather than lots of new cafes, he says. “We are always looking for new sites and there are now only a couple of parts of Brighton which we haven’t opened up in – Portslade is one area we are looking at. “In wholesale we sell our coffee to high-end coffee shops. We have always done a fair bit of this, but we are looking to boost this area of the business. It helps with our sourcing because the more that we roast then the more we can import.” Meanwhile, the second outlet of Velo is all set to open now at Brighton station, and expanding his pub interests may also be on the cards for Lambe: “I am quite sure we will do more pubs and maybe more Urchin-style pubs but it’s too early to say.” For the future Lambe is content with the opportunities Brighton has to offer. “Brighton is a great location with really well-run venues and it values independents; it doesn’t have the same chain mentality of other cities and it’s small enough to make it easy to get to know people better, plus there are lots of passionate artisans out there. “We love developing new produce and hooking up with new partners, and that’s something we are always looking at.”

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Being both manager and leader When you are a manager leading other managers, you need to balance three different roles at the same time, says Chris Muller


he leaders of managers will find that their time and focus often shifts among three perspectives. They should discover a balance in their schedule for modelling all three roles which they are required to perform: that of administrator, manager and leader. I will briefly present a definition of each role, but it is important to keep in mind that while still critical for success, the functions of the administrator are the most easily delegated, and for many people the least challenging to master. Each role has its own challenges and rewards, and all three are necessary to be successful in their position. During the course of the leader of managers’ transition, each multi-unit manager will be called to exhibit the skills of the administrator, the manager and the leader, sometimes all within a few minutes of each other. Administration occurs when an individual integrates and enforces organisational policies and practices. The leader's activities include collecting, organising and communicating information while maintaining control over variability and undesirable systemic change. In a short phrase: administrators integrate. Management happens when an individual implements, maintains or plans for programmes, procedures and systems. A manager's activities are task-related and include planning, budgeting and analysis. In summation: managers implement. Leadership is when an individual inspires people, often to take action they

would not take without the leader. The leader's activities include setting goals, sharing a vision for the future, behaviour modelling, mentoring and team-building. Simply stated: leaders inspire. The leaders of managers will need to know when the time is right to use each role to accomplish their goals. As noted, it is important to remember – even though all three roles independently are critical to being a successful leader of managers – in daily work life, most people are unaware of the work done by the administrator unless it leads to a procedural bottleneck. They work for a manager with little loyalty or thought unless there is reason to fear him or her; but they follow a leader, often without concern for other personal rewards or expected returns.

Approaches In order to become effective and move from acting as a merely a task-driven multiunit manager, the leaders of managers must utilise as many techniques and skills as they can develop. Since much of a unitlevel general manager’s decision-making is based on situational analysis, they tend to take a traditional “hands on” approach. Instead, as the leader of managers grows and redefines the role, decision-making begins to become more conceptual, with a longer time horizon, and therefore more visionary in perspective. Obviously, all levels of management in an organisation must be flexible and be able to adapt to each new set of circumstances and challenges as they

The balanced leader of managers Managerial approach 'both/and' Leadership approach Numbers Focused People Focused Cost controlling Revenue enhancing Studies past information Looks ahead and plans Product-driven Market and brand-driven Skills-oriented Concep-oriented Avoids conflict (reactive) Uses conflict (proactive) Responsibility without authority Authority based on responsibility Top-down decision-making Shared decision-making Intuitive and experiential Analytical and experimental Conventional wisdom Breakthrough thinking Accepting competitive standards Seeking competitive advantage Conservative, risk-avoiding Innovative, risk-assessing Labour as a necessary expense Labour as a profit-making asset Asset supervisor Sales, information and revenue manager



arise. Each time a situation calls for a decision, a balance will be struck by using the appropriate approach drawn from the experiences a manager has learned to master over time. One way of seeing this back-and-forth interplay between the perspective of a unit manager and the role assumed by the leader of managers is illustrated in the chart. Rather than presenting an “either/ or” decision scenario, this presents the concept of “both/and” choice, and should also be seen as complementary to the three models presented elsewhere in my book The Leader of Managers. For example, a unit manager must be keenly focused on the period income statement, truly being focused on the “numbers”. The multi-unit manager needs to continue to keep unit budgeting and profitability in mind, but balances this inward view with a broader focus that looks more at the development of people and how talented individuals use those numbers to advance the business. The manager studies past weekly, monthly and quarterly operating results, while the leader looks forward to plan operating results for the next quarter, the upcoming six months, or a year in the future. In balance, good managerial decisions need to consider past results to see trends and budget exceptions, good leadership needs to set a clear course for others to follow. The manager might rely on the efficiency of top-down decision-making, while the leader is more open to the effectiveness of cooperative decisionmaking and consensus building. In balance, certain situations call for immediate action to be taken by the one in charge, yet delegation and shared decision-making develops critical thinking in junior managers. Leadership is not practiced in a solitary void, management is not a stand-alone practice, and administration requires more than simple organisational loyalty. When combined and used effectively, the individual responsible for making things happen needs to draw on the skills and temperament of all three roles, leader, manager and administrator, at the appropriate moment.

Dr Christopher Muller is Professor of the Practice, Hospitality at Boston University

Advertising Feature

How big data technologies are revolutionising restaurant marketing

Dev Ganesan

by Dev Ganesan, President & CEO, Fishbowl


ince taking over as CEO of Fishbowl in late 2014, I have met with a number of our clients to understand the challenges facing restaurant CEOs, CMOs and CIOs and one trend really stood out. Restaurant marketers have a lot of data about their guests, but they have a hard time leveraging it to get a detailed picture of them. They don’t really know who their guests are.

Data challenges The data can be overwhelming. A typical restaurant will have a point of sales system containing payment, check and item level detail about all their guests, potentially a loyalty program with data about those enrolled , and email metrics from all of their campaigns. Restaurants will also have access to public data sources like their Twitter and Yelp pages, which contain information about the guest experience and brand sentiment. But the data lives in silos – restaurateurs cannot easily combine these data sources to develop insights that can be used for more effective marketing or better decision making. On the technical side, there is much complexity. These data sources are in different formats. POS data is structured, email data is unstructured, and Twitter data is streaming. Restaurants with multiple locations and multi-year data could easily have a terabyte of data – not massive if you are Google and Amazon, but not easily reviewed in tools that a restaurant marketer is likely to have. Research firms like Gartner and Forrester call this “Big Data:” any combination of datasets that has large volume (terabytes to petabytes), variety (structured and unstructured), and velocity (streaming data like Twitter). For restaurants the second “V” – variety – is the biggest challenge.

Financial challenges There are also financial challenges. The technology offered in recent years to analyze “Big Data” is expensive. Data warehousing applications like those sold by Oracle or Teradata cost close to seven figures and are not geared to the restaurant industry. But the good news is that the data world is changing. Restaurants can take advantage of their data with the next generation of analytical tools built by the great Internet pioneers – Google, Yahoo, and Amazon. These companies once had the same “Big Data” problems, but fortunately for us, they solved them by developing an open source software framework that eliminates the complexity of aggregating and analyzing silos of data. This framework is called Hadoop – after the toy elephant of the creator’s son.

“Successful marketers will need the power of analytics to learn who their guests really are” At Fishbowl, we saw the power of Hadoop and recognised that we could leverage it to help restaurant marketers solve their data problems and gain better insights into their guests. What we did was to integrate Hadoop into our flagship marketing platform so that guest analytics is the foundation of all of our marketing solutions. What does this mean for our clients? Well, here are some case studies: X For one client, we used analytics to maximise campaign performance by segmenting their guests into frequency, recency, and spend cohorts. Guests with high frequency received an offer for a free beverage if they spent a certain amount or more, while high spending guests received a “thank you for your loyalty” message. As a result, open rates increased across the board.

X For a different casual dine client, we combined transactional information with demographic and psychographic data to geo-target a direct mail campaign. We were able to show the client who their best guests are based on purchase behavior and where they live. As a result, the client is using direct mail cost-effectively by targeting high return geographic areas. X For another client, we used analytics for a site selection decision. The key to site selection is to identify a location with a high density of “best guests,” but far enough away from existing stores to avoid cannibalization. Using demographic and psychographic information with geo-targeting, we were able to show the client that their intended location would not be a good choice. The revenue impact of this decision alone was 10x the investment in analytics. There is no question that restaurant marketing is about to undergo a transformation, just as it has in the retail, ecommerce, and hospitality industries. Successful marketers will need the power of analytics to learn who their guests really are. Consequently they will make not only better marketing decisions, but also better decisions about strategy, revenue management, and even real estate choices. It sounds daunting, but there’s never been a more exciting time to be a restaurant marketer.

For more information please contact Fishbowl at: t: 0808 189 1495 e: w: ¡ SUMMER 2015 ¡ PROPEL QUARTERLY


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Feature xxx

Cooking with Gas Street Adam Freeth and his team at Shaker Group have trained thousands of barstaff, who are now working literally all over the world. He tells Martyn Cornell how he is putting some of that experience to practical use in a new venture, Gas Street Social.


dam Freeth was born into the hospitality trade, albeit not at the upmarket end he is trying to conquer now: his mother ran "many a spit-and-sawdust boozer" in his home town of Redditch in Worcestershire, and at a young age he was drafted in, "to help empty bottle-bins, collect glasses, run food to tables and pour a Mickey Mouse – bitter shandy – now and then," he says. In 1997 he went off to university, where he eventually graduated with an MSc in business management and entrepreneurship. But an even more important part of his student education came every summer, when he would travel to the Mediterranean, and work in bars from Ibiza to Rhodes. The first summer in Ibiza happened even before Freeth went off to university, when his brother, who was working in a bar on the holiday island as a doorman, suggested he come out for a season. Freeth went, and, he says, "I fell in love with the place. I ended up in a tequila bar, serving tequilas 12 different ways. I was only about 17 or 18 years old, and I just enjoyed the lifestyle of it." Back in Adam Freeth England he worked in pubs while studying, to earn enough money to keep going, and the next year he returned to Ibiza, where he The courses Shaker runs are used by "individuals who want to got a job working at the almost legendary Sgt Peppers 2, one of skill themselves in professional bartending", Freeth says, and also the best known bars on the island. The owner, Ian Gouley, by bar, restaurant and hotel groups. "People have come from Barnsley, " took me under his wing ," Freeth says. to us over the past 15 years from places like Hyatt and "I bartended for two weeks, I had a real keenness Radisson at the hotel end to PizzaExpress and other “People are for bartending and cocktails, and within two weeks high street brands. The head bartenders at some coming in with he'd given me the bar manager's job. I has of the most significant hotels in London, places about ten people under, me, and I was only 19. their phones and like the Savoy, have come through our courses. He wanted someone with a bit of clout, a bit We also have quite a significant number of showing us pictures of responsibility, and I was probably the only international students, because it's London and of food and cocktails person on the island not doing drugs!" because we've built up this brand internationally. that they would like More summertime jobs followed, with Probably about 15% of our intake in international and ordering it Freeth running a hotel bar in Crete, and – people travel from all over the world, from the then working in a bar in Faliraki in Rhodes, almost from their Far East to South America." meanwhile continuing to work in university phone” Side-step pubs and bars and nightclubs, "concentrating This year, however, Freeth and Shaker took what he on cocktails", back in Britain while he finished his calls "a side-step", opening Gas Street Social, an upmarket studies. At the end of his master's degree he wrote a restaurant and cocktail bar, in the Mailbox, the former Royal thesis called "Shaker International: How to Build a Brand from Mail sorting office in the centre of Birmingham, which is being Scratch" – and then went on to do that. When he graduated, transformed into a " premier shopping and lifestyle location". It is, Freeth says, he thought, "Do I go and get a job, or do I try and Freeth says, "a completely new enterprise, using the experience we do something I love?" So in 2001 he wrote a programme called have in the management team, doing something slightly different. the International Bartender's Course, and started to try to sell It's been set up as a restaurant and bar, an all-day dining and it. That was the start of the Shaker bar consultancy and training business, which now runs a hospitality training school based in drinking venue. It's very much the launch-pad for a brand that we a bar in Hampstead Road, near Euston Station, London, Shaker believe we could eventually roll out. That's the plan." and Company, and Shaker International, with franchises in Africa, Gas Street Social – named after the nearby Gas Street Basin – is the Middle East and Australia. the only independent operation in the Mailbox, competing against ▲







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some 15 or so other restaurants and bars all run by national chains, including Cafe Rouge, Nando's, PizzaExpress, GBK, Strada, Bar Room Bar and Zizzi. It is being an independent, Freeth believes, that gives the operation its edge. The chains, he says, "can't necessarily provide that fresh food concept that we can. They probably don't have the ability to do that at such a large scale. But 95% of our produce is fresh food daily, and all of our food is prepared on-site every single day, from our arancini balls through to our beetroot tarts and the puff pastry we use to make the chicken and mushroom vol-au-vents. "We've been very selective over our products in terms of our offer, so we have a very select range of craft beers, we do cocktails very, very well but succinctly – we don't have a huge list, we have a very crafted list. One of the things that we do very differently to most other high street or national offers is that we are focusing on craft cocktails. All of the work and effort that we put into that is very much in the preparation and the selection of the ingredients that we use. We make home-made sherbets, we make home-made syrups, where we'll take, say, a mango spiced reduction, and it will take us four hours to make that. Then when it comes to the execution, we're making drinks within 60 seconds, so rather than a bar taking five minutes to make a cocktail, on a Friday and Saturday night when you're four deep, we'll be making a cocktail in the time that it takes to make a gin and tonic. That's because all the work has been done in the preparation of the ingredients, so we get the quality and we get the speed. That's one of our USPs. "On the food side of things we do something very different to anybody. We're taking small plates and sharing food and making them in a very modern British way. So in terms of our food items, we've got anything from a chicken and mushroom vol-au-vent through to a runny Scotch egg with black pudding, and people can share those plates – the whole food offer is around sharing. We have things like smoked salmon skewers, where we put them in a Kilner jar. In terms of our presentation and our products, we're using locally sourced products, so all of our products come from the British Isles, our breads come from about 200 yards away from where we are, a little bakery in the Jewellery Quarter, all the meat comes from the Wyre Forest, which is about an hour away – it's all about the quality. Then we just get fabulous people to serve it and deliver it. Our experience has been in training for the past 15 years. So we very much care about the people side of things, and it's the people who are going to be delivering our products." Social media has been very important to getting the concept off the ground, Freeth says: "It's been one of our key focuses for the launch, we did it all internally and we've done that very well, I believe. I was doing the social media, with my marketing manager, Vicky Coliandris – it's something I've really enjoyed over the past few years. The result is that people are coming in with their phones and showing us pictures of food and cocktails that they would like and ordering it almost from their phone – 'I've seen this on the internet, I'd really like to order it'." The retail side of the Mailbox will not be fully operational until the summer, with the new Harvey Nicholls store opening on 16 July and other shops following over the next couple of months. Until then, Gas Street Social is "not at full pace", with only lunchtime and evening food on offer. Breakfast will be in place by the time Harvey Nichols opens – "We'll be doing brunch first, Saturday and Sunday brunch, We've got some really interesting ideas around how we're going to launch that, we'll probably have an option where you're able to have a Prosecco brunch, where for a two-hour period you can have unlimited Prosecco. That's something we're going to be launching before 16 July.

"In the next two weeks we're launching an express lunch menu, we're going to be doing gourmet sandwiches, with the bread provided by Peel and Stone, a local artisan bakery, and we're going to be introducing some British flatbreads using the meats and cheeses we're sourcing locally. And eventually, more towards the autumn, we're going to be introducing a Sunday lunch as well. We've got a six-month plan for when the Mailbox fully opens, and we're working our promotion, and our offer, around that. At the moment during the daytime the Mailbox really only relies on its local office trade, which is, to be brutally honest, fairly quiet, with none of the 40-odd retail stores open. So the daytime isn't a big focus at the moment. But as they open in stages from July to September, that's when we'll make sure we've got our full breakfast offer and our full lunchtime offer and roast offer. There's no point in doing it yet, though. "At the moment the split is 70% drinks, 30% food, pushing towards 35%. But that 35% of food sales is driving another 30% of drink sales. So the food is very much integral to the offer. We've only launched about 75% of our food offer: at the moment it's a sharing lunch and evening dinner, but it's not at full pace yet. We've got about 50 staff running the venue, of whom about 17 are chefs – but it's about making sure we get the quality right at every stage, so we're not in any rush to launch."

When it comes to rolling out the brand, the "Gas Street" part is specific to the Mailbox location, while the "Social" part comes courtesy of one of the investors in the business, Eric Yu of the Breakfast Group, and his The Social in Fitzrovia, London. "The name 'Social' can certainly be used, if the next site we look at lends itself to that, but we're not using a brand, we're using the DNA of a business model," Freeth says. "So if it needs to be called the Colmore Dining Rooms, or something else, then we'll happily work with a different name. It's the DNA of the offer that we're more interested in, the design, the service, the overall food offer. We feel we can use that to move into other sites, wherever that may be – and at the moment we are looking at two or three other sites. Two of them are in the West Midlands and one is up north. "The site we're in at the moment is 4,500 sq ft. I think 3,500 to 5,000 sq ft is probably where we need to be. We are looking at a site that's slightly bigger than that, it really depends on the floor plan and how it's split, whether its two floors. It needs to be in a premium area, but not necessarily in a shopping area. But we've been looking for some time, and we're not in any rush. We're making sure we get this product and offer right first before we entertain looking at a second site." All the same, Freeth says, he has a long-term strategy, and exit, in mind: "I'd like to build up a little portfolio of Gas Street Social-type concepts in the next five to seven years – and we would, potentially, then sell that element. But I think Shaker Group , and the training and consultancy and events side of the business, is probably going to stay with us for quite some time. We still haven't even scratched the surface of the global training market, where we feel our courses could go. We've been approached from all corners of the world to take on our brand: Korea, Lebanon, Cyprus, all over Europe. But we're very selective with who we will partner with." ¡ SUMMER 2015 ¡ PROPEL QUARTERLY


Conference Overview

Snaps from the Propel Multi Club Conference Thursday, 12 March 2015 The Lancaster London Hotel, Lancaster Gate, London, W2



Conference Overview




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Our next Our next conference is on conference is on Thursday 20th June 2013 2 July 2015 at The Oxford at The Oxford Belfry Hotel, Hotel Belfry Thame

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Conference Overview

Avoiding shocks and being awesome Tim Hall

Speakers at Propel’s Multi Club Conference in the spring brought delegates the inside take on everything from top mistakes not to make to how a small business can get into bed with a global giant. Sonya Hook profiles the speakers and summarises their talks

Brasserie Blanc and the pub business Mark Derry Having worked for Whitbread, eventually running TGI Friday's, Mark Derry went on to run Country Style Inns with Ian Glyn, which was sold for a profit in 1997. He then launched Loch Fyne Restaurants, which acquired along the way Raymond Blanc's Le Petit Blanc. Loch Fyne Restaurants was sold to Greene King in 2007 for £49m, and Derry stayed with it for two years before rejoining Petit Blanc, now renamed Brasserie Blanc. The business, now Brasserie Bar Co, has grown to 20 restaurants and five White Brasserie Co pubs.

congested, we have found that the format we were trading in had become a little bit tired. So our sales had become diluted.” Although the business at the time was in good shape, “it was just a little on the dull side”. So far the company has converted seven of the restaurants to a new look, Derry said, and "the transformation has been pretty dramatic. All sales are in like-for-like growth and are continuing to grow.” The restaurants have a much more relaxed atmosphere than before, he said, with tablecloths removed, for example. “This means we have now got a much younger profile of customers.”

Figurehead When Loch Fyne Restaurants, then run by Ian Glyn and Mark, Derry, acquired Raymond Blanc's Petit Blanc business, Derry told delegates at the Propel Multi Club Conference, “It was a bit on the twee side, and very focused on Raymondstyle food, which was very specialised. The two of us struck up a relationship which was sort of him on grill and me on till – and from there we started developing the Brasserie Blanc business.” When Glyn and Derry sold Loch Fyne they kept Brasserie Blanc, and this became the foundation for the business they now run, Brasserie Bar Co. Looking for a way to expand, Derry told the conference, two years ago the company decided to take another look at pubs. “We saw opportunities within the property sector of pubs and particularly within food for running gastro-style pubs,” he said. The company embarked on a trial and it was quickly successful. “This then became a second string to our bow.” It now has five sites around the M25 area and for most of these sales have doubled compared to their past experience. “We are doing £35,000 or £45,000 a week in a couple of pubs,” Derry said. However, "the property opportunity is what we really like.” The pubs, run under the White Brasserie Co name, are 50:50 food and drink, but the menu and pricing is the same as that of the Brasserie Blanc restaurants. “We knew therefore that the expectation and attitude to this would be

good but in the pub world this has been enormous, which has been brilliant,” Derry said. The company now sees this as a real opportunity, to develop a second arm of the business into the pub arena and in the premium food offer in pubs. “In the pub industry there is quite a lot of dissatisfaction with pub landlords but we have had really good relationships," Derry told delegates. "We have five sites and a further five in the pipeline. So far, landlords have been extremely easy to deal with. When you compare it to dealing with really serious landlords we find that, frankly, they are easy to do deals with.” The fundamental thing, Derry told the conference, is that "when you get away from the cluttered high street it is very difficult to set rents. Because what is market rent in a village? If you can get the volume, then the rents don’t seem to me to be outrageously expensive. And our rent roll at the moment in our pub estate is probably 6% or 7%.” The company has also managed to negotiate some long free-of-tie leases on the basis that it will do two things. “One is that we operate well, and the other is that we invest some of our own capital. But to be fair that’s what we are doing everywhere else so it’s not particularly new to us,” Derry said.

Strategy The company is not neglecting its restaurant arm, Derry said. "As high streets are becoming more and more

One thing the company has going for it, Derry told delegates, is that it is very French. “Having Raymond Blanc as the figurehead helps enormously,” he said. “We wanted to leverage Blanc’s skill base and develop the idea of a kind of family of Blancs. We have 200 chefs working for us and a very high skill base and we do everything from scratch, including making our own pickles and sauces. We have a lot of experience in the sector and so we should be able to convince a few people we know what we are doing.” The high skill level in the kitchen is at the heart of the business, he said. “We know how to cook and that transferable knowledge into what is a new market for us is really interesting and so far, so good. The combination of our experience and cash seems to be opening doors.” The company also gets a lot of benefits from being a multiple operator “and we are going to continue to leverage that.” For the future, Derry told the conference, the company will continue to refurbish the Blancs and it plans to do 20 to 30 new pubs within the next five years “as and when those opportunities arise”. Brasserie Bar Co will definitely keep driving the pub arm forward, he said. "We’ve found that customer expectations are not as high in the pub business as they are in the restaurant sector, so this makes it more pleasurable. We can also get long leases and we are taking advantage of this, and we are stepping away from a very cluttered high street, which I suspect is only going to get more cluttered.” ▲ ¡ SUMMER 2015 ¡ PROPEL QUARTERLY


Conference Overview

Future trends and future shocks Paul Flatters Paul Flatters worked at the Henley Centre, the Consumers' Association and BBC News, where he was head of analysis and research, before becoming chief executive of the Future Foundation in 2002. That business was sold to Experian in 2005, and Flatters left in 2007, going on in 2008 to help set up the Trajectory Partnership, a consumer insight company, where he is chief executive. The foodservice sector has been significantly outperforming other sectors of the economy, Paul Flatters, head of the Trajectory Partnership, told delegates at the Propel Multi Club Conference. But in looking at some of the key trends in the sector there were a couple of things to note, he said. “One thing to consider is the fragile nature of the economy and of the country, which has been one of the key shaping factors – things are much better than they were thankfully, but there is a sense we are not out of the woods yet. “Last year we were celebrating in the UK that GDP had reached its pre-downturn levels but that actually ignored the fact that the population is bigger, so GDP per capita is still 2% lower than it was in 2007.” In addition, Flatters said, real wages are still 8% below their peak, and he did not expect these to realistically recover back to their pre-downturn levels until 2017. “Looking at it like this it all looks a bit gloomy,” Flatters told the conference. “But frankly the economic catastrophe that we have been through is something that we can still see shaping consumer behaviour significantly.” On a more positive note, the foodservice sector was definitely doing something right, he said, and it was outperforming the rest of the discretionary spend market and certainly the rest of the leisure market. The other big transformative trend of the past five or more years, Flatters said, was connectivity. "I’m talking about the internet and mobile revolution,. And actually the two things – economic fragility and internet connectivity – are coming together in quite an interesting way and are helping to shape a lot of consumer behaviours, in particular around demands around personalisation and tailoring services to individual needs."

Winners and losers Looking forwards, Flatters predicted that what we are looking at now is a “really sharp-edged winners and losers set of trends”. As part of this, he said, there has never been a greater polarisation of prospects for different groups of consumers. Geographically we have already seen something of a difference between London and the rest of the UK, he said. “It’s very polarised and urban versus rural shows very different prospects.” At the same time the public sector and the private sector also shows very different prospects, Flatters said. “The private sector is really now looking forward to significant wage growth for the


first time in many years while the public sector is looking at five more years-worth of pay restraint, if not job losses.” If we look further at this, he said, these are key consumer groups for the sector – teachers, council workers and NHS staff – none of whom will be looking at significant pay growth, or increased spending power over the next few years, “and of course we are also seeing a lot more people becoming self-employed and more self-reliant, and living in a much less certain way.” There has been a much greater focus on segments, he says. “It means that very few of the trends I am talking about here will apply to all consumers. Different segments are having very different economic experiences.”

Cultural issues The economic downturn has undoubtedly been a big shock and this has changed people’s opinions and perceptions, Flatters said. “People have much less interest in global issues such as global poverty, corporate social responsibility. They have become a lot tougher and selfinterested. They are asking, ‘What are you going to do for me?'” If companies do not deliver what they promise, then consumers can easily use social media against them, Flatters told delegates, "and if you offer me a great meal or great service, I might well publicise that as well. In this sector we all know that today’s consumer feedback might become tomorrow’s headlines, either positive or negative.” Another trend, which has been slower to emerge, but is gradually taking shape is immediacy, Flatters said. “We want things in an instant. The expectation of instant gratification and of things being done really efficiently is growing. Compared to a couple of years ago, how long are you prepared to wait for an online purchase or for a coffee in a queue? For most people this is shorter than before. And this may change even more.”

Drivers of change Health is another driver of consumer behaviour, Flatters told the conference, and while it was a huge topic, in a nutshell, it was another area where we are seeing a huge amount of polarisation. “Clearly at one end there is public concern about obesity levels – the rate of increase in obesity is slowing but it is still on the agenda. And there is a massive focus on health at the other end of the


spectrum. This is really shaping the way that consumers eat.” There was a huge interest in young people about body image, generally in a healthy way, he said. Diversity is another challenge for the sector, in understanding the needs and wants of black, Asian, minority and ethnic groups, Flatters said. “It’s a real blind spot for the industry. This population of the UK is 13% – in England it is 15% and in Wales it is 4% and in London it is 42%. So it is almost half of the market for foodservice operators and it’s a market that many in the industry say they don’t understand.” In this polarising marketplace there is still a role for luxury at the top end, but, Flatters said, “the bar is being set higher and higher about what counts as a luxury item and experience.” In terms of luxury it was down to connectivity again, he said. “It’s about personalised experiences – products are increasingly becoming services. Cars are starting to drive themselves without you having to drive them, for example.” Looking at specific examples of change within foodservice, Flatters pointed to Domino's Pizza. “Their ambition has been to be everywhere the customer is, allowing you to order pizza from your smart watch and there’s even a clever app that measures your belly rumbles and gives you a personalised pizza order – I suspect this isn’t a game changer but it does allude to the kind of role you can see some of these players taking," he said. "For Domino’s, this is about brand building, and they have done a really good job of brand building with that Millennial audience.” Flatters also listed other future concepts which foodservice operators should keep in mind, such as 3D printing of food, and incar apps being trialled that allow customers to order pizza from their cars. In the coffee sector, he said, bars were becoming more like coffee shops, cafes are becoming more like bars, with Starbucks opening up in the evenings and serving alcohol, for example. “It plays on that point of, ‘If you are a brand that I like, I want you to be there delivering services to me on my terms and when I want’,” he said. Looking at demographics, the group of 20-something consumers known as Millennials "won’t know a world without the internet,” Flatters said. One of the key things with this group for the sector is that they were not drinking as much as previous generations, they do not seem to like pubs and they do not treat pubs in the same way. “One of the main things to understand about them is the ‘SoLoMo’ idea, or ‘Social, Local, Mobile,” Flatters said. The Millennial generation is very facilitated by virtual, and they go for spontaneous hook-ups, he said. “They need to know what’s going on, and if you want these people in your premises then you need to have digital apparatus, this is crucial.” It was often misunderstood how engaged Millennials were with their local areas, Flatters said. “They are very out and, and there is a real opportunity for the sector here, particularly in those parts of the country where there is a real ▲


Conference Overview vibrancy and the areas are on the right end of the polarisation, for example parts of London like Dulwich and Brixton, which have lots of local festivals. There are real opportunities for the food and drink sector to get involved in these events."

Beyond 2015 For the future, consumers want authenticity, but they are also value hunting, Flatters said. “Issues around sustainability are back on the agenda – the mood has changed again and urban dynamics are changing. Organic died a death during the downturn, but it is back on the menu,” he said. The nature of how people use an outlet is also changing, Flatters said: “The same outlet may have to be fast and slow at different times of the day and different parts of the week,” he told delegates. “And a regular customer may even be in different modes at different times.” Flatters stressed the importance of

having a digital strategy, and he linked this to the importance of health. “It’s about the idea of the quantified self, with things such as calorie counting apps where consumers are keeping an eye on their health. It doesn’t have to be all about low calories – consumers just want help in counting them,” he said. The food and drink sector is doing really well in terms of in-home and outof-home leisure, Flatters told delegates, “but the future could be in-home versus out-of-home versus virtual leisure. I’m talking about tailoring your hedonism. There is a lot of talk at the moment about legal highs and also functional foods and smart drugs – particularly with the view to trying to help people with illnesses such as Parkinson’s and dementia. But it’s not a huge figment of the imagination to think that the marketplace might develop around this a personalised high or intoxication, and this could become part of the industry’s competitive set.”

Pigs are flying Roy Ellis and Simon Rimmer Roy Ellis helped found Inventive Leisure 25 years ago. Five years later the Revolution bar chain was born, and a spin-off brand, Revolucion de Cuba, emerged in 2010. Simon Rimmer changed his career from textile designer to chef, opened three restaurants and expanded his career by appearing on television cookery shows. The two have now come together to found the Flying Pig & Lobster Company, a combination of a classic pub format alongside an American barbecue brand. Inventive Leisure co-founder Roy Ellis told delegates at the Propel Multi Club Conference that he and Simon Rimmer had been friends for a long time, “and had always talked about setting up a company together. Things were getting exciting in the industry with a lot going on in craft beers, and American food – we decided that the time was right to start something new.” Consequently, the Flying Pig & Lobster Company was born. The pair did four months of research on both sides of the Atlantic, and in the end they came up with two concepts that they both felt passionate about. “We thought we could either do a modern British pub with some twists, or we could do an American pub,” Ellis told delegates. They thought about which one they should work on first, and how long the other could sit on the backburner waiting to be developed. They decided the best answer to this was to work on both at the same time. “We were pretty confident we would be successful with both, but searching for sites was a challenge,” Ellis told the conference. “As it turned out, the perfect site for each concept turned up at


once.” One of these was a pub called the Elephant in Woolton Village, Liverpool, which was a listed building owned by Star Pubs and Bars. “It had lovely outbuildings and some converted barns – I knew then that if we couldn’t turn this into something really special then we don’t deserve to be in this industry,” Ellis said. To start off, the pair set out their purpose, vision and values for both brands. “We were really clear – we only really wanted to exist to create things that we were really proud of and that our customers would really love. End of story," Ellis told the conference. “Our dream is to have the best places to work in, the best places to be in for our customers and we wanted the best places to invest in – and this includes our suppliers.” It means that the operation has lots of systems and processes but hardly any rules, he said. Both Ellis and Rimmer believe this is a good operation for a number of reasons. “Firstly it costs us just £100 per square foot to fit out. It’s about 4,500 square feet and we have managed to do it for about £450,000, and I know based on my experience that’s pretty low for that kind of product,” Ellis said.


“We have also managed to increase the turnover from just under £20,000 per week to £35,000 per week, primarily by increasing covers from about 500 to 1,000 a week and we have also managed to increase the beverage take by about 50%,” he said. “It was already quite a strong bar-led business in this part of Liverpool and we’ve increased this.” If the business continues in this way then it will generate cash payback, pre-tax, in just over a couple of years.

Liberty Tavern The pub has a strong authentically American feel, Ellis said, and Simon Rimmer told delegates that that making the venue feel American, rather than American-themed was very important. “It should feel good fun – the smells and sound and noise and décor should make you feel it is special.” The menu had to justifiably be American, he said: “Shrimp cocktails needed to be served in a cocktail glass, for example. Also on our travels, we encountered a dirty shack type of place that served these amazing oysters in their shell. And elsewhere we had the best tortilla chips, with eight-hour cooked Texas chilli on top.” Craft beers are also important and the pair constantly look at fresh imports of beers, as well as drinks such as frozen margaritas. The American music is also “massively important”, so there is Marvin Gaye and Kings of Leon, as well as some more modern tunes. “We celebrate

Conference Overview

Roy Ellis and Simon Rimmer

when America celebrates, so 4th July, thanksgiving and the super bowl are all important dates," Rimmer said.

Elephant Pub & Bakehouse If the Liberty has been a success, Ellis said, “the Elephant has been even more successful”. It had similar fit-out costs, again at £100 per square foot for about 3,500 to 4,000 square foot of space, he told delegates. The ground floor only has 90 covers so the pair added a function room on the first floor, giving an additional 60 covers. “We are using this every Friday, Saturday and Tuesday at the moment,” Ellis said. They also upgraded the garden, for a total cost of £350,000. “I think we’ve got a really good fresh, bright, light feel and a quirkily designed bar,” he said. They have created about 40 new fulltime positions and the financials are good, according to Ellis. “The business wasn’t on its knees when we took it on – it was doing about £15,000 a week and it was quite a successful little local pub. But we’ve got it doing more like £50,000 a week.” They have done this primarily by increasing food covers from 300 to 1,600 a week, and boosting the £7 average spend to around £12. It is now a much more rounded business, Ellis told delegates. “We do 40% of our trade between Monday and Thursday, and we do about a third of our business during the day. It's busy at breakfast and lunch – typically we will be doing 100 lunches Monday through to Thursday.”

The pub also has a wide-ranging customer base, Ellis said: “We see students on a Tuesday enjoying professionallymade pizzas and quiz nights, or grandmas enjoying food or young mums with their babies in the daytime. We also see couples or guys enjoying a pint before or after the match. And that’s reflected as well in the trading. We do £20,000 a week in food and probably another £10,000 a week associated with the food in booze. It is still a pub – this is not a restaurant dressed up as a pub. And we do another £20,000 a week just in drinks, so people coming in just to enjoy drinks.” Consequently, Ellis told delegates, they have nearly trebled their cask sales by working well with Star Pubs & Bars, “and they have allowed us to introduce some cask ales so we have some really great Liverpool beers.” They also have a good range of beers they are not tied with, “and we have quadrupled our sales of wine,” he said. “For this business we will get a sub one-year payback on our investment, and I’ve only matched this once in my career. So this has been a really successful business for us. ” Getting the target audience right was crucial in developing the Elephant, Rimmer told the conference. “A lot of good pubs we found still seemed to be pitched to the grey pound,” he said. “We wanted to create an urban voice, so it was important that we lowered that age group a little bit, but without alienating anybody.” For the food this meant creating a straightforward menu but with a few twists. “We needed to do classics such as burgers and fish & chips, but to do these incredibly well. And we looked at the way we served things as well.” Working with local butchers, bakers and other suppliers has also been important. The pubs do a lot of their own baking, which includes making their own pizza dough in-house. “We have also been really keen to make this pub the centre of the local community, so we do a lot of events to make this work and we are very family-orientated. We continually develop the whole way that we sit within the community,” Rimmer said.

The future For the Liberty Tavern, Ellis said, many people in the industry would look at the numbers and the return on investment and say, “You should roll this out.” However, he told delegates, “We don’t think we have got our big idea right. The voice isn’t quite right yet.” The Liberty Tavern is good, he said, but they both think it could be even better. “We are going to recalibrate and we are going to make this better and then we are sure it will be something we can roll out,” he said. The Elephant meanwhile, is a different product, Ellis told the conference. “It is ready to roll out and it has a significant amount of USPs in it already. It’s about the whole proposition.” The paid already have two additional sites lined up for expansion of the Elephant idea. “The sites are both 50% bigger than the original,” Ellis revealed to delegates, “plus we are in negotiation with another three sites.”

Turnaround and heavy lifting Steve Richards

Steve Richards has been chief executive at Tragus Group, now Casual Dining Group, owner of the Cafe Rouge and Bella Italia brands, since April 2014. His career has included being managing director of the pubs division of Scottish & Newcastle, and chief executive of Novus Leisure. Just a few years ago the Casual Dining Group, formerly the Tragus Group, was an under-invested and declining business, its chief executive Steve Richards, told delegates at the Propel Multi Club Conference. However, he said, he – and others – believed it could be turned around; it just needed re-energising and a lot of money needed to be spent on it. “It had some very established brands which we saw then as being very scalable,” Richards said. “They were tired and underinvested brands and we knew we needed skilled people to run them, but we had some great leases in great locations. These were, however, masking some poorly located assets, so therefore we knew the whole business needed restructuring and some ‘heavy lifting’ was required.” It had the potential to become a strong business, he told the conference. But restructuring a business which had some strong and weak assets, while also dealing with some inherited debts, was not going to be easy. “We planned to create a great company of 200 restaurants, from the 354 leases we inherited. We decided we would focus on scalable brands, and we needed it to be a self-funded vehicle – and in order to do this we needed the debt reduced from £354m to £91m.” The team set out a three-year plan, which involved focusing on the Bella Italia and Cafe Rouge chains. Much was achieved during the first year of this plan, including the closure of 50 sites and the sale of 15. Finally the Strada business was sold, Richards said. “We then moved on to our innovation plan, and this commenced with 160 refurbs, of which we have 60 left to do,” he said. ▲ ¡ SUMMER 2015 ¡ PROPEL QUARTERLY


Conference Overview As part of this refurbishment strategy, new formats were created for each of the two brands.

Bella Italia One of the plans for Bella Italia was to extend the brand into new areas, and therefore quite early on in the process Richards and his team set out a vision to find 70 new sites. The 37 they have secured so far are a combination of concessions, leisure parks and high street venues. “We knew that the old Bella was seen as being good value for money, and its food was OK, but with limited choice,” he told delegates. “The decor was outdated and although it was a stable business it was liked but not loved, and it needed evolution.” On the "to do" list was a plan to move it away from the crowded pizza market, Richards said. “We wanted to focus on ‘fun’, families and teens. We needed to get better at social media and we needed to improve our food and drink choice, as well as the value and quality.” The chain introduced a new children’s and breakfast menu, and worked on its coffee offer. A new look was introduced specifically for leisure park venues, and there was also some investment into improving the service and staff training. The business has moved out of the Italian sector and now sits more within the ‘themed’ and family-style of restaurant, alongside brands such as Frankie & Benny’s, Richards said. Eighteen months in and the business is in double digit growth and profit, he told the conference, and it is the top "brand riser" on the latest CGA BrandTrack report, up from position 22 to 12. The company is aiming to have 15 Bella Italias across the country, creating a £200mturnover business by 2018, but, Richards said, “we think there can be 300 Bellas, and we will take it overseas. There has been a lot of franchising interest.”

Cafe Rouge The Cafe Rouge project, meanwhile, which began six months ago, has been more about “capturing the past”, according to Richards. “There is still a lot of customer affection for Café Rouge, but the décor and offer had become tired. It had some fantastic buildings and estate but there hadn’t been much investment over the past 25 years,” he said. The brand needed repositioning and the company needed to work on how to make it popular again for families and also singletons. Research identified that the food and service needed improvement, but Casual Dining Group also saw “a big opportunity to scale it up” by focusing on a French bistro format, Richards said. “The recovery strategy involves a return to “hero” dishes and Frenchness, he told the conference. In addition to this, each kitchen will be replaced and the refurbishments will focus on “putting comfort back into each building”. Although this project is still in its infancy, Cafe Rouge is now the second highest riser brand on the Peach BrandTrack report, having moved from 30 to 22.


Richards told delegates that the company now has a vision to build its estate to a total of 500 stores, with 200 being Cafe Rouge and up to 300 as Bella Italia. “We will also look at a third brand,” he revealed. One of the best decisions the company made when it started this journey, he admitted, was to remain self-funded, and this has helped drive such rapid growth. “The sale of Strada helped and we knew this was the right business to sell," he said. "To be in the Italian sector, you need to have scale, and there were only 42 units of Strada, so it wasn’t as scalable as the other two brands, in our opinion.”

Doing it by the board Tim Hall

Tim Hall, who has previously owned a formal menswear company, founded the healthy eating brand Pod in 2004, and spent two years researching the market before opening an outlet in the City of London. The second store opened in 2008, and it now operates 23 sites of its own and is being rolled out in ten Starbucks outlets in and around London The Pod brand was a pioneer in healthy fast food back when it began its life, founder Tim Hall told delegates at the Multi Club Conference, but the era was totally right for the concept. It was a period when an interest in food was already big news and Gordon Ramsay, Jamie Oliver and other cooking gurus dominated the small screen. Health and the environment were also growing trends, encapsulated in documentaries such as Morgan Spurlock’s Super Size Me, which looked at the effects a fast food diet might have on a person’ health. “The fact that Spurlock was able to openly criticise McDonald’s in this documentary was a new concept in the UK,” Hall told delegates. There was also a sense that branding was moving, he said, with vegetarian alternatives starting to emerge on shelf, led by brands such as Innocent. “There was a sense of celebrating health,” Hall said. But, he continued,


while there was a feeling of change within supermarkets and via the media, at the time the food-to-go sector was miles behind the macro trends of the period.

Starting out “All of the macro trends that were around at the time helped us to come up with the Pod concept,” he said. “In addition, ten years ago there were very few salad bars and the market was dominated by Pret A Manger and Eat. We wanted Pod to say that it wasn’t specifically about ingredients, and it wasn’t a salad bar, but it was about helping people to lead healthier lives.” The original Pod started out by offering salads, cold drinks and sandwiches, Hall said. “We started exploring different food types and we used blackboards to flag up our specials. We soon found that 25% and then 40% of our revenue was being driven by this board.” The team also introduced breakfasts, but while all items also evolved around health, getting the recipe right was important, Hall said: “You can’t sell healthy food unless it tastes fantastic. You are up against products full of sugar and fat so your food has to taste good.” The menu soon adapted to include nori wraps, made with edible seaweed, instead of sandwiches, while fresh food in yoghurt pots also became popular, and porridge to go was another totally revolutionary for the time, Hall said. When the first Pod opened in 2005 the team also looked at different retailing ideas, such as A-boards. “No one in our sector used these at the time. All the items we listed on the A-boards would quadruple in sales," he said. Hall also introduced an environmental design to the store, with plenty of recycled plastic, wood and responsibly sourced timber. Pod started off being about providing people with a healthy option for lunch, but this has evolved so much that the health message is now the bit that sells the product, Hall said. “We call our products ‘detox box’ and ‘energy pot’, and we have a new launch called ‘boost soup’, which is designed to be healthy but is rich in vitamins and nutrients,” he said. “This is the communication style that works for consumers at the moment. We also have to flag up messages such as ‘gluten-free’, ‘coeliac’ and ‘wheat-free’ – increasingly we are finding that these messages help to sell a product."

Competition There is plenty of competition in the healthy sector now, Hall said with brands such as Wasabi, Itsu and Chop’d all fighting for a share of consumer spend. “This does have a big impact on all of us and those in the market in healthy fast food,” he said. Hall pointed to three growing sectors within healthy fast food, including new brands, such as Farm, Pure and Loaf, as well as a new emerging sector of Mexican offerings, which includes players such as Chilango, Chipotle and Poncho8. Growing new formats include Pull’d and Just Falafel. ▲







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Conference Overview “Customers are so surrounded by high quality innovation that we have to really fight for our share,” Hall told delegates. “We have had to have a good look at our business, and one of the things we are careful about is to make sure that we balance our menu – it’s not all healthfocused. Someone might want to order a gluten-free hot pot and a packet of crisps, for example, so we have to make sure we have a good range.” Many of Pod’s customers fit a meal in around a gym visit or exercise, and as a result, he told delegates, protein-rich products have become very popular, as have diet-specific meals. The company is doing well, and has had two years of like for like growth, Hall said: “We had excellent trading in 2013 in particular.” It continues to invest in innovation, he told delegates: “We introduce new items to our menu all the time, such as ‘blitzers’ for the breakfast

menu, and we also look at new ways of selling and serving products. We started selling pasta in 2005, but now this is a much higher quality product, as we have improved our recipe a lot, and also because the standards in the sector are now so high.” One of the biggest challenges for company is property, he said. “The challenges here mean that it is increasingly difficult to expand the business, even though we think there are customers out there for us, we are really limited due to a lack of venues and very high property prices.” The number of offers that are now being made for a good 1,200 sq ft site on a prime London street are “crackers”, he said. “We used to be able to pick up these sites for £80,000 to £90,000 rent, but now you pay £150,000 plus £100,000 premium. The scale of competition is huge and I’ve never seen it like this before. I think this leads to partnerships

Growth and challenges Peter Backman Peter Backman founded the insights firm Horizons, where he is managing director, in 2002. He has been a researcher and consultant within the hospitality sector for more than 30 years and is a Fellow of the Institute of Hospitality and a member of the Market Research Society. He is also a past chairman of Arena, the panindustry networking organisation he helped set up in 1983, and is still on the organisation's executive committee. There are a variety of positive trends in place which are supporting growth in the sector, Peter Backman, head of the insights firm Horizons, told delegates at the Multi Club Conference. Population growth stands at 0.5% a year while the average spend-per-meal increased by 2.1% last year, he said. When looking back at 2014 it was clear that these factors helped the sector record some strong value growth at 3.8% to £46.6bn. In comparison to the years just gone, the sector finally has a much more positive outlook, Backman said, and value growth of more than £10bn for the UK’s foodservice sector by the end of 2019 is by no means unrealistic. “For the next year we can do something we haven’t done for a few years – we are finally looking at growth throughout the whole year,” Backman said. “This story is one of innovation, growth and expansion. Anybody who is now growing their business by just 0.5% in volume terms, given population growth, is under-performing.” He warned that companies can no longer expect inflation to do their growth for them: this year the Bank of England is expecting very modest inflation, Backman said: “It’s been a getout-of-jail card in previous years, giving growth even when there was no real growth. It will probably go back to around


2% next year and tootle along at that level for the next three or four years.” The foodservice sector really propelled forward in 2014, Backman told the conference. “Last year, we saw 69 million more meals being served and we saw the sector mix changing from the noncommercial sector to the commercial sector, where restaurants, pubs and quick service restaurants sit – and the spend is higher in the commercial sector, which is one factor driving the market.” One factor that helped turn things around last year is that the proportion of people eating out every two weeks is increasing. “It’s been going up and down during the recession; it’s now the 35 to 45-year-olds who are eating out more,” Backman said. The pub-restaurant market is gaining ground and will increasingly represent a “very significant part of the total market”, he said. Horizons’ research also shows that in the UK foodservice most sectors are currently in growth, except the market for eating at work, which has dropped in line with flexible working patterns. However, trends in this sector do still vary across the country, Backman said, with London in particular standing out from other areas. “It’s outperformed the whole country by a significant extent, with group operators really powering ahead,


– the big brands may not have the products but they have the sites.”

Starbucks It is because of this belief that Hall was so keen to work with Starbucks when the global coffee giant first discovered Pod and got in touch. Starbucks wanted a healthy food option to help revive its flagging food sales, and had a look at existing brands, specifically in the London area. It approached Hall, and consequently Pod-branded food began trials in three of Starbuck’s London outlets last September, a figure now being expanded to ten. “It’s a thrilling prospect for us – the company has removed all of its previous food items and replaced them with Pod-branded hot and chilled food,” Hall said. “It really could be a solution for the biggest challenge for us as they have 21,000 stores. It really could be a very exciting thing for us.” taking the market by the scruff of the neck and powering it forward," he said. "What distinguishes London from the rest of the country is the proportion of 21 to 50-year-olds – there are so many more of these in London and these are the people prepared to spend and try new things.”

Challenges However, Backman told the conference, while there was a lot of positive activity in the sector at present, there were still some challenges and uncertainties about the future. “There are a number of risks, such as economic and political uncertainty for the future,” he said. And there are other factors which Horizons has identified, which may change the positive outlook for foodservice. The threat of international terrorism could become a reality, and this could have an effect on the sector. Extreme weather was also something that could not be easily predicted but it too could pose a challenge to many businesses in the UK. There was also “the unexpected”, one example being "horse-gate", the horsemeat scandal that had a direct impact on the foodservice sector. However, Backman told the conference, while challenges do exist, the future for the sector does look rosy. Group operators, hose classed as companies with five or more outlets, are “really taking the market by storm”, he said. As well as the pubrestaurant sector, there are other areas of growth that the industry should be aware of. There will continue to be an interest in flavours from the United States, such as smoked, barbecue and slow-cooking, healthy dishes and meals pitched at the premium and indulgent end of the market, Backman told delegates. “Healthy quick service restaurants, Mexican, coffee shops and British casual dining have all been in growth and these all still ones to watch,” he said. And while growth in London has soared ahead of the rest of the country, there are merging hot spots outside the capital, such as Bristol, Glasgow, Manchester and Leeds.

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Are you experienced? It’s all about operators who deliver the experience for Ann Elliott, as she dines out from Cape Town to Berlin via the Leighton Buzzard Harvester


t £144 for two with nothing to drink but water and a spicy tomato juice, the lunch at the Chiltern Firehouse in Marylebone was what you might call on the expensive side. It is a long time since I have spent that much on a meal for two. But what a meal! Actually, it doesn’t feel right to call it a "meal". It was an experience from beginning to end: the sort of meal where every part of it is etched in the memory, the sort of experience that makes you feel valued, whisked away and taken to a far-off land, the sort of ambiance that makes you want to stay there all day. Restaurants that command and receive this sort of spend per head are often stuffy, pretentious and slightly intimidating. Yet despite its reputation for being in the pages of Hello!, the Chiltern Firehouse is none of those. I often think of casual dining restaurants in terms of the "customer journey", from the moment of arrival outside the restaurant to the moment customers leave, but this term feels totally irrelevant here. Customers are swept up by a welcome on the pavement and then escorted into a different world from which they emerge, rather startled, into the back streets of Marylebone hours later. Table reservations are confirmed on an iPad, drinks are constantly refilled, check backs are done informally when pouring drinks, the food is served with pride, and it is divine. Every mouthful was a joy.

“Aubergine for breakfast challenges all the senses at that time of day”

“Harvester is worth a look at”

There is so much that many casual dining operators could learn from the Chiltern Firehouse. Of course, the price level is prohibitive (not everyone can charge £21 for a cauliflower dish as a main course), but the principles are easy to transfer. More than ever, customers are now seeking experiences, not just a meal, when they eat out and they want this experience across the whole of their connection with the restaurant/pub. Playing Italian language tapes in a loo is getting some of the way there, but operators are increasingly looking at every step of their customers’ journey (that term again) to ensure the experience is the best it can possibly be.

Everyday people An experience at the other end of the scale included a meal for three one Saturday night in early April in the Leighton Buzzard Harvester – £34 including some alcohol. When we arrived at 6.10pm, we were told we had a 40-minute wait for a table. The place was absolutely heaving. There were large groups with children, some younger couples and a smattering of older groups, a real mix of ordinary, everyday people enjoying a meal out. This is a new-style Harvester and it worked really well, though there were too many large tables, and we were finally seated on a table for six. The ambiance was warm and friendly, the waitress was charming and helpful and the food was fine. It is great value, too – bowlful of salads (the old balancing act of stuffing as much as possible into a free salad bowl was alive and well in Leighton Buzzard), free bread rolls, and meals starting at £4.99 (described as "early bird" but available all day – how does that work?). Harvester is worth a look at. For an overall brand experience, the new Dishoom in Kings Cross, North London is hard to beat. It is vast, colourful, noisy, vibrant and exciting. Every bit of the building works to build the vision for the brand. Customers are easily transported to a bygone India but it does not feel corny or contrived. The menu still needs a bit of work, in my humble opinion, but the whole experience is just wonderful. Other good cafe and restaurant experiences lately have included Fleet River Bakery in Lincoln's Inn Fields, the Wolseley in Piccadilly (consistently brilliant on every level), the Banana Tree chain, Tredwell's in Covent Garden (though its music policy is very odd), the new ▲ ¡ SUMMER 2015 ¡ PROPEL QUARTERLY


Insight ETM pub, The Botanist, in Broadgate Circle in the City, Old Orchard Park, near Denham, Buckinghamshire (a Brunning and Price pub) and the Ivy Market Grill in Covent Garden (its raw veg salad is outstanding). Honey & Co in Warren Street, Fitzrovia is a very simple cafe serving the most amazing Middle Eastern food – aubergine for breakfast challenges all the senses at that time of day. My recent hotel dining occasions however, have not been so great. I often wonder why so many hotels just cannot get their F & B experience right. Take the lunch I had recently in the brasserie at Luton Hoo, near Luton. This should be outstanding. It is such a beautiful building and unique in this part of the world, a bit like Cliveden on a smaller scale. The whole experience, though, was dull and insipid, from uninterested team members to a bland menu to indifferent food, almost as if the whole team wished they were working somewhere else in the hotel. It was ghastly, and such a shame. Lunch was pretty poor recently, too, at the Rosewood Hotel in High Holborn in Central London. Only four tables taken; only curried dishes on the menu; a draught through the door. The Rosewood only needs to look at the Hoxton up the road or the Firmdale group of hotels to realise how good its customer experience really could be. And this is London. Not many diners I know are brave enough to eat in a hotel out of London at lunchtime, with some exceptions. When will it dawn on hoteliers that F&B is a fundamental part of a hotel experience, and could be a brilliant standalone one, too? At the other end of the scale geographically, Cape Town is bursting with new restaurants, casual dining chains (usually franchised and owned by one of the three largest casual dining companies), street food and independent operators. Once you have shelled out quite a lot for flights, then staying in the city is not expensive and dining out seems very good value indeed. I have a list of great restaurants to visit if you want them. We had some fantastic dining experiences there in February. Impressive this time (particularly as I was looking for brands that could expand out of South Africa and into Europe) was Mugg and Bean. I can only assume it has not been taken up in the UK because the margins are just not as

Mugg and Bean, in Cape Town high here as they are in Africa, where low rents, low food prices and low pay balance out the cost of the franchise fee.


“When will it dawn on hoteliers that F&B is a fundamental part of a hotel experience?”

Picture: visitBerlin-Foto-Pierre Adenis

When will it dawn on hoteliers that F&B is a fundamental part of a hotel experience?

Cafe Anna Blume on Kollwitzstrasse, Berlin



It has been the norm for as long as I can remember to be very sniffy and snobby about the use of photographs in menus. It is time this way of thinking was challenged. I see Wagamama is now using more photographs in its menus and POS and is seeing some staggering sales increases. It is always interesting to see, when you are dining in a group, how many fellow guests choose items that have photographs on the menu: inevitably it is the majority. Mugg and Bean’s menu is simply brilliant in terms of its food and drink photography. It defines the brand. It suggests the people behind the brand love their food. It makes the food appealing and appetising. Honestly – it’s great. Berlin proved superb recently at providing some out-of-the-box thinking on restaurant experiences. We had a great breakfast in Betty'n Caty in Knaackstrasse, a hummus lunch at the Zula hummus cafe nearby on Husemannstrasse, afternoon tea in the Hotel Adlon Kempinsky on Unter den Linden and an interesting dinner (fascinating menu design) at the Neni restaurant on the top floor of the 25hours Hotel Bikini Berlin on Budapesterstrasse. The highlight, though, was our experience at the Cafe Anna Blume on Kollwitzstrasse, where our breakfast menu included an Anna Blume Special – a three-tiered colourful breakfast bouquet which was divine (€22.50 for two people). Around the corner, Fischfabrik in Danzigerstrasse was very different, with only three tables and fresh fish cooked in front of you. There was no menu. Quite amazing. I just loved dining out in Berlin. Experience has been the raison d’etre for restaurant visits in recent weeks – not just for me, I suspect, but for most people eating out nowadays. It will be interesting to see how various operators interpret this in the year ahead.

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

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10 Points to consider when dilapidations claims arise

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Feature Tanya Webb

Cafe Marmalade, Brighton

The woman behind Bill’s The name on the front of the fastgrowing Bill’s chain may be a man's, but behind the whole concept at the beginning stood a female with vision. Sonya Hook find out what Bill’s co-founder Tanya Webb is doing now


good take-away trade. It has a small kitchen, and 15 staff on a he national rollout of the Bill’s restaurant chain rota, with a maximum of six on at any time. But somehow the could not have happened without the expertise of team manage to sell an average of 75 portions of eggs each one woman. day, generally scrambled or boiled (with soldiers!), and it has a That Bill’s is now a hugely popular and growing varied all day breakfast menu. The glass counter is filled with concern is in very large part thanks to Tanya Webb, who linked fresh sandwiches, as well as home-made quiche and cakes. up with her brother-in-law, Bill Collison, in 2000 to fuse her “We try different recipes and we tweak existing ones, especially cafe concept onto his successful fruit and vegetable store in salads,” Webb says. Lewes, Sussex. Webb used her 15 years of expertise in brand consultancy and creating restaurant concepts around the world Challenges to get the cafe side of the business off the ground. One of the biggest challenges, she says, is that it has been It became a huge success, and within 15 years, during hard, financially, to go down the quality route. “I want which time it was sold to the restaurant entrepreneur to sell nice sandwiches with nice ingredients, and Richard Caring, who also owns Caprice Holdings things that I would like to eat, but it means that and the Soho House group, it has grown to “When starting as a business we need to pay more for these almost 70 sites across the country. So where out, many businesses is Webb now, and what new project is she items and so our margins are perhaps not as aren’t as busy as they getting her teeth into? good as they should be. I have accepted that would like, and so they Near to where she lives in Brighton is a because it is more about the enjoyment of it cafe she bought in 2013 called Marmalade. and I want people to love the food. cut costs by dropping The simple but striking venue is wholly “However, with the minimum wage the quality. But it’s a big owned by Webb, although the refit was increasing and more staff needed, it is hard mistake, as they still done by her partner Mark Barnes, who to make money. I do make money because won’t get people runs Catering Projects Ltd, a kitchen design our volume sales are good, but it’s tough coming in” business which has worked with big brands to be able to sell what we want and also be a such as Nando's and Byron’s. The design work, reasonably priced cafe.” which took just one week, involved ripping out the Webb is considering putting prices up a little, ceiling and creating a mezzanine level, as well as exposing she says, but she is adamant that she will not compromise some original features. “Mark is very good at making things on quality. “It is definitely one of the challenges of an happen and we designed it between us – we work well as a establishment that focuses on the day-time trade only,” she team,” Webb says. says. “If it was an evening venue then people would spend The cafe has just 35 seats, but it is rarely empty and has a three times as much as they do in the daytime.” ▲




*Source: GB On Trade, CGA Strategy Brand Index to 27th December 2014. MAGNERS IS A REGISTERED TRADEMARK OF THE C&C GROUP.




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Feature At the moment, piling up the counters with tasty and attractive sandwiches has worked well for Marmalade, despite its slightly out-of-town location. “If you serve quality and you make the volume then you can get the customers,” Webb says. “When starting out, many businesses aren’t as busy as they would like, and so they cut costs by dropping the quality. But it’s a big mistake, as they still won’t get people coming in. So many people try to serve sub-standard food, but at Marmalade we go for quality and people come back each day for more.” Another challenge, Webb says, is the high staff turnover in the cafe and restaurant business. For Webb, it has been a great comfort therefore to have Louise Carter, who worked at the original Bill's store, running Marmalade for her. “If I go away then I don’t have to worry about the business because I know Louise will keep it running well, but also that she understands the visual thing. It’s a certain skill that only some people have,” Webb says. “Louise is amazing. She will ensure the displays are right and that the cafe looks the way that it should. We complement each other very well.”

Tripled Despite those challenges, the business has tripled its turnover since Webb took it over. Although the café is set away from the high street in Kemptown, a shopping and residential area to the east of Brighton city centre, Marmalade does have the advantage of being near a school and the main hospital for the city, plus it has a loyal local community trade. “It can’t take much more and I think it is trading at 90% of its maximum capacity, largely because of the size limitations of the kitchen," Webb says. “The obvious way to boost the business would be to start opening at night. It would probably make good money, but this business is about enjoyment and not just about making money.” Marmalade has opened at night for one-off events and private parties, and this is something she may do more of, Webb says, but it is not a big part of the future business plan. As it is, the business took off quicker than she expected, although it has been hard work, she says, and it took up more time that she

Cafe Marmalade, Brighton planned for. “Things that are good don’t happen easily. You have to work hard. It is now where I want it to be. I pop in daily but I have good staff running it, so I can leave it alone.” Webb loves the idea of running a B&B, or a local pub, she says, but she is not prepared to invest the time or energy again. “I have a background in creating concepts and I know that the first year is hard and you have to see it through.” Marmalade is also unlikely to become a chain, although the team did seriously consider a second site last year. “When you start rolling something out you lose some of what was special about it,” Webb says.

About Bill’s “Bill had a fabulous business in Lewes but we often talked about how great it would be to add a café and juice bar,” Webb says. When Lewes high street was unexpectedly flooded one day, the opportunity arose. “I quit my job and came to set up the new Bill’s café and grocery store in Lewes. It was always the plan to do lots of these, but it took five years before we opened in Brighton; the model was complicated because of the combination of retail and food – it took a long time to get it right.” They were often approached with proposals to purchase the business. “We wanted someone with experience rather than just money, and so we weren’t interested until we were approached by Richard Caring.” Cafe Marmalade, Brighton

Collison is still very much involved in the business while Webb still holds a small share. ¡ SUMMER 2015 ¡ PROPEL QUARTERLY



Keeping hospitality on the political menu With the concerns of hospitality operators and politicians coinciding in many areas, this has been a general election where pubs and restaurants have been part of the debate, not just one of the places where the debate takes place, says Kate Nicholls


s I sit writing this, the sun is shining, my local pub beer garden is proving a viable office alternative and the last of the party manifestos has just been unveiled. Now I know most of you will have been with me until that last part, but for someone who loves pubs and politics in almost equal measure, this is my World Cup moment! It is also a moment to pause and draw breath, because this is the first general election that I can remember in which the run-up has been dominated by political concerns with and about the eating and drinking-out sector – and by that I do not just mean pubs. We have literally been bombarded by political audiences wanting to know what is happening in the trade and what our members’ views are on a wide range of topics. It is a mark of the success of the industry’s lobbying over the past five years that the eating and drinking-out sector has become acknowledged as a key barometer of the health of the economy and a touchstone for the assessing the confidence of consumers and, more importantly, of voters. Our concerns matter as never before – and that explains the slew of pro-High Street policies which have dominated debate over the past 18 months and which were prominent in the political manifestos of 2015.

Optimism We have certainly had a strong and positive message to promote. In terms of growth, productivity, job creation, capex and training, we are now back at pre-recession levels of growth, with the economy predicted to grow by 2% to 3% over the next couple of years. Additionally, licensed hospitality is outgrowing the wider economy, and the ALMR’s Benchmarking Report shows likefor-like growth in wet-led pubs of 4.8%, while casual dining high-street venues are seeing 9.8% growth. A year ago, the market was best described as flat, fierce and fickle; our ability to grow was constrained by wider economic conditions. The regulatory


environment for pubs and bars was, and arguably still is, fierce, with local authorities looking to stifle trade and restrict hours. The commercial outlook was dodgy, as fickle customers, feeling the squeeze, pushed aside the notion of brand loyalty in favour of a bargain. Today, there are clear signs of growth and emerging confidence, particularly in earnings and disposable income. But that also brings its own challenges, both in terms of the market and politically. This is certainly the most intensely competitive period in licensed hospitality I can remember, with sophisticated operators expanding and evolving to meet the demands of increasingly savvy, and markedly less loyal customers. There is, without a doubt, a renewed sense of purpose and ferocity from high street retailers looking to capitalise on a growing sense of confidence. A recent CGA Peach Business Leaders survey showed that in excess of 90% of more than 200 senior executives from a range of hospitality brands were optimistic about 2015, with 26% describing themselves as very optimistic,

“We have literally been bombarded by political audiences wanting to know what is happening in the trade and what our members’ views are”


and confidence levels highest among the newer brand of entrepreneurial operators who have entered the market in the past three years. Competition will only intensify, as one in three companies expects to open at least ten sites over the course of the year. Interestingly, it is the premium end of the market which is anticipated to show the most growth – again, an endorsement of consumer confidence and the economy as a whole. Just under two thirds of business leaders expect premium fast food to do well and half of them see growth in premium casual. The sweet spot will be where those converge. Expect to see greater hybridisation, with all-day flexible formats also positioned well. But growth brings its own challenges. That optimism manifests itself in intense competition. It means that, for the coming year, operator concerns are distilled down as never before to just two issues: property and people.

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Opinion parliament with no clear direction at a national level made that even more acute. It was particularly worrying given that the differences between the main parties seemed to be focused around the pre-occupations of operators and the pressure points identified by them as being make or break to their future success – property and people. Arguably the outlook will remain fickle, but the past five years have shown that we can influence macro-government policy for the better if we proactively engage – and there are as many opportunities as there are threats in what the politicians are offering.

Business rates

impact on their business plans and future expansion, there will be a wide range of individual responses. This year, the CGA Peach Business Leaders survey sees three quarters of company bosses concerned or very concerned about property costs and rent, with two thirds worried about market saturation and oversupply and a similar proportion about staffing costs. Success – or failure – will be down to those who can find the right sites at the right prices, the perfect offer and the best individuals to run and grow the company. The battle is on for a share of a leisure pound which remains uncertain – with no sign that consumers are going to become brand-loyal or less fickle any time soon. It is an area where operators and politicians have similar concerns. With real earnings continuing to grow more slowly than the economy, will this be a brake not only on recovery, but also the ambitions of operators? More importantly, as the economy recovers, will politicians and regulators harden their approach to business? Over the past 18 months, we have seen a softening of the regulatory environment, a consciousness that the fragile recovery could be put at risk by inappropriate or costly business policies and even a new legal requirements for regulators to have regard for economic growth. A buoyant economy could mean some will conclude that businesses don’t need that helping hand – business rate reductions, cuts in jobs taxes or red tape. It could lead others to conclude that we have the headroom to cope with additional regulation and the costs it brings.

Uncertainty A general election always brings a period of uncertainty to businesses, but the original prospect of a hung

Whether that is the pledge of a "once in a generation" reform of business rates from the Conservatives, a review that they have already set in train and which they say will deliver a modernised tax system reflecting new online and high street trading patterns next year, or Labour’s less radical freeze and business rate cut for small businesses, the politicians know that tying up our property market in red tape and taxing it out of existence threatens our investment in local communities. At the same time, debate on rates inevitably places rents under the political

Voting down the pub: an advertisement put out by the Brewers’ Society during the general election of 1959, when the Conservatives under Harold Macmillan easily beat Hugh Gaitskell’s Labour party, with the Liberals a distant third. At the time, bottled beer made up a considerable proportion of total beer sales – while lager was less than 2% of the market

spotlight and debate around pubco lease regulation has already brought commercial practices into the debate. If we work together as an eating and drinking-out sector, we could unlock some of the current challenges we face with planners, HMRC and landlords alike and end the situation where good operators are effectively penalised for their success.

Tax and NICs Then there are the positive measures on personal tax and NICs, which will not only help us as employers to invest in our people, but will also mean that our customers have a boost in take-home pay and disposable income which may be more effective than living wage regulation.

“Our campaigning this year delivered £150m in cost savings to the sector.” The Conservatives have pledged a tax-free national minimum wage and income threshold of £12,500 and there are suggestions that NIC reform could follow – building on the existing scrapping of NICs for those aged under 21 and apprentices. There is a real opportunity on the back of this to cut the red tape around apprenticeships and direct spend to in-work training. This is also our opportunity to turn the debate with zero hours contracts to a positive dialogue about flexible working. We need to work together to reverse Labour’s apparent fixation with the idea that all businesses are inherently abusive and exploitative unless proved otherwise. The smaller parties, too, are in on the act, and again, it is testimony to the campaigning of the past five years that they choose licensed hospitality as their route in to ordinary voters’ preoccupations and to demonstrate their business-friendly credentials. UKIP said it would like to reintroduce smoking rooms and the Greens would support a cut in VAT for eating out. While neither will be implemented, they are helpful in stimulating debate: all mainstream parties look to the extremes to see which policies resonate. Our campaigning this year delivered £150m in cost savings to the sector. One thing is certain, with policy pledges to introduce health as a licensing objective, new promises on food regulation and the living wage and talk of zero hours contract bans, the work of the ALMR to defend, protect and champion operators remains as vital as ever.

Kate Nicholls is chief executive of the Association of Licensed Multiple Retailers ¡ SUMMER 2015 ¡ PROPEL QUARTERLY


Feature Insight

Ten top tips for building brands If you and your new brand are starting out on the journey to greatness, then Chris Edger and Tony Hughes have some guiding principles that will make that journey easier and quicker

3 Build the bridge Due attention must be paid in the initial phases to both the functional (what it does) and emotional (what it stands for) elements of the brand. A pithy bridge statement of both elements will act as the compass of the brand on the journey forward.

4 Create meaning Out of this bridge statement should come a "signature purpose" or clear articulation what you want the brand to be famous for. This must resonate with both employees and customers.

5 Detail the retail In tandem with the above, successful food service brands designed from a greenfield start must follow the principle of "one prototype and three trials", to work on essential elements such as operating procedures, space planning and customer touches/moments of truth.

6 Invest in believers Right from the get-go, brands should concentrate their efforts on attraction rather than recruitment. That is to say the employment brand should be sufficiently attuned to attracting staff at all levels who fit the brand ethos, coupled with spontaneous recognition systems and sparkling development programmes. Your staff must exemplify and be raving advocates for the brand.

7 Less haste, more speed


Successful brands have patient roll-out plans that place an emphasis upon site quality rather than quantity. System growth is important for brand recognition but poor, opportunistic site choices will waste management time and cause untold reputational damage on social media. In addition, food service brands in roll-out would be well advised to split out core business personnel from designated roll-out teams to prevent like-for-like slippage.

1 Find the gap

number of the attributes listed above and, being built on shaky foundations coupled with delusional roll-out expectations, will fail. Investors beware!

he explosion of food service concepts, causing a rapacious "race for space" over the past few years, heralds a golden age for the industry. With consumer economic confidence rising, discretionary spend on the increase and the propensity to eat out trending upwards, long-established companies and new start-ups are pumping money into, or raising capital for the purposes of, rolling out a plethora of new brands. However this bull run, while increasing 8 Retain your signature purpose consumer choice and covering every conceivable occasion, also The needs that customers had when brands were ramps up costs for operators through spiralling rents and founded are likely to exist in perpetuity, even if the accelerating labour rates caused by the war for scarce means of addressing them subtly change over talent. During the next economic correction, there “Your staff time. Deviating from the original bridge statement will be a clear-out of weak brands, which will be or signature purpose of the brand will end – in must exemplify exposed as whimsical fads, while the strong will almost all cases – in commercial suicide. At times, continue to prosper and grow. But what are the and be raving guardians and stewards of the brand will have to main characteristics and attributes of sustainable advocates for ignore some of the "suits"; especially "unhelpful" food service brands? the brand” accountants, because as Albert Einstein is Researching our forthcoming book Building supposed to have observed ,"not everything that can Sustainable Brands – Creating, Evolving and be counted counts!" Reviving!, we reviewed what had been written on brands to date, finding most definitions, such as the 9 Focus on covers growth great advertising man David Ogilvy’s "the intangible sum of a The one controllable for everyone at unit level is "number of product’s attributes: its name, packaging and price, its history, meals sold", "plates" or "cover turnover". Successful food its reputation and the way its advertised", had more of an service brands (the brand having been set up and designed FMCG -based emphasis on goods rather than a hospitalitycorrectly) will focus unit teams on the one number that counts, based emphasis on service. Other commentators talked about namely, number of meals served. successful brands needing strong differentiation for competitive advantage purposes, combined with a "strong personality" that 10 Let your customers innovate create deep-seated, trust-based relationships with customers. Successful food service brands, in addition to being fast But what are the ten "must do’s" for building sustainable food followers, are exceptionally good at listening to their customers, service brands? Based on our insight derived from both serial with the best brands constantly questioning what they should authorship on multi-site operations and creating/developing continue, stop or start doing to satisfy their customers’ needs. some of the UK's most acclaimed pub restaurant brands, we Great food service brands owe their sustainability to a number believe them to be as follows: of key factors. Many of the brands currently in flight today lack a Successful food service brands find an unfulfilled customer need, a "white market space" that has scalable potential

2 Co-opt experts Brand originators must decide whether or not they want their product to be "world-class or third-class". Assembling an advisory team (design, marketing, menu development, supply chain, property and so on) is essential in order to leverage the tacit knowledge of renowned experts who can accelerate the brand to world class status.


Professor Chris Edger teaches multi-site managers at Birmingham City University, while Tony Hughes is the former managing director of restaurants at Mitchells & Butlers and currently a non-executive director at the Restaurant Group


LT MANAGEMENT SERVICES The sector’s leading out-sourced management company

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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Kimbo are on a mission to Kimbo have created solutions bring high quality coffee to appropriate for pubs serving a pubs across the UK. range of volumes. For smaller volume sites they suggest With successful partnerships FDSVXOH VROXWLRQV 7KH EHQHÂżW already established with Star of capsules is that they are Pubs & Bars, Admiral Taverns & easy to use, minimise wastage Punch Taverns, Kimbo have put and produce consistently great together simple offers tailored espresso every time. As Kimbo for the pub sector. Unlike other capsules are foil packed in twos, coffee agreements, which can the coffee stays as fresh as the involve long-terms contracts, day it was ground. expensive initial investments and unrealistic targets, Kimbo With numerous pubs still base their packages on free on closing every week, owners need loan or rental machines with to up their game and branch credit given via direct debit. out to try new approaches. They also provide free barista Serving fresh, espresso based training, ongoing support, coffee drinks, allows pubs point of sale items and, of to compete with local coffee shops to increase their daytime course, delicious coffee. trade. Running coffee and cake

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promotions, coffee mornings and advertising free WiFi and parking can all help bring customers in at quieter points in the day. Kimbo help support pubs with POS and marketing ideas. For pubs offering food, coffee is D YLWDO ¿QDOH WR D PHDO DQG ZLWK SUR¿W PDUJLQV RI DERXW per cup, it’s a no-brainer that a quality cup of coffee must be on the menu. Pubs already sell in excess of 3.6m cups of coffee a week, and this number will only increase exponentially. Pubs are at the centre of their communities and Kimbo are committed to help WKHP LQFUHDVH SUR¿WV WKURXJK offering a quality coffee.


This gorgeous village pub was immediately popular with has been serving Kimbo diners and daytime trade. coffee since August 2014. They also have luxury bed and The Crown Inn upgraded breakfast accommodation from a capsule solution to and delight their visitors with a full traditional machine quality food and coffee in the shortly after adding the quality mornings. On average they coffee offer to their menu. As VHUYH DERXW FXSV RI FRIIHH D a large, food led pub, coffee GD\ PDNLQJ D KHDOWK\ SURÂżW RI

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pubs and bars serving cocktails already, the theatre of a coffee machine and a cocktail shaker create an exciting and engaging customer experience. Kimbo have put together a number of coffee cocktail recipes for their customers, such as ‘Honeyffee’ and ‘The Nutty Irishman’. They provide recipe guides and barista training to help clients achieve the most from their menus and coffee offer.

RQ HDFK FXS Kimbo provide regular barista training for this site and have found the staff enthusiastic and welcoming. Staff embracing Kimbo’s coffee passion has meant that customers have been included and involved in the Kimbo journey.


What’s cooking in European foodservice? The ‘Big Six’ EU countries have a bigger combined population than the United States, but the spend on foodservice is only half the size, says Maria Bertoch, suggesting plenty of room to grow


ow are European foodservice markets performing at a time when Britain is enjoying a solid economic recovery? The forecast for UK GDP growth was revised upwards to 2.5% for the year. But is this positive economic trend reflected in the British foodservice industry? Is Great Britain doing better than other countries? And how will Europe’s foodservice market develop in 2015 and 2016? The foodservice industry has had a tough run since the 2008 global financial crisis. While most of the industry has become accustomed to a “new normal” of dampened expectations, there are still bright points. The NPD Group has run continuous consumer online trackers since 2005 in the Europe "Big Five". Poland is the new addition, with NPD’s first study of this market completed in late 2014. These "Big Six" countries have a total population of 353 million, bigger than the United States. But foodservice consumer spending for the "Big Six" is only roughly half of out-of-home (OOH) consumption in the US. This suggests Europe still has room to grow. In terms of market value, the British market is comparable to France, Germany

or Italy, while Spain is relatively cheaper, with a lower average bill per visit, and Poland, still a young market, has much room for growth. The visit pattern in OOH is different. Britons make 176 visits per year per head, which is roughly between three and four visits per week. This count includes all foodservice market segments (food and beverages bought in commercial foodservice, on-site canteens, the leisure segment, transport hubs and vending). The French and Spanish eat out less often, and the frequency for Germans is lower still. There are two extreme values, for the Italians and Poles. In Italy, the foodservice market is driven by coffee consumption in the morning, with about 30% of all visits corresponding to this specific occasion. In contrast, Poland registers low visits per capita, owing to the relatively young foodservice market, with a limited numbers of outlets, a less developed habit of eating out of home and budget concerns. How did the European market perform in 2014? Focusing on the "Big Five", 2014 was slightly better than 2013. Total spend ended up rising 0.4%, boosted by average bill-per-visit growth of 1.1%, although visits were down 0.7% – a slower decline

Chart 1: OOH annual spendings (£bn) and average bill per visit (2014)

than the visit dip of 1.5% seen in 2013. Before we look at each country, here is some consumer confidence data from the European Commission. Clearly, there was improving consumer confidence in 2014 with Italy, Spain and the UK finishing the year higher than they started. In the UK, people feel more confident, so no surprise that consumers have increased the number of visits and the value of each bill per visit. The foodservice market in Britain offers significant choice in the form of new concepts and new chains. This diversity has boosted consumer interest and the willingness to spend. There is a different picture in Germany, where the foodservice market has only been able to grow because of an increased average bill per visit, stemming not only from price increases but also from consumers choosing higher value segments or products. Looking at visits in 2014, only Britain shows an increase of 1%, representing about 100 million additional visits. However, France registered a 1% loss in traffic while Germany was stable. Southern Europe is still struggling with visit declines in Italy ( down 2%) and Spain (down 1%). ▲

Chart 2: OOH annual visits per capita (2014)



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Insight But there are certainly bright spots. While Britain leads in terms of foodservice growth, Poland represents the highest potential for future development. Home to 38 million people, Poland is the sixth largest EU nation in population terms, with a prospering economy and a very young and modern population. All of this makes it a profitable option for foodservice operators and manufacturers. NPD has just released its first study on this rapidly developing market, which is dominated by QSR concepts. It is easy to split Europe into two groups: “chain-dominated” or “independent-dominated”. The first group includes Britain, France and – perhaps surprisingly – Poland. Why Poland? The market is still quite young and as chains open they are drawing traffic and consolidating the market. Independents are becoming less numerous and their market appeal is also declining. The “independent-dominated” markets are Germany, Spain and Italy. In all cases, chains are performing better than independents in visit terms; the "Big Five" show an increase of 3% in visits for chains in 2014 against 2% losses in traffic for independent concepts. The NPD Group expects this trend to continue, especially with new chain concepts crossing borders into new markets. While lunch is the biggest foodservice occasion in Europe, it has been quite stable. In contrast, breakfast is seeing growth. In the five years after 2009, breakfast has increased 4% in traffic terms in the "Big Five". What is behind this trend? First, more outlets are offering breakfast as well as coffee to take away. Another reason for the growth of breakfast is the rise of single households in Europe. This trend is seeing active young people choose OOH outlets for their cup of coffee and some food before going to work. Single breakfasts are also growing, because of the "home-office" trend, with people working from a cafe and having breakfast there too.

Winning segments What are the growing concepts in Britain? QSR is doing well thanks to major players extending their stores, and on the back of sound marketing and communications, as well as consistent product innovations. In addition to classic burger, chicken and pizza players, the developing concept of the bakery cafe is creating some buzz. Strong players include Gregg’s as well as many smaller brands promoting the quality of their bread or pastries, which are usually accompanied by coffee. The bakery businesses Paul and Patisserie Valerie are adding a French touch to the local market. The coffee shop segment is also a winning player in Britain, as are those chain pubs that have developed the broadest possible customer appeal. The retail segment, where NPD tracks ready-to-eat beverages and food for immediate consumption, is also doing well. In the full service segment,


Chart 3: Consumer confidence, European Commission 2014

the key trend is that people are being more and more demanding in terms of quality of overall experience including food, service and atmosphere. This consumer trend is paying dividends in the casual dining segment, which is enjoying a boost in the number of visits.

“In the UK, people feel more confident, so no surprise that consumers have increased the number of visits and the value of each bill per visit” The UK market is often seen as a flagship for European foodservice, as many new trends and concepts first take root here before being adopted by other markets. While France is less dynamic in visit terms (down 1% in 2014) compared to the UK, there are still some clear winners. The coffee shop segment (where we include only "modern coffee shops" such as Starbucks or Costa but not traditional "brasseries") is still relatively small in France, but is doing well in answering key needs for socialising and high quality specialty coffees. The retail segment in France is offering more and more food-to-go, and this will only increase, as there are now several Marks & Spencer stores in Paris, copying

successful UK food strategies. In Germany, while classic burger concepts suffered in 2014 in the face of strong awareness of healthy eating among the German population, bakery concepts are doing quite well. With a formula of a bakery counter, an all-day foodservice portfolio as well as attractive interior design, bakeries such as K&U Bäckerei or Steinecke have won the hearts (and stomachs) of Germans. It also seems that the trend of moving from a "beer country" to a "coffee country" has come to Germany as well. The retail segment is growing alongside new healthy-to-go options. In the full service segment, the casual dining trend is definitely gaining share, with Vapiano and L’Osteria. In Italy, despite overall 2% losses in visits in 2014, burger concepts, still small in this country of pizza and pasta, grew rapidly. Full service brands also did well and include players such as Roda Grill, Rossopomodoro and Old Wild West. With a 1% fall in visits in 2014, Spain is still doing relatively better than before when compared to its 3% drop in visits in 2013. The important chain QSR players from the burger segment and the sandwich bakery segment (such as Granier Bakery) are recording positive growth in visits. Tapas chains such as 100 Montaditos or Lizaran (brands that are part of Spain’s leisure segment) were able to grow their visits in 2014 strongly due to aggressive promotions and outlet expansion. ▲

Chart 4: OOH performance trends % YE Dec’14 vs YE Dec’13





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Insight Finally in Poland, QSR concepts are booming, as they attract more than half of total market visits. Burger and chicken concepts dominate in visit share, followed by take-away pizza brands, street kiosks, petrol stations, as well as some sandwich/bakery concepts. Another Polish peculiarity is that the retail and gas station segments are quite well developed. The petrol station segment also competes with QSR restaurants, especially during snacking occasions. Petrol station concepts include Stop Cafe (more than 600 outlets) and Wild Bean Cafe (more than 400 outlets), followed by Shell and Statoil. Coffee shops – known as cukiernias in Poland – continue to grow share. Today, going out to a café to meet friends or to work on a computer has become a fashionable trend, as has "coffee-to-go". Despite local differences, therefore, there are clear trends. Busier lifestyles and increased mobility are making coffee shops increasingly popular as a place for a morning booster or afternoon treat. Across the Big Six, retail outlets are now typically offering ready-to-eat meals, such as sandwiches or other meals. This was not the case in past years, except perhaps in the UK. This means consumers in Europe can choose a sandwich from a bakery or a sandwich from a supermarket. Bakery cafés seem to be a panEuropean phenomenon, uniting a love for a coffee and a good freshly baked sandwich or pastry. Lastly, there are more and more "frontier" concepts, positioning themselves between full and quick service. This "fast casual" approach often includes suppressing table service, but keeping high standards for quality of food and beverages, often prepared in the open kitchen in front of the customers. Special attention is also paid to the interior design and atmosphere.

Chart 5: GDP forecasts by country, 2015 vs 2014, %

What will the future bring? We can estimate future market development based on external economic data and on our own internal insights. Recent forecasts (March 2015) for GDP growth during 2015 show that all the Big Six countries are doing better with Poland showing the best increase. The economy in Poland has performed well over the past five years and in 2015 GDP growth is expected to be 3.5%. The growth of the foodservice industry in this young market is assured, with new brands and outlets opening. Looking at Spain, the predicted increase in GDP is also impressive. Our own data shows that Spain’s foodservice market showed the first positive signs of improvement in December 2014. Unemployment is still a big issue in Spain, at 23%, more than double the 9.8% rate for the EU as a whole. But if the morning meal (mainly driven by coffee) and evening dining (tapas) improve, the market will improve. Street food is also developing in Spain, where you can now taste Japanese ramen or Peruvian snacks on the streets of Madrid.

EUROPEAN FOODSERVICE – FACT FILE: European Big Six: UK, France, Germany, Spain, Italy Poland (combined population of 353 million) Foodservice trends in 2014 versus 2013 for Big Five (excluding Poland): u Up 0.4% in consumer spending u Up 1.1% in average bill per visit u Down 0.7% in visits (still a bit better than the 2013 traffic loss of 1.5%) Room for growth, and key trends: u Foodservice spends in Big Six still lower than in the United States with comparable population u Poland clearly a young market with promising future

British consumers, increasingly confident, have started to eat out more. We are forecasting that the foodservice market in Britain will grow by 1.1% in 2015 and 1.5% in 2016. Momentum is well under way after the 0.9% growth in out-ofhome (OOH) foodservice visits in Britain in 2014, the first rise in many years. We see three key important consumer trends impacting the foodservice industry. First, thanks to a brighter economy, consumers are looking to treat themselves and their children. Second, they want more choice and diversity and are much more willing to try something new. Third, when consumers go out to eat, they want a full experience and the sense of a social or family occasion. These trends will impact on foodservice channels in different ways with the branded channels enjoying better growth potential than the independents.

“British consumers, increasingly confident, have started to eat out more” For Germany, there is likely to be a low level of visit growth for 2015, but further growth for 2016, so the market should slowly improve. In addition, the average spend trends will continue to grow as long as there are no surprises in the German economy. The foodservice market in France is a more complicated story, due to a difficult economy and declining consumer confidence. The market has been hit by a traffic crisis, especially following the January terrorist attacks in Paris, which affected restaurant visits. So 2015 will potentially end "in the red" for French foodservice. As for Italy, the country is moving slowly towards a more positive economy. Italy’s foodservice market will recover in 2015 and do better than 2014. While it’s too optimistic to say that the market will be growing, it could well register a 0% change (instead of -2% in 2014), which would be a great result for Italian foodservice.

u Chains are driving the European markets u Breakfast is a bright spot u Pan-European winning concepts – coffee shops, bakery cafs, retail …

Maria Bertoch is a director and industry expert at Foodservice Europe ¡ SUMMER 2015 ¡ PROPEL QUARTERLY



The colouring-in department Is your marketing department merely there to make pretty pictures, asks James Hacon, or does it properly and effectively own the entire customer journey, from way before the first booking to long after they've left


Redefining the journey It is my opinion that while operators are responsible for the tangible experience, from when guests walk in the door to when they leave, the marketer's role is to own the entire customer journey. To understand this effectively, it is important that we define the customer journey, of course. Traditionally, this might have been extended forward to the point of booking. But I believe that the point when the customer makes a booking is a long way down the road from the start of their journey. The true journey starts at the moment of inspiration – and ends when a customer stops sharing their experience of your brand. You will see here a model I have borrowed and adapted for the hospitality sector from Google’s Five Stages of Travel process. It shows this flow and how, in the best scenarios, it becomes self-perpetuating. Working through the stages, it is clear that each is intrinsically connected. Any areas missed or underperforming will directly affect each of those after.

have a very clear owner within an hile I was sitting in a organisation. Inspiration, planning and meeting with a large sharing are usually placed under the operator recently, I was control of the marketing director, along surprised to hear that the with PR, social, digital, activation and marketing team had been coined the advertising tactics. The operator clearly "colouring-in department". During my owns the experience stage. The one year back in the UK, I have been lucky to work with some of the biggest and The obscurity of ‘brand’ best operators in our sector in my role INSPIRATION at Elliotts. This has given me insights You might say that what I am describing that have allowed me to recognise can be defined as "brand" – which, how marketing teams are used in its broadest sense, it is. The effectively, ineffectively and in problem with "brand" as a term some cases, not at all. is that over time it seems to For many brands, it have been converted into seems, the marketing something that needs department constitutes protecting. In a way, no more than a support SHARING "brand" has become service delivering an obscure, magical against an annual term that gives the marketing activation marketing team calendar, and then power to make delivering briefs RESEARCHING decisions. defined by operators A brand is not the and other internal concept developed departments. At its on a whiteboard by worst the output can agencies like ours. It often end up having is what customers are a very internal focus, experiencing along with activity based on their journey. How we vouchering and POS change the brand is by development, which changing the customer drives footfall and average journey, which is a process spend, but not trial of new that needs utter leadership customers or loyalty. and direction. BOOKING At the other end of the scale I believe the most successful EXPERIENCING you find organisations that truly brands in the sector are already embrace the importance of marketing embracing this as a philosophy and to the business, as something central to seeing the results. If you are not there the development of the brand and the yet, a good way to start is to model shared area of responsibility comes at brand owner's wider strategy. your touch points within this journey. the booking stage, with operations, When layering data on this, you can marketing and IT input. Taking ownership start to understand the areas that are in The overarching role of marketing is It appears that business leaders see their most need of change and innovation. to strive for consistency throughout all organisations as either brand-led or touchpoints along the customer journey, operations-led, which seems odd to me. driving for innovation and change when Surely all hospitality businesses should James Hacon is the managing required, with, of course everything based be customer-led? This lack of ownership director at Elliotts, the sector’s on customer insight. Within this culture, often results in no one taking overall leading specialist marketing, this means that one individual takes responsibility for the customer journey. responsibility for the entire experience. insight and PR agency Most stages of the journey, naturally,



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Tailoring the technology Today, says Gareth Powell, it’s much less about asking what technology can do for you, and much more about asking technology suppliers to do what you want from them


e have had a remarkable, and at times exhausting, 12 months at Intelligent Business Systems. Recently we have added Itsu, Rick Stein and Harry Ramsden's to our client portfolio. The upand-coming operators Bone Daddies, the Inception Group and Rift & Co have also been welcomed on board. Account managers Mark Bagnall, Justin Atkinson and Damian Dunkley, and I have been clocking up the miles demonstrating our business management solutions. We have met a diverse array of operators embracing every sector of the hospitality industry, although they share one similarity: they have a clear vision of what they want to achieve with their eposled technology investment. Gone are the days of asking us what we can do for them. Instead, it is about operators showing us what they want to achieve. This actually makes our task much easier as technology providers, because we can tailor our solutions to their exact operational and head office requirements without everyone undergoing a major sea change to accommodate new technology. Our decision to migrate all our products to the cloud several years ago has really captured the interest of operators looking to purchase their third or fourth eposbased management solution. They are increasingly technology savvy, and they have far greater expectations compared to a dozen or so years ago. Itsu, led by Julian Metcalfe, is a great example of what I mean. Metcalfe, who also founded a former client of ours, Pret A Manager, currently has a collection of 58 "healthy fast-casual" stores, primarily based in London. There are ambitions to expand Itsu nationwide and then globally. A dedicated store opening team will be busy launching an anticipated ten to 15 new sites by the end of 2015. This is typical of Itsu’s attention to detail, leaving nothing to chance, including investing in cloud technology. An independent consultant approached us with a no-nonsense brief about what Itsu wanted to achieve in terms of speed, ease of use and appearance. We have worked for Julian before and know all about his


passion for look, feel and quality. Our initial response saw us shortlisted alongside other epos providers and, after a successful trial period, we won the full contract. Ever since, we have been busy installing three sites a week overnight, starting at 10pm on a Thursday (the end of Itsu’s trading week), ensuring the stores are ready to open 12 hours later. Every aspect has been thought through in thorough detail to optimise the customer experience. Cash drawers are hidden out of sight under the counters and sleek touchscreen terminals are mounted on poles to save space, leaving counter displays uncluttered and aesthetically pleasing. Credit card terminals are housed on black PED arms attached to the poles and can be turned away when not in use. All the buttons on the sales and kitchen video screens are either hi-res floating graphics or product images, so the screens look just like a printed menu. Understanding written English is not necessary to operate the system.

“Stores have saved seven seconds per transaction compared to their previous system” Performance is just as important, especially speed of service. Feedback from Itsu’s head of technology and infrastructure, Terry Rose, reveals that stores have saved seven seconds per transaction compared to their previous system. Wave-and-pay-for transactions under £20 are even quicker, taking just three or four seconds. Our StockLink Online management software automatically sends live sales data to head office and passes real-time data to the latest Fourth Hospitality solution. Our kitchen management system contains a hot pass system similar to McDonald’s. Within a few seconds of an order being placed, the items appear in the kitchen and transaction data is available for tracking and analysis in the cloud. Streamed transaction data to Live Store software links CCTV and tills, to monitor potential fraudulent activities. Itsu's high expectations are mirrored by


other clients, such as Harry Ramsden’s and Rick Stein, both of whom clearly identified specific challenges for us when we pitched for their business. Harry Ramsden’s, under the direction of chief executive Joe Teixeria, has ambitious expansion plans, including franchising here in the UK and overseas. Outlets are a mix of takeaways and full-service restaurant styles, with their kitchens serving both. Our kitchen management solution differentiates between the orders, to ensure the kitchens run smoothly without any confusion. As floor staff carry cash pouches, we wrote a bespoke cash management report to track clerk floats and clerk declarations. These are fed into weekly business sheets. There is also an in-house stock control system, which lowers staff costs and increases the speed of ordering and changing menus. A purchase and delivery module ensures purchase orders can only be generated for approved Harry Ramsden’s suppliers. Rick Stein, headed by the eponymous TV chef, is a very diverse business combining fish retailing, food-to-go and high level dining as well as hotel accommodation. One of our primary tasks was to join up all aspects of the business using one system, which also incorporates table reservations and loyalty and gift cards across the business. All three examples encapsulate the growing influence and importance of technology within the hospitality sector. This was further highlighted earlier in March when another client, Revolution Bars Group, joined the London Stock Exchange to fund the growth of its Revolution and Revolucion de Cuba brands. During the run up to the floatation the directors of the company said that among its many strengths they “believe that the operational, financial and IT platforms within the group are capable of serving a bigger business without material additional expenditure.”

Gareth Powell is managing director of Intelligent Business Systems


Small plates, big opportunities How chains can take a bigger bite of market share People are sharing, people are experimenting, people are looking to save, people are looking to watch their consumption – all trends that fit right in with the move to more small-plate offers on menus, says Marc Brandon


mall plates are getting big on menus all over the UK, and the bite-sized trend indicates that restaurant chains have not downsized their ambitions but are pursuing a bigger share of a slow-growing foodservice market. Small plates’ potential popularity is one of several reasons why Technomic predicts quick-service restaurants, food-led pubs, and the travel and leisure segment will lead much of the growth in the commercial sector of foodservice in the UK this year. Starters and shareable main dishes are more at home on these establishments’ menus, and far more rare in parts of the cost sector, such as healthcare or workplace foodservice, where much lower nominal growth is expected in 2015. Technomic’s MenuMonitor, which tracks the menus of more than 300 British chain and independent restaurants, hotels, retail outlets, and colleges and universities, found that small-plate offerings have increased 25% year-on-year as of the first quarter of 2015. The strategy makes sense for foodservice brands across the UK, as it gives consumers affordable and approachable ways to try new foods or to inject more flavour and variety into their normal rotation of restaurant favourites, all at a time when they are cautious about their spending. For example, ethnic small plates are showing up more on restaurant menus because they allow customers to sample and share items that are unfamiliar to them without having to commit to ordering a full-size, full-price dish.

Purse-watching Small plates also ensure restaurant owners’ flexibility to offer several types of food categories at different price points, which increases their ability to coax consumers back to their stores. Many customers do still need convincing:

in a Technomic UK.consumer survey conducted last autumn, almost six out of ten people described their spending habits as either “I am on a careful budget” (29%), or “I am still mindful of my spending but starting to treat myself to small indulgences again” (28%). More than a third of consumers are either “more focused on saving and have cut out more non-essential purchases” or “buying only necessities.” Consumers’ prospects are not terribly optimistic for the rest of the year. When surveyed about their outlook for the next 12 months, roughly one in five respondents agreed with the statement, “The United Kingdom’s economy will improve.” Only one in seven agreed that “The EU’s economy will improve.” They regard their own situations similarly, with one in five consumers responding, “My personal finances will improve,” and a slightly smaller number (18%), “Our household will be able to spend more when we dine out.” As such, most of the sales growth in the UK foodservice industry will come from segments that happen to be more suited to smaller portion sizes and smaller price points. Quick-service restaurants are projected to increase sales by 3.7% in 2015, against a 3% increase for full-service restaurants. A wider gap will occur between foodled pubs, expected to grow sales 3.5%, and drinks-led pubs, which are forecast to record a 0.9% decline in sales this year. ▲ ¡ SUMMER 2015 ¡ PROPEL QUARTERLY


Feature for small plates to provide a low-cost, low-risk way to try unfamiliar foods. Technomic has noticed culinary inspiration from across the globe as well on British menus, especially smoky and spicy flavours, the kinds of taste profiles perfectly suited for small plates and bite-size starters. Cuisines inspired by global street foods, ranging from barbecue in the US south to Latin American tacos to dumplings in Asia, have gained in popularity and will show formidable staying power. A fourth culinary trend Technomic projected for the UK in 2015 was the rise of “unexpected” foods, which, unsurprisingly, favour continued innovation around small plates and micro-menu items. Chain restaurants, as well as independents, have been experimenting with hybrid foods and new applications of traditional dishes to appeal more to adventurous Millennial diners, as well as expand into new dayparts such as late-night dining. Some of the most interesting findings of the MenuMonitor tracking service are small plates that cross over several of these trends, such as: Supermarkets and convenience stores, which continue to improve their offerings of fresh prepared foods, are also expected to be a bright spot, increasing sales 3.6%. That is higher than the predicted rise at full-service restaurants, which increasingly face the threat of supermarket prepared foods as replacements for their meals. Do not be surprised if the fastest-growing restaurant brands in the UK continue to be coffeehouses or patisserie concepts that specialise in affordable indulgences such as a premium cup of coffee and baked goods.

Hot trends Of the handful of hot culinary trends that Technomic predicted for UK restaurants in 2015, four are suited for small plates and shareable starters and mains. The first is a strengthening focus on alternative diets. The forthcoming allergen labelling requirements have begun to spur operational changes as well as menu innovation at restaurants. While restaurant and pub owners should become more transparent about ingredients to comply with the regulations, they could also leverage the focus on healthfulness by rolling out new small-plate items that satisfy people seeking gluten-free, peanut-free or dairy-free options. Many people do not want to commit to an entire meal of vegetarian or vegan food, but perhaps they could be enticed to try a starter or dessert built around some health descriptor. Moreover, smaller portion sizes legitimately offer customers the chance to limit their calorie intake by picking and choosing from several parts of the menu. Small plates also let customers in on the trends for regional British cuisine or bolder ethnic flavours from all over the world. Operators have rediscovered rustic preparations and classic dishes native to their parts of Britain, giving them another chance to highlight local flavours and ingredients on their menu. Regional favourites are also showing the ability to cross over and appeal to diners in other parts of the country, and this again is an opportunity


■ The traditional Peruvian foods made with British-sourced produce at Pachamama, including saddleback spare ribs, Cornish lobster, lamb belly and sweet plantains

“Ethnic small plates allow customers to sample and share unfamiliar items without having to commit to ordering a full-size, full-price dish”


■ All Bar One’s recent small-plate additions, such as ginger teriyaki chicken skewers, salmon bruschetta and sea bass ceviche ■ Crispy crumbled halloumi, Bill’s giant green Gordal olives and Bill’s cheese plate, all recently introduced at Bill’s ■ The cicchetti bar recently added to Piccolino Ristorante e Bar, which includes Venetian-style tapas, crudo and ceviche

Bill’s Crispy crumbled halloumi Overall, the rise in small plates comes at an advantageous time for restaurants in the UK. The economies of both Britain and the eurozone appear to have weathered the worst of the most recent recession and stabilised, but growth in many consumer segments, including foodservice, is not expected to be very robust. Some parts of the foodservice industry, especially the cost sector, will be flat at best this year. But operators can broaden their appeal to budget-conscious consumers by shrinking their portion sizes, while simultaneously setting off renewed creativity in the kitchen that lets brands get in on emerging culinary trends.

Mark Brandau is content manager at Technomic Inc

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