Propel Quarterly Summer 2017

Page 1


Propel www.propelhospitality. com

ISSUE 19 • SUMMER 2017

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

Outside the box Roger Wade reveals all about the Boxpark concept

Inside: James Nye, of ACI, interviewed Las Vegas study tour analysis Consumer direct – the next bright spot Scott Collins, of Meatailer, interviewed Five phases to excellence Chris Edger gets tough Nino Caruso, of Veeno, interviewed Inspirational messages


ISSUE 19 • SUMMER 2017

“They’ve got the balance just right.�



Tailored support for you and your pub. When you choose Star, we work with you to ensure that you and your pub are well looked after. We provide a balance between giving you freedom to run your 31',#11 5&'*12 -j #0',% 13..-02 5&#,#4#0 7-3 ,##" '2@ &#2&#0 '2a1 5'2& -30 Star Food programme, one of our Raising the Bar workshops or working with you on the full refurbishment of your pub, we aim to make you and your business as successful as possible. Start your application at or call us on 08085 94 95 96




Contents 06

Running a beautiful business model


Strength in numbers


The Italian job – simple and effective


Outside the box


Delivery channel


5 phases to excellence


Consumer direct – the next bright spot

John Porter interviews James Nye, of ACI

Kate Nicholls looks at how the ALMR has changed

Veeno co-founder Nino Caruso talks to Glynn Davis about the secrets of his brand's success

Roger Wade talks to Paul Charity about Boxpark

Cyril Lavenant predicts the future of home delivery

by Christopher Muller and Lee Sheldon

by Darren Tristano

25 06


The imposter


Propel Multi Club


Wasted opportunity


Meating of minds


Las Vegas study tour analysis


Getting tough


Inspirational messages


Technology can fight inflation

Published by Propel Hospitality Unit 26, Graylands Estate, Langhurstwood Road, Horsham, West Sussex RH12 4QD

Director Jo Charity T: 01444 810304 E:

Managing Director Paul Charity T: 01444 810306 E:

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Managing Editor Paul Bishop T: 01444 817690 E:

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

Deputy Editor Martin Cooper T: 01444 817689 E:

Design & Production Jonathan Taylor T: 01403 892685 E:

Glynn Davis looks at the rise of gastro-pubs

in pictures

Paul Chase on the Apprenticeship Levy

Scott Collins reveals the story behind the MeatLiquor phenomenon in a chat with John Porter

by James Hacon, Mark Stretton, Dan Einzig and Kate Nicholls

by Chris Edger

by Ann Elliott

by Gareth Powell Contributors Paul Chase, Glynn Davis, Chris Edger, Ann Elliott, Dan Einzig, James Hacon, Cyril Lavenant, Christopher Muller, Kate Nicholls, John Porter, Lee Sheldon, Mark Stretton, Darren Tristano Printing and Distribution Bishops Printers, Walton Road Farlington, Portsmouth PO6 1TR


uarterly ©Propel Hospitality Ltd. 2017 ¡ SUMMER 2017 ¡ PROPEL QUARTERLY


Feature Hermitage Rd Bar and Restaurant, Hitchin

Running a beautiful business model C

onventional business wisdom says careful planning is the key to success, as much in the pub and restaurant sector as any other. Put in the spadework on the business plan, research the customer demographic, and ensure you know your market before investing. But this wasn’t the case when it came to Anglian Country Inns (ACI) – or at least, not initially. James Nye, managing director of the family owned and run business, recalls his father Cliff Nye bought the company’s first pub as an “impulse buy”. Known at the time as the Lobster Pot, the pub in the Norfolk seaside village of Brancaster, north of King’s Lynn, came on the market in summer 1996. Although he had no experience in the hospitality sector, Nye senior had a sound business track record having run a successful replacement window company. He had also just sold an aerospace business. James Nye recalls: “Dad’s parents had a caravan in the village and he’d stayed there when he was a kid. He knew the area well and loved it. “He also loved the local food and had grown up with a lot of the fishermen in the village. He always planned to make a go of the Lobster Pot but it was definitely an impulse buy. His greatest ambition was to have a bit of fun running the pub.” Now 21 years on, ACI owns and operates


James Nye, managing director of Anglian Country Inns, tells John Porter how his family owned and run company has built its portfolio by making sure the wet side is as important as the dining


James Nye

seven hospitality businesses. Cliff Nye is chairman, with sons James and Howard, who is operations director, at the heart of the dayto-day running of the business. The company employs 275 staff and has won enough awards to fill a trophy cabinet, including the best managed company for training (with fewer than 30 outlets) category at the British Institute of Innkeepers’ NITA awards in 2016. Last year also saw the business awarded a three-star “food made good” rating by the Sustainable Restaurant Association (SRA) in recognition of ACI’s commitment to serving ethical and sustainable food. The SRA’s wide-ranging assessment also saw ACI score 100% in the “treating people fairly” category. This suggests that however much fun running the business has proved, ACI is also a serious contender as one of the industry’s brightest up-and-coming operators. The current portfolio includes three pubs in north Norfolk, with the Lobster Pot having reverted to its original name, The White Horse, while ACI also has a second pub in Brancaster, The Jolly Sailors. Last year saw the acquisition of The Kings Head in Letheringsett. ACI also operates four venues in Hertfordshire, including two village pubs, The Fox in Willian and The Cricketers in Weston, as well as two town centre sites – Hermitage Rd Bar and Restaurant in Hitchin, and Water Lane Bar & Restaurant in Bishop’s Stortford. ▲


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Hermitage Road Bar and Restaurant, Hitchin Plans are also in hand to add another site in Hertfordshire, which would be ACI’s biggest to date and could see outside investors brought in for the first time to co-fund the project.

Doubling the business So far, each new ACI acquisition has been funded from existing resources. Nye says: “It’s only in the past few years we’ve started motoring. Our growth rate was low and organic before that and then in the past five years we’ve doubled the business.” Turnover has grown from £4.9m in the year to March 2012 to £10.4m in the year to March 2017. “I think Dad’s now realised that rather than just a bit of fun, the pubs are something a bit more substantial,” Nye adds. The geographical split between Norfolk and Hertfordshire has allowed ACI to gain experience in operating a range of trading styles. Nye says: “The north Norfolk coast is a specialist trading area and I think the big boys get a bit frightened. The demographics don’t look good and the numbers don’t always add up for them, but it means we’ve got this wonderful independent pub culture up there. Hertfordshire is a very different market. We’re up against more of the casual dining chains and big groups. It’s an interesting split between our two trading areas. “We’re not a chain. Each pub is its own brand. Our three sites in and around Hitchin all have a different appeal. North Norfolk is the holiday crowd, people who own second homes, and a lot of locals as well. Even in Norfolk, where we’ve got two pubs in Brancaster, The White Horse does two-rosette restaurant food, beautiful seafood, and The Jolly Sailor 400 yards down the road is a family pub and does pizza and pub grub. Each of them has their own direction, they don’t really compete with each other and they’ve both been in growth since we opened them.”


“It’s only in the past few years we’ve started motoring. Our growth rate was low and organic before that and then in the past five years we’ve doubled the business”


In Hitchin, Hermitage Rd is a converted firstfloor ballroom. Nye says: “It’s in what probably used to be the wrong end of town. We’ve got a 150-cover restaurant and a big cocktail bar, and it’s one of our busiest sites. It complements The Fox, just outside Hitchin, which is more gastro-pub than anything else. The philosophy is the same at each site. We serve fresh food and source as regionally and as seasonally as we can.” However, as both the NITA and SRA awards last year demonstrate, ACI places considerable emphasis on empowering the management team at each pub. Nye adds: “It’s freedom within a framework. We set the framework for the pub so, for example, The Cricketers is positioned as a family pub and we set our expectations with the manager and then try to give them the freedom to fulfil them. ▲

Brancaster Best on tap at The Jolly Sailors




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Feature Fresh seafood at The White Horse, Brancaster Staithe, Norfolk

“It’s the same with the food, we have seven different menus across the estate. Some of them are similar in that they do pizza and pub grub but each site is different. We let the head chef put his interpretation on it and, as long as he’s hitting his margins, the pub has the ownership. It creates real buy-in from your management team on-site. At our top sites, the menus change by the day depending what comes through the door.” The wet-dry split across the estate is about 55% in favour of food. Water Lane, based in a converted brewery in Bishop’s Stortford, has a large basement cocktail bar and the site generates about 60% of its sales from the drinks side. “The more rural sites struggle with the drinking and do more food, although a sunny summer would change all that,” Nye says.

Specialist dishes

“At our top sites, the menus change by the day depending what comes through the door”

Water Lane Bar & Restaurant



In common with most operators, casual dining favourites burger and pizza are big sellers across the ACI business. However, Nye also cites the popularity of specialist seasonal dishes such as Brancaster mussels and fresh Norfolk asparagus. The target food gross profit is 70% overall. “So far this year we’re on 70.1%,” Nye says. “Defending our margin is something we’ve been working on this year. We have group purchasing for dry goods and other bits and pieces and we complement that with local products at site level. “We’ll only pay more if it’s a quality product – we don’t do local for the sake of doing local. We’re not the cheapest operator out there by any means but we still think we give value for what we’re doing. Sometimes sourcing direct from, say, local fishermen can be a lot cheaper than going through a middle party who add their slice of margin to it. “We’ve split Norfolk and Hertfordshire into two areas and put executive chefs into each. A big part of their remit is to develop new menus and, more importantly, to help the head chefs at each site develop their own menus. It isn’t just about serving really exciting food, it’s about how we get the margins right, how we control the labour costs in the kitchen, and how we ensure compliance. They’re mentors for the head chefs in each area, and that’s been a really important move for us.” Nye cites using the trim from fresh fish to make pies and fishcakes as one way executive chefs are focusing on simple ideas that can protect food margin in an inflationary environment. He adds:“They’re the type of dishes that are real crowd pleasers and it means you’re using food that otherwise you’d be throwing away.” ▲

Feature The White Horse, Brancaster Staithe

On the drinks side, as well as strong spirits and cocktail sales at certain sites, there is also a big cask ale trade at pubs such as The White Horse and The Jolly Sailors, while ACI has its own brewing arm, Brancaster Brewery. Nye says: “You can probably buy in beer cheaper than you can make it these days, which is a bit sad, but there are some marketing opportunities off the back of it. We do bottle-conditioned beers that go into farm shops and farmers’ markets. It’s a little bit different and every label promotes The White Horse and The Jolly Sailors.”

Gap in the market More strategic for ACI is accommodation. The White Horse has 15 rooms and last year eight letting rooms were added to The Fox, while the acquisition of The Kings Head added four more. Nye says: “I really like accommodation. There’s a lot of pressure on pubs, with outlay such as minimum wage, food inflation, rates, you name it, and we’ve found accommodation is a really good revenue stream.” Nye sees a gap for well-located pubs with rooms above within the budget hotel sector. He adds: “Pubs have got a lot more character and personality about them. I think accommodation fits in really well with that.” Nye also points to added benefits from rooms, such as 170 Mother’s Day breakfasts sold this year following a sales promotion. He says: “It’s a really nice boost from what would be a dead part of the day. It’s making the asset sweat a little bit harder.”

Key values

£10.4m turnover in the year to March 2017, compared with £4.9m five years earlier

The view from the restaurant at The White Horse, Brancaster Staithe



Maintaining service levels is clearly at the heart of all this activity, and ACI’s increasingly impressive reputation as an employer is the result of an internal review of its approach that took place about 18 months ago. This identified four key values for the business – family, friends, fun and focus. The SRA accreditation mentioned ACI’s extensive staff training alongside its wider culture of employee welfare, such as gym memberships and cycle-to-work schemes. “As we grow, we have to get our culture right, which is very easy to say and very hard to do,” Nye says. “If you’re living those values, you’re the right fit for ACI. Once people realise what you’re trying to do, they have more belief in you, which helps retention.” At the heart of training is ACI’s Rising Stars programme, which formed an important part of the 2016 NITAs entry. Nye says: “We were finding we had great chefs who didn’t yet have the management skills or waiters who wanted to become restaurant managers. We developed Rising Stars to teach the basics around man management and how to lead people. When people come through it, they understand management responsibilities. It’s about leading a team.” The strength of company culture is emphasised by the £21,000 raised for charities through a fund-raising drive launched to mark ACI’s 20th anniversary last year. This saw employees from all seven sites take part in ▲

Feature Meet the Nyes – Howard, Cliff and James

everything from skydives and swimathons to a 100-mile sponsored walk from Hertfordshire to north Norfolk. ACI is also beefing up its head office team, adding a marketing department and central support team with a focus on supporting a larger business. Nye says: “It’s the big question – do you grow first and then put the support in afterwards or do you put it in first? We invested in three new positions at head office last year. It hurts financially to begin with but then you start to see the benefits.”

Outside investment

The Jolly Sailors beach hut garden service area

Regarding ACI’s planned new site in Hertfordshire, its scale has prompted the Nye family to open negotiations with potential outside investors – individuals rather than institutions – through a proposed Special Purpose Vehicle (SPV). Nye says: “Up to this point, we are 100% investor-free. It’s entirely owned by the family, with some bank debt to support us. This next project is different to anything we’ve done before and, because it’s a large site and a very large spend, we’re looking to bring in some outside investment. We’re going to set up an SPV, with the potential that once it’s established, perhaps five years down the line, we either buy back the shares or the loan notes and incorporate the business back into ACI. “What I don’t think we’ll be doing is rolling out five a year. The style of business we operate precludes that but we see further opportunities in both our trading areas. I get approached a lot. It’s easy to find new sites but hard to find the right sites. I see Cambridge and its outskirts as a real opportunity, anywhere close to larger towns and cities.” Nye is clear ACI will continue to reap the benefits of the flexibility of the pub format. He says: “Very few restaurants have a bar where you can have a drink first or afterwards. A pub is two customer occasions – it’s going for a meal and you might also have a beer. You can have Michelin-starred dining in a pub or you can have pies and pub grub, or Indian, Mexican, Chinese – there are no rules of what pub food should be. “For us, though, the wet side and the pure drinking side is as important as the dining. When you walk into a pub, it feels like you’re walking into a social hub. There are people around you enjoying a drink and there’s a great atmosphere. I think that’s a beautiful business model.”

James Nye managing director Anglian Country Inns Favourite dish: A plate of Brancaster oysters with a dash of lemon and Tabasco.

Beer to match:

The Kings Head shoot taxidermy room Greenwood bar zebra



A pint of Guinness. The saltiness of the oysters works really well with the bitterness of the beer and the really nice velvety texture of both complement each other so well.


Strength in numbers T

Chief executive Kate Nicholls looks back at how the ALMR has grown and changed since its foundation in 1992, and looks forward to the association’s next quarter-century as the voice of eating and drinking out

his year’s ALMR Spring Conference provided members with an opportunity to discuss and hear experts talk about the general election, Brexit and the future of eating and drinking out in the UK. It also marked the 25th anniversary of the Association of Licensed Multiple Retailers and was a chance to reflect on the changing nature of the sector, and the ALMR, over a quarter of a century. In 1992 when the ALMR was formed, the UK’s eating and drinking out sector was a very different market. Outlets tended to be wet-led and in the mould of the traditional pub. Customers looking to eat out were restricted to fast-food outlets or restaurants and anyone looking forward to a “late one” would definitely end up in a nightclub, which would almost certainly close at 2am, rather than a late-night pub or bar.

“There is no doubt this is an exciting time for the entrepreneurial businesses that make up our sector” These days the sector is a nuanced and sophisticated mix of outlets and styles blurring the lines between the older offerings. Pubs routinely offer great food as well as drink, and many pubs and bars have a late licence giving their customers a chance to enjoy themselves for longer periods. Branded casual dining outlets have taken over town and city centres with their accessible and inexpensive hybrid offerings incorporating a myriad of cuisines, combining the convenience of a fast food chain with the quality of a restaurant. Pubs, restaurants and bars do face challenges but there is no doubt this is an exciting time for the entrepreneurial businesses that make up our sector. In 1992, the ALMR was formed to represent the interests of the wet-led pubs that dominated at the time. As the landscape of hospitality has changed so has our membership, to keep pace with the evolution happening on high streets across the country. The ALMR, now bigger than ever, boasts a diverse membership that reflects a varied sector. We are the only UK trade association representing the interests of pubs, restaurants, bars, nightclubs and coffee shops. We are recognised by Westminster as the de facto voice for eating and drinking out in the UK and represent the interests of the


Panel session from this year‘s ALMR Spring Conference

sector on a continental scale as the UK’s representative to HOTREC, the umbrella body for hospitality associations. In recent years we have welcomed all the major managed pub companies into our membership, including Greene King and Marston’s. We now represent more than 90% of this sector and are the voice of major high-street pub brands. We also incorporated the Bar Entertainment & Dance Association to consolidate our position as the voice of the night-time economy, leading the fight for nightclubs, music venues and late-night bars in the issues that affect them the most. We have been leading the drive for the adoption of the agent of change principle and the only trade association actively challenging the introduction of latenight levies and early-morning restriction orders on a legal basis. We have also cemented our position as the leading voice for restaurants with many of the UK’s favourite outlets, including TGI Friday’s, Wahaca, Wagamama and Carluccio’s. The ALMR has grown exponentially since its inception and we are in a healthy position to continue our expansion.

Crucial moments The ALMR’s 25th anniversary came at a crucial moment for the sector economically and politically, with voters taking to the polls for a general election that has been shaping the tone of the debate as the country approaches Brexit – arguably the most important political moment in the UK for 70 years. The ALMR is representing more than 200 retailers that between them account for more than 25,000 outlets and 650,000 staff. We have a clear vision, mission and objectives


to deliver what our members need to continue to grow and develop during the next 25 years. The foundations for this will be laid during the next two years. The ALMR has been putting forward a strong, united voice for pubs, restaurants and clubs at the heart of government at this turbulent time to ensure our members, and the wider sector, get the best possible deal. In addition to our ongoing work negotiating on the obesity strategy and chairing campaigns on employment costs, we have been adding a strong fourth pillar in vital Brexit negotiations alongside farmers, supermarkets and manufacturers for a fair deal on migration. We continue to push for decisionmakers to enshrine access for the non-UK workers who make up a quarter of the hospitality and tourism workforce and do such good work driving innovation and making the UK’s eating and drinking out sector one of the most exciting in the world. The sector has changed enormously in 25 years but something that remains constant is the need for stability and equitability to allow businesses to succeed. As we look forward to the next 25 years as the voice of eating and drinking out, we will be pushing national and local authorities hard to make sure they are on our side and ready to support a fantastic group of businesses that continue to evolve and shape the cultural fabric of the UK’s high streets.

Kate Nicholls is chief executive of the Association of Licensed Multiple Retailers

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The Italian job simple and effective As Veeno continues its rapid growth, co-founder Nino Caruso tells Glynn Davis about the secrets of its success and the company’s franchising plans

Veeno Leeds

Veeno Chester


ast-growing Italian wine cafe Veeno has rapidly opened 11 outlets around the north of England and the secret of its success could well be down to what it calls its “Italianity”. This made-up word translates into taking an uncompromising stance on the quality of the ingredients and the overall authenticity of the Italian proposition. This is fundamental to the business and at its heart is the wine offer, which comes from Sicilian winery Caruso & Minini that is owned and run by the family of Nino Caruso, co-founder of Veeno, who acknowledges: “We might have done Veeno without the family winery but it's integral. It would have been different without it. It's the connection with what we are; it’s authentic. We send our managers over to Sicily because we want people to see what is behind the brand. Some brands are [developed] just for show.”

“We don’t need kitchen equipment, ventilation systems, chefs and the extra space and rental costs that come with this. We could even manage our cafes at the quietest times with only one person and we can still be serving food” This authenticity has underpinned the success Veeno has had conveying the message to its customers about its wines and complementary foods. The most obvious example is with its Wine Tastings that comprise a flight of five wines priced at £10, which involves a member of the team explaining the characteristics of each wine and the story of the winery. These tastings account for an impressive 15% of sales when you throw in the matching foods, which are all sourced from Italy. Caruso says: “This expresses what we do. It is labour-intensive, and no other chain does it, but it’s the magic for us.”

The wine knowledge of many people in the north of England would clearly not be quite so rich today had Caruso not met fellow Italian Andrea Zecchino in Manchester and bonded over their mutual love of Italian wine and sharing platters of cold foods. This is what the Italians call apertivo when it's done straight after work. Despite his deep wine connections, Caruso had been working for a rather dry logistics firm and it was only the conversations with Zecchino that lit the touch-paper that would fire up the idea for creating a wine cafe selling the Caruso family wines along with Italian foods in an easy-going atmosphere. In 2013, armed with a few thousand pounds, Caruso says the pair fitted out a 150 square metre unit in a secondary site in Manchester with IKEA fixtures and a borrowed coffee machine. He says: “It was very simple and we were both still in full-time jobs but it boomed. We sold out of our stocks in ten days, which was ten-times faster than we’d expected.” He admits being an Italian business makes it accessible to people because the British recognise and respect the country’s food and drink heritage. “We're not good at a lot of things in Italy but some things we are very good at,” he adds.

Keeping it simple Running out of stock was certainly not a problem in terms of accessing more supplies because the Caruso winery produces 1.5 million bottles a year (exporting to 35 countries) but it did lead to the co-founders having to quit their day jobs and commit fully to developing Veeno. Making their lives easier has ensured a strict focus on keeping things simple, which has been paramount to the efficiency and financial success of the model. Central to this is the food offer, which comprises predominantly spuntini – small Italian snacks including bruschette, cheese, meat, and dips. Caruso says: “We don't need kitchen equipment, ventilation systems, chefs and all the extra space and rental costs that come with this. We could even manage our cafes at the quietest times with only one person and we can still be serving food.” Proof of this simplicity and efficiency can be seen in the fact that with 11 sites the company only employs a modest 120 ▲ ¡ SUMMER 2017 ¡ PROPEL QUARTERLY


Feature Co-founders Andrea Zecchino (left) and Nino Caruso

people of whom ten are based in its head office. This strippedback approach came from the co-founders’ simple lack of hospitality experience that Caruso says has ultimately been very beneficial. He adds: “We never thought to rely on traditional systems. We've built everything ourselves. Sometimes it would have been useful to have experience but on balance the pros have outweighed the cons.” The systems put in place have been pretty robust because barring the removal of outsourced lasagne from the menu, Caruso says the model is largely unchanged. This has made it possible to roll-out the concept at speed. Leeds opened nine months after the initial Manchester cafe in July 2014, with York following in November. Then in 2015 the Liverpool and Nottingham openings saw Veeno take up more primary locations in the city centres. And in 2016 five more units were added, which he says have a combination of modern and traditional elements in the fit-outs. Part of the system that has also helped keep things simple, as well as boost profitability, is keeping most activities in-house. Outsourcing is only undertaken where absolutely necessary. Along with handling all the fit-outs internally, Veeno also has its own project managers, interior designer and graphics designer. In addition, the back-of-house activities are all centralised to ensure the teams in the cafes are serving customers and not “dealing with the boring bits” as Caruso likes to describe them. Even the sourcing of food is increasingly dealt with by direct dealings with producers in Italy rather than third-party wholesalers and importers. Caruso says: “About 50% is direct from Italy and the plan is to do 95%. It’s just that we’ve not had the time to sort this but we’ve certainly got the volumes to make it work.” The training of staff is also handled in-house and the quality of this is an essential component of the Veeno concept because it enables the business to put customers at ease and help them understand wine “through an educational, but easy-going approach”. Caruso says: “Every customer is different and we take the pressure off them and make it interesting. We tell them the story of the wines.”


Friendly approach This friendly approach to wine has ensured it accounts for a hefty 66% of wet sales, which in total represents 60% of total sales. Although a modest number of cocktails are on the menu these are kept to a minimum because they add complexity to the model and take too much time to prepare. With its backdrop of straightforward simplicity and proven capital efficiency, Caruso believes the concept is extremely well suited to franchising and to this end Veeno held a “Discovery Day” in Bristol in January to attract potential franchisees. The result was 15 to 20 people expressed interest and negotiations are taking place with eight parties that could see franchised outlets in areas including Cardiff, London, Birmingham and Newcastle. Much of the heavy lifting will be undertaken by Veeno, which is effectively offering a “turn-key” franchise ▲

Veeno Leeds



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“We had this plan at the beginning. Franchises will give it more time than a manager and will deliver the experience much better”

Veeno Leeds

Caruso & Minini produces 20 different wines that make up the core of the list including:

Andrea Zecchino (left) and Nino Caruso

Whites Tasari

Catarratto grape (12%): 175ml (£4), bottle (£14.50)


Chardonnay (13%): 175ml (£5), bottle (£21)

Le Selezioni –

proposition. Caruso says: “Once we agree then we’ll find the venue, we do the designs and the fit-out as well as supplying all the training. It’s very easy for a franchisee.” The main driver behind taking this route is the difficulty finding good managers and the greater commitment that he expects franchisees to give to the business when compared with even high-quality salaried managers. Caruso says: “We had this plan at the beginning. Franchises will give it more time than a manager and will deliver the experience much better. Their sales are typically 20% to 50% above managed stores because of the extra effort they put in.” Franchising will also help the company accelerate its openings, which are particularly ambitious. By the end of the year there are expected to be 20 Veeno cafes in total, of which at least half of the new ones will be franchised, and there is a longer-term plan to have 80 sites by the end of 2020 that will involve doubling up in some cities. This has already happened in Chester and Leeds. As if this was not enough, Caruso and Zecchino have set up a joint venture with an Italian partner to open Blue Lobster seafood restaurants. The first one opened in Alderley Edge, Cheshire, and more could potentially follow although Caruso is clear to point out the major focus is definitely on developing the Veeno business. Nothing should detract from ensuring the simplicity and Italianity remain firmly in place.

Catarratto/Grecanico/Inzolia grapes (13%): bottle (£29)

Rosé Tasari

Syrah grape (12.5%): 175ml (£4), bottle (£14.50)


Nero d’Avola/Merlot grapes (13%): 175ml (£4), bottle (£14.50)


Nero d’Avola grape; (13.5%) 175 ml (£6), bottle (£24)


Cabernet Sauvignon grape (13.5%): 175ml (£5), bottle (£21)



Veeno Chester


There’s A Beer For That

There’s A Beer For That is a consumer campaign backed by an alliance of brewers, pub companies and industry bodies that demonstrates the diversity, versatility and quality of beer. With over 140 different styles available, beer really can enhance the dining experience through pairing its many distinctive tastes to complement or contrast with the flavours of food. Pairing beer and food is a great opportunity to offer your customers a new experience, encourage trial of different beers and drive sales. We’re already working with brewers, pub companies and beer experts on a proven range of programmes and educational materials that could help develop your business.

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Outside the box Chief executive Roger Wade tells Paul Charity about the Boxpark concept, refocusing on the foodservice sector, and where next for the ‘container revolution’ ¡ SUMMER 2017 ¡ PROPEL QUARTERLY



PC: You’re now a fully fledged bar and restaurant operator with the new central bar at Boxpark Croydon, how is it going? RW: Boxpark Croydon is the first time we’ve included hospitality drinking and dining. It is literally our first six months of running a bar. It is maybe a major departure for a retail developer to start being a bar operator but we are a business that wants to make people feel special. We have got almost 40 operators on the food side at Boxpark Croydon and we felt we needed to underpin the site with a central bar alongside 200-plus events.

to get that. This is ridiculous.” We wanted to create something to serve the latent demand, and what it has proven to us and others is you don’t have to follow the crowd and go to trendy areas. The market in Croydon was crying out for some really good bars and restaurants. The response has been phenomenal. Because we’ve got such economies of scale and a major development, we can almost create our own restaurant quarter in Croydon in one go. We are not reliant on anyone else.

PC: Did the Shoreditch site build anticipation for what was to come and make Croydon a “Because we’ve bit cooler? PC: How would you describe your core got such economies demographic? RW: It did. We received so many comments in of scale and a major RW: We serve the existing clientele in the early days such as: “Why are you going to development, we can Croydon and bring in a younger demographic Croydon? Shoreditch is so cool.” But why not? almost create our own at night. The normal trade is at lunchtime and I’m from south London. The whole concept restaurant quarter in then after work. We now have a 1am licence. you have to be in a cool area to do business Croydon in one go. We We run three or four events every week, is ridiculous. We did build a good name in certainly on a Thursday, Friday and Saturday. are not reliant on Shoreditch but the reality is that when we set We have people coming now specifically to visit up there it was never about food and drink. We anyone else” the bar – it’s been successful. sort of accidentally fell into that side. Two-thirds of Boxpark Shoreditch was about selling fashion, gifts PC: After Shoreditch, why Croydon? and jewellery. Food and drink was the afterthought based on RW: Croydon suffered from an image problem. People labelled having a food court area upstairs. an entire borough as grey and the place suffered from a superficial image suggesting nothing really happens there. The PC: Did it help that the first Boxpark was near Shoreditch House? reality is Croydon is the largest London borough with more than 500,000 people – a significantly greater population than Brighton RW: When we arrived in 2011 a lot of those guys such as Lyle’s – yet it was really underserved in terms of bars and restaurants. In weren’t there. If there was one thing that started the revitalisation terms of the offer in Croydon it was really poor. We said: “Look, of Shoreditch, though, it was Shoreditch House. It was the 500,000 people are living here. Every time they want to have a beginnings of something really fantastic. We’re now in our sixth nice drink or a nice meal they’ve got to go outside the borough year there. ▲






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£500,000 to upgrade food and drinks offering at Boxpark Shoreditch

PC: Have you extended your lease at Boxpark Shoreditch? RW: We have extended the lease and renovated our entire top floor. Our future is in food and drink so we wanted Shoreditch to reflect that. We are spending half a million pounds to upgrade the whole food area upstairs to make it a better environment. The original plan was to make the site last only five years but we got an extension on the lease to take it up to eight years. However, it needs improvement. I’m not really bothered about whether we have premium brands – we have an understanding customer base who like street food and casual dining. We just want to have some unique offers. We want to have great operators and, at the same time, we want to bring in guys who have been trading at street food markets. Experience has proven to us you need a lot of good operators so we do a lot of work with Fulham Shore Group and, I’m not saying they are coming in, but they’ve got people like Franco Manca and The Real Greek. They are the ideal types for us because they are still niche but really well run. Alongside them, we’ve got guys such as vegan restaurant CookDaily, which has been phenomenally successful. We are going to bring over some tenants from Boxpark Croydon and some tenants already in Shoreditch will take some bigger units and replace a couple we don’t feel are performing well.

right brands. People don’t understand the subtle nuances of dealing with the fashion industry. Retailers get calls from larger retailers saying: “I don’t want you going into there because we are already stocking them around the corner.” The fashion retail industry is unlike a lot of other industries. We came to the conclusion we needed to focus on a specialised sector. For me, the real growth sector was casual dining and, increasingly, people have got less and less time and are eating out more and more. If you look at places like the US, it’s not uncommon for people to eat out seven days a week. London has a long way to go to get to that culture but we believe it is going to be the trend. We just want to have a focused offering that will specialise in casual dining. That is us now. PC: How would you sum up the Boxpark concept? RW: It is an organism. An organism needs to survive and to survive it needs to evolve. You have to understand the importance of evolution. If we stood still with our original Boxpark offering we wouldn’t be alive today. We tried lots of different things – some things worked and some things didn’t – but we evolved to what is Boxpark Croydon and it is working for us in a major way. That’s what we’re rolling out. To sum up how we think, we are pushing the absolute boundaries of retail development. No other retail development company came along before Boxpark and built a temporary development based on only being there for five years and spending £2m. We have spent £5m on Boxpark Croydon on the basis we will be there for just five years. Of course we want it to be longer but we have realised there isn’t just one type of model. We’re trying to create the concept that if you eat out, you don’t have to decide among your group if you’re going to have Indian or Chinese food, you can have all of that and bring it back to a central space. We have tried to embrace the digital side of the sector too. We have tried to push the boundaries of social media and act as a conduit driving traffic to our customers. We already supply our tenants with PoS and carry out marketing for them. ▲

“I’m not really bothered about whether we have premium brands – we have an understanding customer base who like street food and casual dining. We just want to have some unique offers” PC: Is a food and drink offering a canny way to retain a captive audience for the retail outlets? RW: We soon came to the conclusion we weren’t going to compete as a retail developer with Urban Outfitters next door or Westfield down the road. The problem is trying to get the



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Feature PC: Boxpark has embraced the Deliveroo concept too, hasn’t it? RW: From our perspective, Deliveroo is the fastest-growing delivery service in Europe. We know the guys well. I think what they do is a complete game changer and really suits our business model. Increasingly, what we want to encourage people to do at Boxpark is not just sit in the restaurant but grab some takeaway food and bring it to the central eating area. Historically, in a restaurant you’d perhaps retain one-third of the space for the kitchen and now, increasingly, I believe people will take smaller spaces and treat it more like a Domino’s Pizza concept where two-thirds of the space is for the kitchen, with a dedicated takeaway offering. Of course, you are going to get restaurants where the whole experience happens around you but there is a whole other model out there based on people wanting convenience. When people want convenience you need to incorporate companies such as Deliveroo. We see the future as increasingly about smaller units that are all about the kitchen with a takeaway counter and where people can eat either outside or get a delivery. I see that as more of a growing trend. Deliveroo had aspirations to launch in Croydon and the reality is we run two-thirds of the restaurants in Croydon. At the same time we didn’t look at it as a threat. We looked at it as an opportunity. PC: What makes Boxpark’s central dining aspect stand out? RW: We believe retail is entertainment. Eating isn’t about shoving food in your face and going off shopping. Our dream customer is someone who chooses to come to Boxpark and spends the day with us. We want them to take a meal, sit on our benches, maybe watch free entertainment and at the end of the day go into our bar and dance the night away. It is always going to be social. So many people run businesses based on a business plan or a bunch of numbers, we don’t – we run things based on feelings. I want everyone to come to Boxpark and feel the experience is special. I believe we have gone a long way to achieve that in Croydon. You walk in and say: “Wow! I’ve not seen anything like this!” Not just in terms of the architecture but in terms of the tenants and the entertainment. We want people to come to Boxpark and feel special and be entertained in a special environment. PC: Who would you say is your main competitor? RW: Ultimately, our competitor isn’t another restaurant or motorway service station food court – it is the home. You always

have to look at what will get people off their sofas and out the door. I think our offering will do that. An example of that is rugby. We showed games from the Six Nations tournament at Boxpark. Getting to and from Twickenham is a nightmare so we wanted to create the next-best environment. Twickenham isn’t that far from us and we realised fans were coming to Boxpark to have lunch and watch rugby on the big screen. At the end of the game, everyone was getting a drink from the bar and bringing the place to a different level. We want to create the ultimate fanzone at Boxpark. Also, artists such as grime star Stormzy came to Boxpark to launch his album. It meant a lot to us because we wanted to bring Stormzy back to his home town at a time when there were major issues with knife crime in Croydon. We wanted to send a message to the youths to say: “Look, there’s an alternative. Here is a local man and look at what he is doing.” We didn’t charge for that event. In the first three months at Boxpark Croydon we had 60 events, and 59 of them were free. We are funding all that because unlike the service station food court concept or the people who work there who see each customer as a number or pound sign, we see our customer as special. It is our responsibility to entertain them so they keep coming back. It’s that which sets us apart. I believe we have created something truly special and taken something to a different level. There may be other guys doing something similar now, but we started the container sites. PC: What have you learned and what do you want to retain as Boxpark entrepreneur? RW: We learned a lot of things from running a street-wear brand for 20 years. One of my favourite brands was Carhartt, which we were involved in starting. Carhartt’s owners have never compromised their brand, kept true to their roots and never sold out. They have made the right long-term decisions – and those are the same decisions Boxpark is taking. On paper, our investors are asking why we are spending half a million pounds on Shoreditch with only two years left on the lease? I reply: “No matter what, we are never going to have such a high-profile site. This is our start and it’s important people remember that and it doesn’t just drift along over the next two years. Even if we don’t make any money on it, what that will do for us is establish the long-term brand awareness for many years to come.” ▲

“Eating isn’t about shoving food in your face and going off shopping. Our dream customer is someone who chooses to come to Boxpark and spends the day with us”



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PC: Are there similarities between Boxpark and Brighton and Hove’s historic North Laine area? RW: Absolutely. I live in Hove and am 100% inspired by my local environment. People love those small shops and they are about the same size as a container – about 300 square feet. We have brought some of those stores to Boxpark. My parents used to take me to Greenwich Market and my first business was there. I loved the whole concept of markets. I loved that you went there and got beautiful things from great stallholders who were all individuals. In many ways we are trying to recreate a 21st century version of Covent Garden Market. Every high street is the same and what we wanted to do was recreate a high street based on what works in North Laine, which is full of independents. If independent stores are popular in Brighton, why can’t they be popular in Bristol or Leeds? Our point of difference is we believe in independent brands. I’m not their saviour but I believe the customer wants to feel special and wants something unique. That is what we are trying to achieve at Boxpark, but the problem independent brands have is they don’t have the resources to compete. PC: If you had your time again, what would you do differently in business? RW: I wouldn’t beat myself up about my mistakes. What I realised with the benefit of turning 50 is all the things I created came out of adversity. One example is Boxpark Croydon, which comes from a time when we were struggling to make pure physical retail and hard goods work. It forced me to think about what we needed. We decided to create an events space and grew it. That led us to food and drink. In the past, I’d have looked at adversity as a bad thing but now I think it’s a great thing, because the same adversity I face is the same adversity my competitors face. Our point of difference is going to be how we rise to that adversity. I’d say that to every entrepreneur – the challenges you face are not just yours alone. You look at the problems and what you can do better to resolve them. You could argue a lot of the street food and casual dining revolution comes out of the fact people wanted a different way of eating. The pop-up industry came about from a desire for a different kind of retail. Retailers didn’t want to have ten-year leases round their necks, they wanted to

have short-term places so they could show people a product and have the freedom to get out too. PC: When do you think the casual dining and street food revolution began? RW: There were some great originators around at the same time as the smoking ban came into effect. In casual dining, Dominic Cools-Lartigue founded Street Feast and was a true visionary. He was the right guy in the right place and spotted something in the US that he brought to the UK. He was the right guy because he came from an entertainment background. He combined the world of entertainment and street food and then all the press Street Feast got caused a mini-explosion. I think we have to give credit to people like Dominic, who did a fantastic job of marketing it. There were also the first gastro-pubs. I remember going to the Lansdowne in Primrose Hill about 30 years ago and it was a gastro-pub. The woman who started the Lansdowne came from The Eagle in Farringdon and had run the pub as gastro. When you get a few people challenging the status quo and doing something a bit different, it creates a new explosion. We have been a part of that with the “container” explosion – loads of people are doing it now and still saying pop-ups are going to change the world. It didn’t begin like that, though. The idea of a pop-up was to do something for a limited time, but then you suddenly get buzzwords everyone uses and people ride them and hold on to them until suddenly it’s a “revolution”. PC: How will casual dining concepts evolve to meet consumer needs in the digital age? RW: In this increasingly digital age we are led to believe we could create a homogenous nation where we’re all the same. Actually, the reverse has happened. We have instant access to information about what is happening from Tokyo to San Francisco at the touch of a button. But what is mad is it has created people who want to be individuals but also part of a tribe. People want to feel special and different from others. I think these revolutions – such as craft beer – came from a desire for people to feel different. The Shoreditch bearded hipster and craft beer went hand in hand, but I also feel you have revolutions when people want to feel different. ▲ ¡ SUMMER 2017 ¡ PROPEL QUARTERLY


Feature belt and the company has taken the smallest unit it could have ever taken in any retail development. The company has started to realise business models need to change. It is what I would describe as a Domino’s franchise. One of the units has half its square footage as a takeaway counter. People are reframing their models as purely dedicated to the kitchen area and perhaps they know the majority of their business will come from takeaway.

A brief history of Roger Wade

PC: What are your tips for success? RW: I believe you have to be great at three things and if you are bad at one of them, you will go under. Great content: If it’s a restaurant you need fantastic food, a good environment and a reasonable price point. The content has to have a major tick. Traffic: You can have the greatest content in the world but if no-one finds you and you don’t get traffic you won’t exist. You need an ideal position that is not too mainstream and not too far off the beaten track. The problem for most smaller brands or street food vendors is a lot of them have great content and are really good at the product side of things but they don’t have the financial covenants to get the location they require. We look at the strength of their brand and ask: “Will it work?” Partnerships: If you are slow and don’t serve people well, it lets down the experience and you will struggle. A lot of independents struggle with things such as outside cleaning and security. We try to allow the smaller independent brands to focus on what they are good at – content. Business is increasingly about partnerships and people have to remember the importance of these elements. PC: Can you explain more about the changing face of dining outlets and takeaway – especially your YO Sushi! adaptation? RW: We have unique and smaller offers as well as bigger operators such as Breakfast Club. Croydon didn’t have one, so we made a balance. We have some of the bigger guys upstairs and have launched YO! Sushi with a new concept. It is the first YO! Sushi venue that does not feature a conveyor


I went to Sussex University, got a few jobs in advertising and was sacked from my first three jobs. My last job was in the States and I came to the conclusion I was unemployable. I had some friends I used to play football with in the UK – Alastair Hook, co-founder of Meantime Brewery, Ben Joseph, Meantime co-founder and owner of the Carhartt clothing brand in the UK, and Ray Richardson, who was also a Meantime investor. They were all requesting sportswear from New York so I used to send stuff back to the UK. Then, with Ben, we started selling sportswear to shops. After that, Ben and I hooked up with designers who helped us take it to market and we created our own brand – Boxfresh – in 1989 and ran that for almost 20 years. We started Carhartt in the UK and were probably the first importer and stockists of G-Star. We sold that to Pentland Brands. While I had Boxfresh I started the first container store, which I used to bring to trade shows. I went on to become a brand consultant for people such as Superdry and Timothy Edwards. However, I couldn’t get the idea of container shops out of my mind. I always loved the idea of industrialised architecture and felt it would resolve some problems. I had about a dozen shops. I remember I was closing two shops – one in Brighton and one in Manchester – and wrote off about a quarter of a million at each. Rather than write-off the shops, I wished I could just pick them up and drop them in another place. A mate used to run a burger joint and turn up with his trailer and park it where he wanted. The new owners of Boxfresh thought it was crazy. After we sold, people were ringing me up and asking what I was doing? I had a mate in the States who had been running a retail development and I woke up one day and thought I would run a whole retail development out of containers that would be a home for independent brands. I put it in Shoreditch because that’s where Boxfresh was based and I knew Shoreditch really well. By chance, I was offered the land and the rest is history. I have literally gone from owning a few stores to running a retail development.


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Advertising Feature

Tips... at a tipping point?

A survey earlier this year by AA Hotel and Hospitality Services made it clear that tipping remains an area for uncertainty amongst customers. Over half are unsure whether to tip, and how much, and they are uncertain how money is shared out, particularly when it comes to non-cash tips or service charges added to the bill.

3. Gratuities and services charges do not count towards A Government consultation in 2016 on the issue of transparency when it comes to tips has not yet offered clarity on the subject. Yet, of the 75 restaurants surveyed by the AA, 81% said they would welcome clearer legislation on how tip money should be distributed.

minimum pay levels – regardless of how the employee is paid and whether the tips are paid via the payroll or through a tronc system. Basic pay rate must always reflect the NLW.

4. Holiday pay should reflect a worker’s normal remuneration, so tips may need to be taken into account when calculating this. Tips paid into a genuine tronc arrangement are unlikely to be regarded as part of a worker’s normal remuneration, however. But where you regularly pay an amount to reflect service charges or non-cash tips, this should be taken into consideration.

The current position Cash tips belong to employees, so the operator should not take control of these. Optional or discretionary service charges/noncash tips are paid to the restaurant, to which they then belong. Unless stated in an employment contract, the business is not legally obliged to allocate a specific proportion of this income to staff. Deductions from service charges and non-cash tips to cover costs for processing payment to staffs can be legitimately made by a restaurant. This is a growing trend in a society where cash is used with decreasing frequency. However, the rise in deductions to cover administration has had a lot of bad press and this has seen some operators, including the Casual Dining Group, Pizza Express and Azzurri, scrapping such charges.

5. Tax is payable on tips and employees must declare cash tips for income tax purposes. PAYE must be applied to all tips paid to an employee.

6. A clear written tips and service charge policy should be in place and be communicated to staff through employment contracts, the staff handbook or other appropriate way. Freeths is one of the few law firms in the UK that specialises solely in advising hospitality and leisure operators. Extensive knowledge of how the law impacts on the industry ensures our team always provides relevant, practical advice and helps protect you against risk.

Best practice: 1. Be clear with staff about the distribution of services charges and tips, and what may be deducted, and for what purpose (this might include banking charges or payroll processing costs). To maintain good relations with staff it is sensible to consult with them over this.

2. You should not make deductions from wages to cover such charges without written agreement of staff, as you will be at risk of breaching contract – unless this is already included in the employment contract.


Specialist legal support for the drinks, hospitality & leisure industry Call: 01908 668555 For more useful legal insights visit:



Delivery channel A

With home delivery in Britain growing eight times faster than the dining-out market, Cyril Lavenant, NPD Group director of foodservice UK, looks at where delivery will take us as it races down the fast lane

s the old saying goes, an Englishman’s home is his castle, and based on the latest market figures on the fastgrowing delivery channel, home is also a great place to enjoy out-of-home (OOH) food. The delivery channel in Britain’s eating-out foodservice market was worth £3.6bn as of year ending February 2017, up 4% on the previous year. The delivery channel has grown rapidly, up nearly 50% in value terms since 2008. But let’s define “delivery” first. This can refer to well-known foodservice chains or any small independent takeaway or larger full-service restaurant that offers delivery. Traditionally, delivery can be requested by phone or online direct from a restaurant. That has not changed. But thanks to smartphones, delivery now includes the sub-category of “aggregators” such as Deliveroo, Just Eat, Hungryhouse and UberEats. These brands are having a major impact on Britain’s foodservice

industry and are a big catalyst for the success of delivery. At NPD Group, we record delivery as OOH business because the order is placed with a foodservice establishment that primarily caters to customers who want to eat out, even though the ready-to-eat food is eaten at home (or in the workplace).

“The data suggests there is a clear market opportunity for lunchtime delivery – and even for breakfast delivery. The opportunity is evident in the low level of penetration” Last year, delivery grew eight times faster than the total OOH market. While total visits to “eat out” increased just 0.9% year-on-year to 11.3 billion, the delivery sector jumped nearly 8% to 603 million

visits in year ending February 2017. Most delivery business (79% of visits) is through the fast-food quick-service restaurant channel, with quick-service ethnic leading the way followed by quick-service pizza and Italian. But pubs are now part of the picture too as they begin to partner with the aggregators. Although British pubs only account for 4.5% of the delivery market, they increased their delivery visits by 54% in year ending February 2017 over the previous year. Across the wider industry, at the end of February 2017 delivery accounted for 5.3% of British OOH foodservice visits (versus 3.6% in year ending February 2008). Millennials (18 to 34-year-olds) use aggregators heavily. The group comprising 18 to 24-year-olds has especially become a major source of demand, accounting for 14% of aggregator delivery visits compared with 9% of total OOH visits. ▲ ¡ SUMMER 2017 ¡ PROPEL QUARTERLY


Insight Italian success Italian favourites in the form of pizza and pasta are riding the delivery wave really effectively. In year ending February 2017, the pizza/Italian channel accounted for 5% of the total OOH market but a much larger 27% of delivery visits. Last year, Britons spent £1.1bn on pizza/Italian delivery, the vast majority of which (£1bn) was spent in quick-service outlets. The Italian channel accounted for 161 million delivery visits (more than one in four) out of a total market of 603 million visits. There was a significant increase in the number of delivery visits for full-service pizza/Italian restaurants with a jump of 4% to almost 15 million.

Pizza in premier position The data clearly shows pizza is the top choice for delivery among Britons. However, is that driven by consumer choice or convenience? At a stroke, the introduction of aggregators has massively expanded the amount of choice on offer to millions of consumers. Instead of choosing between one high-street pizza brand and another, consumers now face a wealth of tempting choices alongside pizza – Chinese, Thai, Japanese, Greek, even traditional pub food. So pizza is popular but the changing delivery dynamics are introducing new competitive pressures.

the quality and enjoyment you always associated with eating out at a fullservice restaurant at home. Plus, you can effortlessly order a wide selection of takeaway food not just from one local restaurant but from several. Consumers like delivery more than ever because they are beginning to get the variety and quality of eating out in the comfort of their own home. The game has changed and millennials are pushing the trend – it’s ultra-convenient for them just to “tap an app” to order. The aggregators will surely view the current low level of penetration at breakfast and lunch as irresistible market opportunities. How soon will it be before we go beyond getting a basic

restaurants to work on their cleanliness and it would be easy for consumers to compare restaurants in that respect.

Restaurant ‘lite’ The average bill for delivered food is almost £1 lower than for a meal eaten on the premises. For year ending February 2017, the average OOH on-premise bill was £6.90, but in the delivery channel it was £6.00. For full-service operators such as a local Indian, Thai, Chinese, Japanese, Greek, Italian or Mexican restaurant, the difference is bigger, at £12.40 for a meal on the premises versus £7.10 for delivery. Why is this? Delivery often works out cheaper because orders typically cut out items such as beverages, starters, sides

Average ticket per person – £ 12.4


6.9 6

Lunch and breakfast: Opportunity knocks “Lunch is for wimps,” Gordon Gekko said in Oliver Stone’s 1987 movie Wall Street. Gekko’s philosophy was life is about hard work and making money so it makes no sense to waste time stopping for lunch. But what would Gekko say a generation later? Would he be tempted if he could tap his smartphone and be confident of a decent lunch arriving in minutes? The data suggests there is a clear market opportunity for lunchtime delivery – and even for breakfast delivery. The opportunity is evident in the low level of penetration. Evening meals currently account for 66% of all aggregator deliveries. Breakfast accounts for only 6% of deliveries (but 12% of OOH visits), while lunch manages 11% of deliveries (against 34% of all OOH visits). That provides plenty of room to catch up. Ordering ready-to-eat food for delivery via app, website or phone is growing so fast, “eating in” is becoming the new “eating out”. It goes beyond getting delivery of conventional “takeaway” food because full-service restaurants are offering delivery too. Delivery obviously saves on the effort of visiting the foodservice outlet – readyto-eat food comes to your door of course. But it’s now easier to duplicate



On Premise



grab-and-go breakfast on the way to work and opt instead for a fancy breakfast delivered to our workplace? Or how long will it be before we order a fancy breakfast for delivery to our homes when we are off work? We can be certain the aggregators will be hard at work to tempt us. Aggregators can come up with a range of innovations. Think of a consumer who wants to be sure the establishment they order from is operating the best hygiene standards. Aggregators could address that by showing hygiene ratings next to the restaurant logo to reassure consumers. If aggregators did this, it would encourage the “below-par”

and desserts. So consumers choosing delivery are often buying “lite” versions of what they might order at a restaurant. The aggregators are effectively driving lowervalue “virtual traffic”. Moreover, the ability to order from more than one restaurant is putting pressure on establishments accustomed to serving hitherto loyal customers in a small catchment area. At the same time, struggling independents are playing on a more level playing field when competing with the big branded foodservice chains. This levelling-out is something independents will welcome as it can only be good for their business at a time when most branded chains are enjoying more success than ever. ▲ ¡ SPRING 2016 ¡ PROPEL QUARTERLY PROPEL QUARTERLY ¡ SUMMER 2017 ¡


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Insight Delivery strategies are a ‘must’ Even though delivery business can often mean less revenue for operators, the delivery channel is growing so quickly any foodservice operator lacking a delivery strategy is taking a distinct business risk. Consumers want delivery and if they find a local outlet is not doing it they will go somewhere else. Meanwhile, any foodservice operator offering delivery must find ways to encourage consumers to increase the value of their orders. A good tactic would be to create special meal deals that apply to delivery only.


rise in deliveries from British pubs in year ending February 2017 over the previous year

“Any foodservice operator offering delivery must find ways to encourage consumers to increase the value of their orders. A good tactic would be to create special meal deals that apply to delivery only” To mitigate the lower spend by delivery customers, restaurant owners must also try to increase the frequency of delivery orders and find ways to ensure more people are included in one single order than would be the case if they were ordering in the restaurant itself. Foodservice operators have demonstrated repeatedly they have the creativity required to get the best out of new trends and respond effectively, and they will devise sound new strategies for delivery.

Making full-service more affordable The ability to order only a main dish might be unwelcome to some restaurants but it is making full-service restaurants more affordable for less affluent consumers. The C2DE social and economic groups account for 38%

of total OOH visits in Britain, versus 48% of aggregator visits. The reverse applies for ABC1s, who account for 62% of OOH visits but a lower share of 52% of aggregator visits. Delivery is popular with parents and their children. This kind of customer group accounts for 28% share of OOH visits but a much bigger 45% share of deliveries through aggregators.

Should convenience stores deliver? Delivery is everywhere, but is this a trend for convenience stores selling food? Many convenience stores sell food ideal for customers looking for a quick snack. But it doesn’t necessarily make sense for the store to arrange to deliver these products because they are low ticket and an operation needs to pay extra when a third-party aggregator handles delivery. Convenience stores are unlikely to opt for a full delivery

Value of delivery in OOH – billion £ 5.3



2020 Forecast

service to homes or offices because of the proliferation of low-ticket items. But a good first step would be to introduce click and collect for food to go by developing an app.

Delivery will keep growing By the end of 2020, the value of the delivery channel could grow by nearly 50% to £5.3bn, compared with £3.6bn today. This is based on a likely faster rate of 10% growth to the end of 2017 and the same amount in each of 2018, 2019 and 2020. The British foodservice industry could feasibly be worth £60bn by the end of 2020 and delivery could represent almost 10% of that figure. The expansion of the delivery channel is an opportunity knocking hard on the doors of Britain’s foodservice industry.

Italian success Italian favourites in the form of pizza and pasta are riding the delivery wave really effectively. In year ending February 2017, the pizza/Italian channel accounted for 5% of the total OOH market but a much larger 27% of delivery visits. Last year, Britons spent £1.1bn on pizza/Italian delivery, the vast majority of which (£1bn) was spent in quick-service outlets. The Italian channel accounted for 161 million delivery visits (more than one in four) out of a total market of 603 million visits. There was a significant increase in the number of delivery visits for full-service pizza/Italian restaurants with a jump of 4% to almost 15 million.

Cyril Lavenant is director of foodservice for the UK at NPD Group¡ ¡SUMMER SPRING 2016 ¡ PROPEL QUARTERLY


Advertising Feature

5 reasons restaurant groups across the UK are turning to central production units

With more than 19 million of us eating out each week in the UK, restaurants are under increasing pressure to meet the demands of a fussy clientèle who could easily take their money elsewhere. Independent eateries and group chains are both feeling the heat and finding it necessary to up the ante to avoid having to shut their doors


n this respect, central production units (CPUs) are playing a steadily increasing role in the UK restaurant industry. Restaurants often outsource aspects of their offerings to CPUs, which specialise in various aspects of food production. CPUs are slowly becoming an essential ingredient of all restaurants. Since Mustard’s launch in 2008, the company has seen a steady increase in demand for centralised production. It might surprise some diners, but restaurants across the spectrum – from casual dining to high-end – are reaching out to CPUs seeking to outsource elements of their menus. Mustard Foods engaged a number of key clients and asked them why they were turning to central production units:


Core focus

Many restaurants engage CPUs to allow them to focus on their core strength. In some cases, this may be a patisserie or bakery outsourcing their deli items and cooked products. In the case of a steak restaurant, it may be their sauces and marinades.


Consistency across franchises

One of the main challenges for rapidly-expanding restaurant chains is consistency. With a national shortage of chefs, it is vital to ensure consistency across the more technical elements of a menu.



Reduced kitchen space

Driven by margins, restaurateurs have to limit the space allocated to the kitchen. This puts added pressure on the kitchen to perform with restricted space and equipment.


Commercial property

Most cities and town centres across the UK have a major shortage of A3 commercial real estate, forcing many restaurant chains to adapt their offering to A1. The competition for A3 space limits the growth opportunities for newcomers to the market and those wanting to scale quickly.


Shortage of chefs

It has been widely reported in the food industry media that the UK is experiencing a dramatic shortage of chefs. This appears to be a trend across many industries, and particularly noticeable in London. Simplifying requirements of chefs by outsourcing the more complex components of food production helps to alleviate the pressure applied by the skills shortage. Developing menu ideas, sourcing and tracking products across the supply chain, implementing a new menu item nationwide across a restaurant group, managing and ensuring consistency, hiring, and training and managing skilled chefs are just some of the challenges and costs removed when working with a central production unit – essential for growing restaurant groups to be competitive.


Advertising Feature

About Mustard Foods The Mustard Group was founded in 1974. In the nineties Mustard Catering, led by Glynn Woodin, revolutionised London’s high-end catering sector and took Mustard to the top, catering at venues across London, including The Royal Academy, The Wallace Collection and the V&A. In the mid-2000s, the casual dining sector began to change. Growing restaurant groups needed strategic food partners with development, advisory and production facilities to support their growth and by 2009, with the establishment of Mustard Foods, Mustard had started supplying a select group of London restaurants. The essence of what made Mustard great in the eighties and nineties remains core to Mustard Foods today: quality, consistency, and integrity. James Robins, Managing Director, and Glynn Woodin, Chairman, have been with Mustard for a combined 60-plus years.

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5 phases to excellence I

Christopher Muller and Lee Sheldon look at how your company can apply the ‘5 Phases’ model in an action plan to professionally develop your multi-unit managers

n previous articles in Propel Quarterly and in our Propel Multi-Unit Masterclasses, we have discussed the “5 Phases” of any multi-unit manager’s professional development. To review, these phases move progressively from the attainment of management competencies in the areas of operations, facilities, finance, marketing and finally human resource management. The arc is the same for everyone who develops true concept mastery, but not everyone moves at the same pace or even comprehends the value of each phase for their own development and career advancement. At a practical level this suggests an individual, or any company they work with, must ask the basic question: “After showing competencies in the operations area, what does mastering marketing, finance, and HR mean in our particular situation?” The follow-up question may be: “Once we know the answer to this, how do we measure and reward success in each area?” This means getting specific about the functional aspects of these disciplines. It requires senior management to be very clear about what the expectations are for a multi-unit manager in each phase. Ultimately, this should lead to identifying not just what simple success will be but what excellence will look like when a personal development programme is implemented. Let’s take two examples for the activities related only to the marketing phase. In your organisation, from the perspective of the multi-unit manager, is marketing measured by: u ensuring the correct promotions are in place across all company and franchised units? u checking the entire staff in every unit is briefed on the processes for implementation? u monitoring to make sure the offer is being communicated effectively to the correct target customers? Or, are multi-unit managers really concerned with understanding how the individual units in their care are performing in terms of key result areas such as customer retention, total meal period transactions, average per-person spend, or simply items included per transaction? Is marketing measured by asking:

‘Phases’ In Multi-Unit (District) Manager Development

u Are our multi-unit managers able to develop their own local store marketing plans to address issues such as building guest frequency and average spend? u Can they analyse the customer’s total experience, identify the vital “moments of truth” that all customers have with the brand? u Can management use the data they have collected to set specific actions into place to enhance the customer experience while maximising area profits even further? The daily application of this line of inquiry creates a critical need to be clear regarding what you expect your multi-unit management team to do (as well as what not to do). This is also when you should see what existing high performers are doing for use as a benchmark for the others on the team. By first identifying and then understanding what “good” looks like, you can better define your expectations and develop programme guides so other multi-unit managers will be able to exhibit similar skills and activities.

“Senior management needs to be very clear about what the expectations are for a multi-unit manager in each phase. Ultimately, this should lead to identifying not just what simple success will be but what excellence will look like” This diagnosis of the tasks and behaviours required at each stage of the 5 Phases model is a critical step in being able to recruit or train existing or future multi-unit managers in an organisation. Using tools and processes developed from numerous opportunities in the field and in the classroom – and integrating the 5 Phases research into a learning system – the team at Mastering Multi Units (MMU) has found many clients know instinctively there are performance gaps in their organisation. What they are often less able to articulate is what their preferred state would look like in practice. In other words, they know what they don’t want to reward but they find it hard to define what specifically they do want to encourage. To bridge that gap, programmes such as those used by MMU spend quality time helping leaders to undertake this multilayered analysis in order to determine the detailed activities and behaviours that will make both newly promoted and seasoned multi-unit managers transition into world-class operators for their business. The challenge, whether a company creates an internal programme of multi-unit manager development or engages an outside company such as MMU to assist in this process, is to address the specific individual needs of each manager while creating a scalable and cost-effective initiative.

Professor Chris Muller teaches at Boston University’s School of Hospitality and leads Propel’s Multi Site Management Masterclass. Lee Sheldon is co-founder of multi-unit management training and advice service MMU

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Consumer direct – the next bright spot


Technomic chief insights officer Darren Tristano focuses on the emerging consumer direct channel and reveals why it is gaining so much traction

onsumer direct is an emerging channel with much hype around it because it provides consumers with new options for sourcing meals beyond traditional restaurant and retail establishments. This channel is comprised of both meal kit companies and third-party delivery services, both of which are taking the industry by storm, as noted at Winsight’s Consumer Direct Conference. Since consumer direct is projected to grow in size, it is important to understand why it is gaining traction with consumers. Let’s start by first examining the appeal of the consumer direct channel. Today’s hectic lifestyle is increasingly leading consumers to seek convenience, speed and quality in their foodservice occasions and that has led to a large shift towards off-premise occasions. Consumer direct platforms not only deliver on all of these attributes, they take off-premise a step further by delivering food and beverages direct to your doorstep.

“While all generations engage with on-demand services (including one out of four baby boomers), millennials comprise 41%” Meal kit companies offer a subscriptionbased model that delivers restaurantquality recipes and the premium, premeasured ingredients needed to prepare the gourmet meal at home. The cook-yourown meal kits allow guests to enjoy the same quality of freshly prepared at-home meals without the inconvenience of having to visit the supermarket for ingredients. Leading meal kit companies are HelloFresh and Blue Apron but emerging startups are increasing competition in this sector. Some are even offering highly specialised meal kit solutions. Purple Carrot only delivers plant-based meals that “reduce your environmental footprint”, and Sun Basket, a company that promotes clean eating, caters to specific lifestyles by offering meal kits with gluten-free, paleo or vegetarian recipes. Third-party delivery companies also provide on-demand service by giving consumers the luxury of choosing from a variety of restaurants and retailers for foodservice occasions without having to

Would consider using in the future 60%


Source: Consumer Direct survey, Feb 2017 © 2017 Technomic Inc.


54% 47%

Grocery Delivery

Delivery-Only Restaurants

Third-Party Delivery

leave the couch. Foodservice options typically comprise a mix of independent restaurants, regional chains and national chains, along with retail options such as drugstores and grocery stores. These companies promise speed, with deliveries usually made in less than an hour, as well as late-night or all-day hours. Another norm of these services is they offer cashless deliveries, meaning everything, including tip, is paid for through the mobile app or website. Leaders in thirdparty delivery include DoorDash and Postmates, although Amazon Restaurants is an emerging third-party delivery service that is quickly gaining traction. So who are the consumer direct users? Technomic research shows the on-demand user skews to higher income, caucasian and younger in age. In fact, while all generations engage with on-demand services (including one out of four baby boomers), millennials comprise 41% of the on-demand consumer. Generation Z, while only making up 14% of on-demand customers, is expected to become a larger user for this channel as members of this cohort come into more spending power. Interestingly, men and woman are relatively balanced in their on-demand foodservice usage (48% female versus 52% male). Many consumers are first enticed to try consumer direct deliveries through offers of free meals and discounts. And the appeal of this channel is catching on, with a considerable proportion of consumers saying they would consider signing up for or using one of these services in the future. But the consumer direct channel does have its Achilles heel – and that is value. To some, on-demand options are perceived as costly because of the related delivery fees and subscription model fees. While it is projected this alternative channel will have a greater alignment

Prepared Meal Services


with the median household income by 2025, consumer direct companies that can promote value now will have the best chance of gaining the loyalty of new customers early on.

As I see it Consumer direct is still in its infancy and has much growth to undergo before it transitions to a mainstream channel. Some companies will come out on top, others will fade away over the next few years. Having household names like Amazon enter the consumer direct arena will help make on-demand ordering more of an everyday habit for consumers. And this channel will also greatly benefit from the loyalty of Generation Z and millennial users, who will gain more discretionary spending as they grow in their professions. What’s on the horizon for on-demand channels? Expect to see chain operators who don’t want to see loss of quality control or decreased margins increasingly evaluating the development of a custom in-house delivery platform. Emerging technology will continue to make ondemand ordering and delivery even more efficient and attractive to consumers. And we’ll also see more advanced customisation options, as well as greater daypart and occasion expansion for these services. Similar to traditional operators, consumer direct companies must keep a pulse on the demands of consumers, stay in the know with new technology, and foster an internal atmosphere that bolsters imagination and innovation in order to thrive in this fast-paced industry.

Darren Tristano is chief insights officer at insights and research firm Technomic ¡ SUMMER 2017 ¡ PROPEL QUARTERLY



The imposter Far too many gastro-pubs are imposter restaurants masquerading as pubs or pubs with a massively overinflated opinion of the quality of their food, says Glynn Davis


next service and been asked if I’d like to see the menu. “No, I’d hen one of the country’s best chefs, Daniel like a pint-and-a-half of beer and two lemonades for my children.” Clifford, recently announced he was relaunching If this order has actually been delivered, then the drinkers’ area The Flitch of Bacon pub, which he runs in Essex as a destination restaurant rather than a gastro-pub, I we’ve been squeezed into has been an embarrassment. regarded this as a rather sensible move. Buy-your-own table He admitted his intention to run it as a top-end pub had The Harwood Arms in Fulham, south west London, had three bar not worked out and he needed to operate it as a toned-down stools allocated to drinkers on my visit. It was a similar scenario at version of his renowned Midsummer House restaurant in Jamie Oliver’s parents’ place The Cricketers in Clavering, Essex. It’s Cambridge instead. He is not the first quality chef to realise unfair of me to pick on these individual establishments because so gastro-pubs with real top-end food (as opposed to those that many others are also guilty. Probably the most ridiculous situation simply buy in low-quality produce) do not really work. Simon I’ve found was some years ago at the Ratcatchers Inn in Norfolk, Rogan is another example of a Michelin-starred chef who took where the poor locals were forced to buy their own table so on a pub and found customers expected some of the they could secure somewhere to sit when popping in same fireworks as at the feted mothership. for a pint but without an inclination to eat in their They invariably fail, in my view, because they so-called local. fall between two stools. They are not really “Gastro-pubs are Like Clifford, people should come clean and restaurants, with the slickness of service that’s not really restaurants, admit it – these places are not pubs, they are expected, and neither are they pubs where restaurants. The only reason they have been with the slickness of you can drop in for a couple of pints. placed in pubs is because historically it has Clifford is introducing fixed-priced a service that’s expected, been much cheaper to open a dining room in a la carte and tasting menus with canapes, and neither are they pub than it has been to open a restaurant. This amuse bouche, and petit fours all present pubs where you can dates back to the first gastro-pub, The Eagle and correct. This is exactly what diners at The in London’s Farringdon Road, where co-owner drop in for a couple Flitch expected but did not receive. Like many Michael Belben only took on a run-down pub such pubs that are taken on by chefs, it was also of pints” and installed rickety, mismatched tables and chairs, failing at being a local people could drop into after abandoned table cloths, and photocopied menus work and have a drink and order a main course if they because he had no money to take any other approach. decided to stay. These elements became the blueprint for the impending I’ve lost count of the pubs I’ve visited over the years that have onslaught of what became known as the gastro-pub. The term had a reputation for excellent food but where I’ve simply popped was coined by food critic Charles Campion in his piece in the 9 in for a drink. Far too many times I’ve seen every table set for the April 1996 edition of the Evening Standard. He was fine with being credited with the term but such was its swift devaluation, which had so few of the values of Belben’s original creation, Campion lost interest in being associated with the term. That the moniker still persists 20 years later highlights just how firmly it has entered the hospitality mainstream. There are now myriad examples of the genre – from the frozen-everything dire end of the market to the multi-Michelin-starred marvels. They have all, rightly or wrongly, found their place in the market but it doesn’t mean I’ve changed my view that far too many are imposter restaurants masquerading as pubs or pubs with a massively overinflated opinion of the quality of their food. As such, I’ll determinedly avoid those places that overtly advertise themselves as gastro-pubs.

Flitch of Bacon


Glynn Davis is a leading commentator on retail trends


4 techniques to maximise your table yield and profits Get rid of the guesswork and cater to your customers with precise, responsive, data-driven activity.

Technique 1 Overbook Any pub or restaurant worth their table salt knows that a certain proportion of bookings are always bound to become no-shows. There was once a time when this made managing reservations a tentative guessing game. But now, by leveraging big data in conjunction with the right digital booking system, you can intelligently overbook, predicting the number of no-shows and adjusting capacity when needed to keep your tables busy. Technique 2 Operate a “one-in, one-out” policy Disappointing a customer by not having their table ready on time is something that should be avoided at all costs. However, you never want to be so conservative with your bookings that you end up with an excess of empty tables. Satisfying both sides of this spectrum requires a comprehensive view of your venue’s real-time availability - all this takes is an online restaurant booking system. Linking this to your EPoS system can allow you to release a table as soon as the bill is paid, immediately freeing up space for new customers. Even better, you can run a waiting list during busy sessions to make sure tables never stay empty. Technique 3 Get personal Offering personalised discounts and loyalty schemes is a great way to inject some life into those quiet periods. The best thing about personalised customer offers is the number of ways in which they can be aligned to your strategic business needs.

Time-limited offers (i.e. ones accessible only to those booking at certain times of the day) are a great way to fill the shoulder times. Or, why not offer a special discount to loyal customers when they check into your venue using your brand app? Technique 4 Cater to the spontaneous As technology continues to give rise to “on-the-go” culture, more and more customers expect their demands to be met at a moment’s notice. This could mean swinging by your restaurant without a reservation, or tweeting you round the clock to see your gluten-free options. Bearing that in mind, having a real-time, in-session view of your venue’s availability is a must, and it’s also vital that your online channels function seamlessly across mobile and tablet devices. Tech can even mitigate the repercussions during those unfortunate times when you do have to turn customers away. By combining digital waiting lists and customer contact data, you can give any walk-ups or fly-by customers accurate wait times, then have a message sent to them as soon as their table is ready.

Find out more about the technologies and trends that could transform your customers’ dining experience.

© 2017 liveRES All Rights Reserved Unit 1 Cheshire House | Hurricane Close | Stafford | ST16 1GZ | Sales: 01785 257 777 | Helpdesk: 01565 622 329

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Our next Our next conference conference is on is on Thursday, 20th June 2013 6 July 2017 at at The Oxford Oxford Belfrey Hotel, Belfry Hotel Thame

Chris Gerard

National network. Local contacts. Expert knowledge.

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Wasted opportunity


odern apprenticeships and the Apprenticeship Levy came into force in the spring, and companies with a payroll of more than £3m per annum will already be paying the levy that began in May. This scheme is the latest in a long line of attempts by government to devise forms of work-related training that address the apparent low skill level of the British workforce. There has been a succession of reports going back more than a hundred years that have bemoaned this problem and, without exception, the solution has been posed in terms of what central government can do about it. Since the 1980s there has been a series of organisational structures, funding mechanisms and training schemes such as Train to Gain aimed at raising the number and status of apprenticeships. None of them have lasted long or been proclaimed a success.

The history The new Apprenticeship Levy is not that new. Rather it is a retread of a 1960s policy introduced by the Harold Wilson-led Labour government as a tax on employers to pay for training. However, the underlying justification is the same – the free market has failed to deliver vocational training at the right level and in sufficient quantity, so government has a duty to step in. The basic argument goes something like this. Employers will not provide an economically optimal investment in training because they cannot capture the return on this investment. This is because workers can take their newly acquired skills to other employers that don’t invest in training and who

The three million low-level apprenticeship starts targeted by the government’s introduction of the Apprenticeship Levy will fail to deliver productivity gains for employers or wage gains for employees, argues Paul Chase

get a “free ride”. The Apprenticeship Levy is an attempt to address this problem by providing a government subsidy of £15,000 to small employers and charging a use-it-or-lose-it 0.5% of payroll levy to larger employers with an annual payroll of £3m or more. This seems to me to be a solution to a problem that is more imaginary than real. Training can take two forms – specific and general. In the licensed retail sector, for example, there is considerable provision of specific induction training relating to an operator’s way of doing things and in its systems and procedures. This form of training, so the argument goes, is non-transferable because the worker cannot take this company-specific knowledge and skills to another employer. On the other hand, general training may provide transferable skills that are of value to other employers. However, this form of training is under-provided because of the fear of poaching. Thus, government must step in to make good this market failure. It seems to me this division between specific and general training is largely spurious and employers, certainly in our sector, do not worry too much about poaching but rather focus on what training they need to provide to make their own staff more effective and deliver good business returns. And there is a high level of training in our sector, we just don’t necessarily call it an apprenticeship. If we take customer service training as an example, every operator may do this in a way that best suits its company culture. However, the generic principles of customer service training do not vary that much from one operator to the next so, in practice, general and specific training are often interwoven. ▲ ¡ SUMMER 2017 ¡ PROPEL QUARTERLY


Opinion If there is a problem with poaching it’s most likely to arise in relation to high-level training – such as poaching business development managers. In such cases one way of dealing with this is a training contract that prevents employees, which the employer has invested in, from leaving within, say, three years without compensation. At CPL, we operate such training contracts in relation to our accounts department and legal training for staff in our licensing department. Paying for training out of public funds often leads to what economists call a “deadweight loss” – a cost to the public purse that would otherwise have been paid for privately. This was certainly true of Gordon Brown’s Train to Gain programme that, by the time of Labour’s March 2010 Budget, had almost £1.4bn allocated to it. The scheme offered employers taxpayerfunded, work-based training and accredited qualifications that were usually delivered by colleges or independent training organisations that worked in partnership with the employer. Critics of this scheme, including economist Lady Alison Wolf, pointed out the emphasis on maximising the numbers of people put through this training led to resources being concentrated on low-level qualifications. She argued many of these qualifications were unpopular and led to little or no gains in productivity for the employer or wage gains for the employee.

“The levy is a crude payroll tax that will hit profits in the short term but in the longer term will be recouped in reduced wages or employee benefits or reduced levels of employment”

Lady Alison Wolf

some benefit from their levy payments. It should be remembered if the number of apprentices a company wants to train costs more than its levy contribution, government will co-invest based on the employer funding 10% and the government 90% of the extra cost, so this is worth doing. Meanwhile, a similar co-investment scheme for employers whose payroll is less than £3m a year has been put on hold.

The free market alternative In 2013-14 only 2% of the 440,000 apprenticeship starts were at the higher level, whereas 66% were at the lowest level. Rather than new apprenticeship jobs being provided, employers were simply rebadging existing staff as “apprentices” and calling existing training an “apprenticeship” to unlock government funding. The coalition government cancelled Train to Gain but the emphasis on quantity, not quality, continued. In 2014-15 the government spent £1.6bn subsidising apprenticeships through government quango the Skills Funding Agency, which operated on the basis training providers would deliver training to work-based apprentices via a process in which employers were largely passive. But since employers weren’t contributing actual money, many went along with the provision of low-level apprenticeships they almost certainly wouldn’t have accepted if they had to pay for them.

The new scheme So now we have modern apprenticeships, traineeships and a new training levy that will involve employers coughing up actual money. The government plans a new delivery board and an Institute of Apprenticeships, while 150 new “employerled standards” – many of which remain to be written – will be introduced. Given the budgetary constraints the government faces, it is understandable it wants to offload the cost of apprenticeships on to employers through the Apprenticeship Levy. However, the government’s ambition to deliver “three million high-quality apprenticeship starts by 2020” is plain nonsense. Ministers may fantasise about high-level manufacturing, construction and technology apprenticeships but in a service-led economy such as ours, these will never be more than a few tens of thousands. We’re not Germany so we’re right back to pumping up the volume. The irony of all this is the cost of the levy, just like the cost of the new, so-called National Living Wage for over-25s, must be recouped somehow by employers. The levy is a crude payroll tax that will hit profits in the short term but in the longer term will be recouped in reduced wages or employee benefits or reduced levels of employment in a way that will, paradoxically, largely impact on low-skilled workers. The levy will start as a payroll tax on employers but end up as a tax on shelf stackers, kitchen porters and bar staff. However, the new funding arrangements place employers in a position where they either treat the Apprenticeship Levy as a payroll tax, pay up and don’t use it or they rebadge their existing training and map it against new apprenticeship standards to get


So what is the free market alternative to government-led apprenticeships? Real apprenticeships should provide skills that workers can take to other employers and obtain a higher wage than they would otherwise have earned. That means taking lowlevel training out of the sphere of apprenticeships altogether. Employers in our sector can, and do, provide training to their staff in bar service, chalk-boarding, customer service, marketing and merchandising, product knowledge, cellar training, and a host of other practical matters. While some of this training may be operatorspecific, it is based on generic principles and does not need, and will not benefit from, being rebadged as an apprenticeship.

Higher-level apprenticeships So should we just publicly fund higher levels of apprenticeship training? I believe if government wants higher-level apprenticeships to be seen as having equal status with university degree courses and wants to play a role in alleviating perceived market failures – failures that came about in the first place because employers were forced through minimum pay regulations to pay apprentices more than the market rate – then it should fund apprenticeships in a similar way to the funding of undergraduates. Government needs to think about truly “high-quality”, higher-level apprenticeships as providing career advancement opportunities a rational young worker would invest in, and then allow young people to look for apprenticeships that suit them. The provision of employer co-funding and apprenticeship loans – the repayment of which would be contingent on the apprentice achieving a certain level of income – seems to me to be a better way forward than some top-down government scheme employers are forced to pay for in the first instance, and which replicates the same mistakes of previous government meddling. The term “apprenticeship” is now to be legally protected; employers will incur costs trying to map across their existing training schemes to meet the new apprenticeship standards to capture some of the money they’ve paid into the levy, rather than concentrating on running their businesses. I simply don’t believe three million low-level apprenticeship starts will deliver productivity gains for employers, or wage gains for employees. The new scheme is yet another wasted opportunity.

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


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Meating of minds J

Scott Collins tells John Porter how he united with Yianni Papoutsis via Twitter, leading to the foundation of Meatailer, the company behind the MeatLiquor phenomenon, which continues to expand from its humble beginnings in a Peckham car park

ust as 40 years on from the number of people who claim to have been at the first Sex Pistols gig at the 100 Club far outnumber the capacity of the venue, if all those who insist they had a Dead Hippie Burger from the original MeatWagon in 2009 are telling the truth, they’d still be queuing now. The phenomenon started in a car park in Peckham. Eight years ago, rumours were circulating among London’s growing band of urban food enthusiasts about a sublime new burger experience being served from a mobile unit in an unglamorous corner of south east London. From that unpromising start Meatailer, operator of the MeatLiquor brand, with 12 sites trading in London and beyond this year, has evolved – and continues to expand. Co-founders Scott Collins and Yianni Papoutsis united through social media, at the time a relatively new phenomenon. Collins recalls: “I heard via a food blogger I respected on Twitter about this mysterious guy who popped up randomly, roughly on a six-weekly basis, in an industrial estate car park in Peckham. This was before anyone was doing that kind of thing so I tracked him down one day and had a burger, which I thought was brilliant. I’d only ever tasted anything similar in diners in the States.” The mystery man was Papoutsis, who had set up a mobile burger business called the MeatWagon and promoted his appearances – or Meatings – on Twitter. Alongside the burgers, music was played, beer was enjoyed, and a generally good time was had by all. At the time, Collins was a shareholder in Capital Pub Company, the business founded by David Bruce and Clive Watson and later sold to Greene King. Sensing an opportunity, he invited ▲

Scott Collins ¡ SUMMER 2017 ¡ PROPEL QUARTERLY


Feature Papoutsis to hold a Meating in the car park of a pub Collins ran for Capital – the Florence in Herne Hill. He says: “Yianni happened to say on Twitter he was looking for somewhere different to occasionally pop up. I asked Clive Watson and his view was ‘do what you want, you run the pubs’. So, we drummed up a bit of interest, and Yianni came down. “Peckham hadn’t been much of a destination and there weren’t any facilities at the original site – it was bring your own booze. All of a sudden, the Meating was in a pub car park so you could order your food and get a drink while you waited, and there were toilets. That first night, I think the queues for a burger were twoand-a-half hours.” While the mobile, pop-up burger concept clearly struck a chord with customers, it was also a fragile business model. The first MeatWagon was trashed by vandals after a festival and the second, which Collins lent Papoutsis the money for, was stolen. The pair began discussing a more secure approach and undertook a fact-finding tour of the food truck culture in Los Angeles. Collins says: “By the start of 2011, I was in the process of buying the Goldsmiths Tavern in New Cross with Capital and there was a disused Italian restaurant above it.” Capital was not due to complete on the pub until March but then-owners Weir Inns were happy to see the restaurant occupied and enjoy the resulting upturn in bar takings. “That’s where we did the pop-up MeatEasy for three months, and that cemented it,” says Collins. “We got a lot of press. It was different, it was fresh, it was affordable, and it was fun.”

Industry buzz The venture created a buzz, with many industry operators travelling to New Cross to check out the queues – which had become legendary – as well as the food. Through a mutual friend, Collins contacted former PizzaExpress owner David Page, who had recently exited his Clapham House Group venture, owner of Gourmet Burger Kitchen and Bombay Bicycle Club. Collins says: “David got on his scooter, came down to New Cross and queued to get in. He sat there bewildered but said: ‘This is brilliant, what do you need from me?’ The plan was to open a permanent site, and everything snowballed from there.” The culinary creativity of Papoutsis and Collins’ operational experience was a good match. Collins says: “I’d gone from having pubs of my own to working under Clive Watson and having other skill sets to call on, and I didn’t want to go back down the lonely route.” Page roped in his business partner Nabil Mankarious and an EIS company was formed into which a small group of industry investors were persuaded to invest, adding legal and property expertise. A site in Welbeck Street, between Oxford Street and Marylebone, was identified through the new investors’ contacts. Collins says: “It was another empty Italian restaurant. It had been empty for two years, no-one wanted it. Through David and this pool of talent we raised about £250,000, which we opened the first venue with, and that’s essentially what has financed everything since.”


“All of a sudden, the Meating was in a pub car park so you could order your food and get a drink while you waited, and there were toilets. That first night, I think the queues for a burger were twoand-a-half hours”


Continuing the theme Papoutsis set from the outset, the newly formed company was called Meatailer and that first restaurant, opened in 2011, branded as MeatLiquor. It was followed by MeatMarket in Covent Garden the following year, which tweaked both the name and approach, with a focus on quick service and takeaway. Collins says: “To combat some of the negative press around the queues, we designed an offer that was much faster, and not as loud and noisy. We’d get people going in there before the theatre or opera in their tuxedos, which was very pleasing.” MeatMission in Hoxton and ChickenLiquor in Brixton came next. The names were created on the hoof, says Collins. He adds: “We didn’t start with the branding. We came up with the MeatLiquor name two days before opening. MeatMarket made sense because it was in a market, and then MeatMission was in an old Christian mission. ChickenLiquor was a chicken concept. Now, it’s a pain in the arse having all the different names.” All subsequent sites have opened as MeatLiquor. Collins says: “It’ll only be MeatLiquor from now on, because it messes with my mind.”

Dead Hippie The business has a database of 200 recipes for burgers, chicken, hotdogs and other dishes, all developed by Papoutsis. The menu varies from site to site but the heart of the offer is MeatLiquor’s acclaimed burgers – the cheeseburger, bacon cheeseburger, green chilli cheeseburger and the signature Dead Hippie, made with the brand’s trademarked mustard and cheese-based Dead Hippie Sauce.


Customers can ask to have ingredients removed if they wish but no substitutions are allowed to protect Papoutsis’ carefully worked out flavour profiles for each dish. The senior team’s Monday meetings usually include a few new food ideas for Papoutsis to work on. Collins says: “We’re like sponges, that’s the fun bit. Inspiration doesn’t come from other burger operators it could easily be a Michelin-starred restaurant in Copenhagen. I’m off to Mexico and LA soon and I’ll come back brimming with ideas to badger Yianni with. We bandy ideas about and see what sticks.” MeatLiquor also has a well-earned reputation for its quality drinks offer. Cocktail recipes are developed in-house and include spirit-laced hard milkshakes, while the business was also an early entrant into the canned craft beer market. Collins quotes the brand’s PR company, which sums up MeatLiquor’s appeal nicely: “It’s for people who like going out but not growing up. Our demographic is surprisingly broad. It does slightly differ from area to area but people are quite happy bringing their grandparents in and vice versa. I think what we do is pretty honest, consistent, high quality, and value for money. So it’s not an age demographic.” While it’s now easier to make a reservation, the first-come, first-served approach that helped build the original buzz around MeatLiquor is still evident. “There are still queues at Welbeck Street but only at the busiest times,” Collins says. “It’s like getting on the tube in rush hour – if you really don’t like it, don’t get on.” With close to 400 employees and a wider geographical spread following out-of-London openings, Collins says Meatailer has raised

“Inspiration doesn’t come from other burger operators it could easily be a Michelinstarred restaurant in Copenhagen. I’m off to Mexico and LA soon and I’ll come back brimming with ideas”

its game operationally, with a six-strong head office team that meets weekly. He adds: “I’ve just had the chefs down from Bristol and Leeds. Our communication is getting better and will get better still. We can’t just pop into those sites every day but we’ve got good teams at those sites, they’re all rock solid and we’re always improving our head office functionality.” The offer is labour-intensive across the board, from assembling burgers and Papoutsis’ carefully worked out recipes to making cocktails from scratch and ensuring high levels of service front-of-house. “We’re overzealous about what is given to the customer,” says Collins. The assembly line approach means MeatLiquor can train its own kitchen teams rather than compete in the market for the limited pool of chefs. However, Collins adds: “That was more luck than judgment. We’re not that clever!” Training is a detailed and relatively costly process but employee retention is good. “There’s now more people coming back to us,” Collins says. “It was Nick Jones from Soho House Group who said a lot of staff leave because they think the grass is greener on the other side but they find out it’s brown on both, so they come knocking on your door looking to come back. We’re getting that increasingly now, which proves we’re doing something right.” As the business expands, the focus is on appointing managers and other key roles from within.

Support and expansion Alongside its six-strong head office team, Meatailer benefits from support by the Fulham Shore operation headed by Page and ¡ SUMMER 2017 ¡ PROPEL QUARTERLY


Feature Mankarious, which is rolling out the Franco Manca authentic pizza and Real Greek brands. The business shares an external accounts company with Fulham Shore, while Carrie Bowers, who handles Meatailer’s recruitment and training, can also call on support when required. “We can draw on this pool of talent and knowledge because of David and Nabil’s investment,” Collins says. “I’m also an investor in Fulham Shore, as are a couple of my ops guys. It’s like this massive fragmented family, and help is just a phone call away.” New openings continue to diversify the business. A delivery-only site opened in Canary Wharf in partnership with Deliveroo in March, while MeatLiquor became exclusive food and drinks partner at London’s historic Queens ice rink in May. The 12th restaurant opens in King’s Cross this summer. Beyond that, out-of-London sites to add to the MeatLiquors in Brighton, Bristol and Leeds are possible. Collins says: “There is still a lot of fun to be had in London. We’ve got three exciting sites on heads of terms, probably for the end of summer and summer next year. We may do some fundraising for that just to test the market. We’ve done it all on cash flow so far.” In terms of a forecast for site numbers, though, he adds: “We don’t think like that. We’re not a cookiecutter operation.” Turnover for the year to June 2016 was £11.1m, up from £10.3m the year before. Collins says: “Our growth has been a bit steadier than perhaps people looking in from the outside might think. It’s been quite calm and measured but we’ve got a head office team that’s ready to ramp it up now.” He says site selection is key and, in terms of suggestions from landlords and developers, “we listen to a lot, and we say yes to a little”. The brand continues to occupy sites that might not appeal to other operators. For example, MeatLiquor N1 is a converted Citroen garage in Islington with no frontage on to the main street. Collins says: “I think we’re quite smart about the kit-outs but they’re still slightly unusual sites, they’ve never been used for

Scott Collins, co-founder, Meatailer

MeatLiquor Brighton


– the number of recipes for dishes, all developed by co-founder Yianni Papoutsis

If you were to create your own burger from scratch, what would it include – ingredients and sides? “For me, it would have to include a lot of offal. We recently worked with St John owner Fergus Henderson to create a brain burger, which we sold to raise money for Parkinson’s research. That one was pretty special – and unusual. It consisted of a slice of calves’ brain fried in panko breadcrumbs and served with sauce gribiche, homemade mayonnaise and shredded cabbage in a potato and onion roll.”

What would you drink with it? “I co-own the Hobo Beer Co and we’ve just launched a canned cider with Aspall, which I am absolutely loving!”



F&B.” However, he says the company balances those costs against the price other operators are paying for more conventional restaurant units in prime locations. He adds: “I think we’re choosing sites more carefully now. Looking back, some sites that have been great in terms of historic performance I wouldn’t open now. Some areas have changed but we’re still lucky in that we’ve got a loyal crowd and a name.” In terms of marketing, social media remains integral. Collins says: “Yianni and I met due to Twitter, that’s how we initially grew, and as a business we monitor every bit of social media so we can act quickly if there’s any negatives, and just as quickly on positivity.” There is also a 40,000-strong customer email database. Collins accepts the business was a highprofile early entrant into the street food/popup/craft beer wave that changed the casual dining market, but insists it was part of a wider movement rather than a lone pioneer. He says: “The craft beer thing was already going on. I opened a craft beer pub ten years ago, the Clarence in Balham, which won the last ever Evening Standard Pub of the Year Award.” There were also “better burger” players already in the market, including Gourmet Burger Kitchen and Byron, at the time MeatLiquor launched. Collins says: “There were suddenly a lot of people talking about food and drink, and the media began reporting it. It was kind of a zeitgeist. But there are now operators dropping away, people who got involved for the wrong reasons, so there are also casualties.” Collins has no regrets about the change of career that saw him swap Capital Pub Company for Meatailer. He says: “I’m glad to be out of the pub game. I think I got out at the right time. It was all a happy accident, we were just doing what made us happy. I wouldn’t want to be opening a pub or even a street food concept nowadays, to be honest. The market is just incredibly competitive.”

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Viva Las Vegas Development, growth and brand strategist James Hacon led this year’s Propel and ALMR Las Vegas Study Tour. He explains the magic behind the city built on hospitality, while tour delegates Mark Stretton, Dan Einzig and Kate Nicholls outline some of the things that stood out for them during the event


ew places can truly claim to be built on hospitality – but Las Vegas is one of them. The vision of East Coast mobsters under pressure from the authorities saw this city grow to what it is today on the back of gamblers’ misfortune. This year celebrates the 70th anniversary of the completion of The Flamingo, the city’s game changer that paved the way for growth of the near-7km strip. Today, however, it’s not the gambling pulling in the punters, it’s the entertainment and dining. The city now attracts more than 40 million visitors a year and employs almost 350,000 hospitality staff, boasting six out of the world’s top ten largest hotels.

Fewer than 15% staff turnover In stark contrast to the UK, the hospitality sector is not only seen as a career option but a great career option, attracting staff from across the US and overseas. The gargantuan scale of the resort means recruitment and retention of good staff is paramount to the success of each business and the resort city as a whole. We met waiters and bartenders in their 50s and 60s who had worked in hotels their whole career.

“The gargantuan scale of the resort means recruitment and retention of good staff is paramount to the success of each business and the resort city as a whole. We met waiters and bartenders in their 50s and 60s who had worked in hotels their whole career” Digging below the surface with a few cheeky questions, it became apparent there were a few elements at play here. Firstly, the cost of living was generally good compared with other parts of the US, with very affordable house prices. The wages are also good. Even in entry-level positions employees can expect to be paid $32,000 (£22,500) per annum. We met

good section waiters who were grossing more than $100,000 (£70,000) per annum when combining salary and tips. In addition to the salaries, the best employers were offering full medical cover for their employees’ wider family, as well as above-average holiday entitlement, leisure memberships, free staff meals, educational assistance and “thank you” gifts for length of service and positive guest feedback. The result of such great employee engagement is an experienced workforce with average turnover of fewer than 15%.

Evolving business models Think Vegas and your mind almost certainly wanders to roulette tables and slot machines, with food, beverage and entertainment secondary. Ten years ago this would have fitted the business model, with management we met suggesting a 70:30 split and gambling the key revenue generator. Fast-forward to today and food and beverage revenue in the city is at an all-time high, with more people travelling to the city than ever. However, the large casino complexes are missing out, with a combined loss of $662m last year having been in the red for six years. This pressure is resulting in gargantuan spaces being converted from slots or gambling tables to retail, entertainment and restaurants, in turn creating some of the bestperforming food and beverage spaces in the world. With gambling revenues expected to continue to dwindle, it will be interesting to see how this destination continues to evolve as a food-and-beverage destination. I would suggest there is a great opportunity for more all-day dining-style venues, having found it difficult to find somewhere to enjoy brunch after a late night checking out the nightlife.

James Hacon is a development, growth and brand strategist for restaurant and hospitality companies, working as brand strategy director at Thai Leisure Group and a select group of other clients ▲ ¡ SUMMER 2017 ¡ PROPEL QUARTERLY





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Welcome to the Wynn Fleet Street Communications managing director Mark Stretton looks at the ultimate expression of Las Vegas luxury The Wynn hotel complex embodies the luxury found in Las Vegas today. Glamorous, ostentatious and excessive, it graphically illustrates the ambition that abounds in these parts. It reflects a city that delivers on a scale matched by few other cities or leisure destinations anywhere in the world. The hotel is the life’s work of Steve Wynn, a key player in the emergence of Las Vegas as America’s playground. Prior to creating the ultimate expression of Sin City’s high-end exuberance, Wynn had a hand in the construction and operation of a string of landmark resorts such as Golden Nugget, The Mirage, Treasure Island and the Bellagio. Built in 2004 at a cost of $2.7bn (£2.2bn), the Wynn features 5,000 bedrooms and suites, with occupancy regularly running well above 90%. In addition to extensive gaming areas and high-end luxury retail – every hotel in Vegas seems to house a shopping complex of some form – the hotel boasts nine fine-dining restaurants, eight casual-dining eateries, six bars and lounges, and three nightclubs (including XS, voted the number-one club in the US for five years running). It also has 220,000 square feet of further events space in its conference centre. It is the most admired food and beverage programme on the strip, and during our time in Vegas with the Association of Licensed Retailers (ALMR) and Propel, we were lucky enough to be given a guided tour of much of it by British-born director of fine dining Warren Richards. Like everything else in this city, the numbers are over the top. The Wynn’s food and beverage operation alone generates more than $500m in annual revenues. Average spend at its highest-end restaurants is near to $200 per head. Its buffet, featuring 15 cooking stations, serves close to a million guests a year. The nightclubs are set up to (and do) take $1m in a single evening at peak times.

What really has an impact is Wynn’s striking focus on creating unique experiences. From the several destination restaurants that overlook the “Lake of Dreams”, which every night transforms into a visual and audio spectacular complete with 12-metre waterfall and two-metre singing frog (true story), to the raft of “unique” experiences to sate all sorts of curiosities – guests can learn to spin records with a star DJ, make pasta with Frank Sinatra’s granddaughter, master the art of the selfie with an internationally renowned stylist, or indulge in oyster “happy hours” (please enjoy responsibly, of course. Actually, we’ll sell you every last one, if you can pay). However, the story of Steve Wynn, and Vegas itself, is best illustrated not by the grandeur of what lies within the four walls of the Wynn hotel but what sits outside, beyond the terraces, pools and waterfalls. A dramatic 18-hole golf course, built in 2001 – somewhat incongruously given its desert location – is every bit as stunning as the rest of the resort and seemingly every bit as appealing as anything seen at Augusta. At $500 per round, it promises to be (almost) as good. Yet the golf course is not paying its way (strictly in Vegas terms) and will be ripped up to make way for Paradise Park, the third chapter in the development of the Wynn (the second was Encore, a $2.3bn, 2,000-room second tower added in 2008). Paradise Park will feature a 15 to 20-acre lake, with a ten-storey island in the middle that guests can access by ferry, daily water-ski and fireworks shows, boardwalks with shops, bars and restaurants, plus 1,000 more hotel rooms and residences. It’ll be “just like Disney”, according to Steve Wynn. The development will cost something like $1.6bn but will unlock massive value. Analysts suggest the Wynn’s golf club currently generates annual underlying profit (Ebitda) of $5m, whereas Park Paradise could bring in an extra $300m to $400m a year. A luxury water park accessible from the strip will again raise the stakes, even by Vegas standards. It also speaks of a place no longer built just on gaming but on food and beverage, leisure and experiences. It’s a city that never sleeps and never stands still. It’s the ultimate sales and marketing machine, always scheming, always plotting, working out how to take more money today than yesterday, and more again tomorrow. Whether it’s the kiosks on the strip hawking iced daiquiris or one of its leading moguls plotting a monolithic project like Paradise Park, there is an unrelenting focus on the commercial rigour of prizing dollars from pockets – whether the pockets belong to people who have a lot or those that have saved hard to be there. ▲ ¡ SUMMER 2017 ¡ PROPEL QUARTERLY



Suspend your stylometer – you’re in Vegas baby! Chief executive of leading restaurant and brand design agency Mystery Dan Einzig looks at what makes Vegas successful from a food and beverage perspective I was lucky enough to join the merry Propel/ALMR band of hospitality operators on the recent tour of Vegas and it got me thinking, what is it about Vegas that makes it so successful from a food and beverage perspective? Vegas is very impressive. Our guides, the local experts who showed us around, opened our eyes to the back-of-house operations and the high-level deal-making, the real workings of the hospitality world in Vegas. The numbers they happily shared with us were off the charts. According to Jeffrey Frederick, a local hospitality consultant who gave us a fascinating insight into the numbers of Vegas, if your cafe is only doing $10m on The Strip, you’re likely to be in trouble. The Las Vegans love impressing with huge numbers, but then everything in Vegas is huge – hotels, resorts, staff numbers, it’s all super-sized and designed to impress. In Vegas, people like to show off and this applies to the corporate culture. We learnt hospitality is now generating more income than gambling. Then again, we were told that by hospitality directors, not gaming directors! My Spidey senses suspected some of the numbers might be overinflated even for Vegas, because Vegas is all about perception. Poker play, it seems, is not confined to the tables, it extends to the hospitality game. One of the lessons of Vegas is – don’t take everything at face value. From a design perspective, Vegas is unlike anything else in the US, or the world. It is hospitality on steroids. Las Vegas drew a record number of visitors last year, 42.9 million people, even more than tourism officials predicted. The Las Vegas Convention and Visitor Authority said only 16% were first-time visitors, which means a staggering 84% are return visitors. Why? Because it’s the ultimate in “escapism”. It’s set up to give people licence to let loose, to take risks, to be like Vegas – over the top. It feels like the adage “what happens in Vegas, stays in Vegas” has permeated the resort culture. Vegas is actually one massive resort. I found many of the casinos were starting to look the same and the hotels themselves can blur together too. The Venetian stands out with its canals but it’s easy to get confused and think you’re at Caesar’s Palace, unless you’re in a gondola. What stands out design-wise is the sheer quality of execution. There are outlandish themes, and nothing is subtle. Indoor canals,


fake ceilings, giant singing frogs. It would be ridiculous in the real world but Vegas is not the real world, and the resorts get away with it because the standards are so high. World-class designers and huge amounts of money are spent on the fit-out and finishes. It’s not tacky because it’s so high end. The Eiffel Tower’s proportions, colour and texture are so faithful in design and reproduction and the quality of details and fit-out are seriously impressive. It could be so awful and yet, as escapism, it works. We are regularly told millennials demand authenticity and integrity – yet they are there in Vegas, a place you might think would be the antithesis to integrity, except you’ll find authenticity in the quality of design and execution of its resorts. If you go, be prepared to be seriously impressed by service as well as fit-out. It’s carried out to military standard because there are armies of staff. As with the rest of Vegas, it’s service on steroids.

“According to Jeffrey Frederick, a local hospitality consultant who gave us a fascinating insight into the numbers of Vegas, if your cafe is only doing $10m on The Strip, you’re likely to be in trouble” In the casinos it’s another story. Other than at the Wynn, the gambling halls are generic. You could be anywhere. Several of us were struck by how unhappy so many of the gamblers looked. You imagine a casino as a glamorous lifestyle like Monte Carlo and Casino Royale, but we noticed a numbness and isolation in the casino – the absolute validation of gambling loneliness. However, it’s the opposite in the bars, clubs and restaurants – everyone looks happy, euphoric even. They are having a truly great time. This confirmed something I’ve been thinking about recently in terms of what makes hospitality brands work – it’s all about togetherness. As operators focusing on product delivery, the powerful feeling of togetherness can often be overlooked in hospitality. Being with other people in the clubs and bars and restaurants and having a great time with your friends is a massive part of what makes places work. It’s the crucial element to any successful food and beverage brand and, because of the contrast with many of the gamblers, its importance is demonstrated so well in Vegas. The canals, gondolas and replica international monuments may be cringeworthy, but in Vegas your style compass gets put to one side. Because you’re there on an escapist trip, surrounded by friends, colleagues and other people having an equally escapist time, you simply suspend your stylometer – “cause you’re in Vegas baby!” ▲


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Welcome to fabulous Kate Nicholls, chief executive of the ALMR, finds Vegas offers some ‘interesting and valuable learnings to take away’ The ALMR/Propel study tour took a detour this year, forsaking a trip to the National Restaurant Association conference in Chicago for the bright lights of the Bar & Nightclub Show in Las Vegas, with more than 35 delegates experiencing the best in US entertainment during a packed three-day schedule. Chicago is known as a foodie hot spot – it typifies midmarket, middle America and is therefore a testing ground for many new concepts and a fertile and innovative market place. Las Vegas is its brash, flash cousin – more style than substance, a tourist destination with a transient consumer and a triumph of money over taste. It is living proof Coco Chanel was wrong in claiming you can never be too rich or too thin. From a concept perspective, it is anything but cutting edge. So was it fabulous – bigger and better like the Elvis celebration – or was it The Killers’ more jaded view? The answer was somewhere in between. Vegas has many faces, it is like nowhere and nothing else, but it offered some interesting and valuable learnings to take away. In a market that doesn’t have to try too hard and is awash with cash, it proved many industry truisms – and in other cases it subverted many of our assumptions. The tourist Vegas is a competitive, crowded market place with visitors ready, willing and able to spend on their experience. The 23 casinos attract more than 790,000 visitors a day, with an average daily spend of $15m. With stats like that you may be forgiven for assuming – rather like our Valuation Office does about trade in London – that you simply open your doors and visitors will come and the normal pressures of business won’t apply. Going around the venues, I was surprised how many of them did.

own competition – think Dome and Cafe Rouge side by side on the high street in the 1990s but with added glitz. We visited five Mario Batali and Joe Bastianich (B&B) outlets in one casino – from high-end fine dining to burger and pizza. B&B is used to doing things on a big scale and hosting multiple eateries in one location. It is the partnership behind Eataly – the Chicago branch alone is 63,000 square feet and had an initial $20m investment. Here, the company rigorously segmented and marketed the different customer experiences and used the breadth of offer across the five sites to maximise margins and minimise waste – offcuts of the premium-aged steak in the fine dining restaurant were used to create top-end burgers in the diner; a toe-to-tail approach fed the mid-market restaurant with hand-crafted salami and charcuterie. The other common truism writ large was that the guest was paying for the experience, not the product, and the venues were monetising that experience by taking a chance on pricing, or being flexible on pricing, to create an aura of must-attend or exclusivity. Clearly this works in a market like Vegas, where investment in the experience is high from both parties. However, the mindset and ultra commercial approach to selling and commoditisation can translate more widely. It could also be seen in the neighbourhood cafes and restaurants off The Strip, where residents ate. Making people wait a short while, appearing to work hard to squeeze them, talking up the locals and regulars.

“The taxi drivers may tell you it is all about location, location, location but in reality it was about segmentation, segmentation, segmentation” One nightclub operator of a leading casino resort spoke about how margins mattered. True, he was describing the mark-up on a $15 bottle of vodka the club retailed at $200 as “favourable”, but the focus on margin maintenance and minimising waste was common throughout a number of venues. At the clubs, it was about securing margin in order to invest – at a macro level about investing in the outlet, frequent refurbishments, keeping it fresh, doing something different or bringing in the next big DJ. It was also about the day-to-day investment in free entry and drinks for women and customers that are seen to be key to the business. It was also about monetising every aspect of the business, taking “sweating the asset” to a whole new level, paying to occupy a seat or space by the hour, introducing a minimum spend level at a small bar with the best view. The operator also described how hard his company worked to market itself and proactively seek customers. Vegas is a destination and many west coasters will plan a big night out or weekend away there. The larger businesses leave nothing to chance – they were scouring social media to pick up those conversations, groups planning a trip and acting on them, offering special deals to encourage customers they wanted to visit their restaurant, bar or nightclub. If a business that is already seen as “must attend” with queues around the block can do it, there are lessons for smaller companies too. In a crowded and competitive market place – with multiple eating-out venues in one small space – the restaurant operators also talked hard about differentiating themselves and their offer. The taxi drivers may tell you it is all about location, location, location but in reality it was about segmentation, segmentation, segmentation. Know your market, identify your USP and market that rigorously – stick to the knitting, but writ large. It was what allowed the same restaurateurs to provide their

And no visit to the States would be complete without talking about service. I have seen a polarisation in recent years – in tipped environments, the service continues to be very good but where there is no chance of earning any money off the back of your customer interaction, the service was actually poor in Vegas. The quality of service and execution was also high in the roles where there was a focused and structured training programme – and this may be down to the high degree of unionisation and the fact collective bargaining is the norm. On the second day, we visited the Culinary Academy of Las Vegas to discuss the role of training in service standards and quality. A dedicated facility, it is funded largely through union backing and a training levy that came out of collective bargaining. Unlike our Apprenticeship Levy, this is seen as a positive mechanism. More importantly, the training and qualifications the academy offers are seen as key to getting not just the best jobs but any job in hospitality in the city, and there is a focus on continuous professional development. The programme focuses on housekeeping, kitchen and front-of-house only but interestingly there is a high degree of fertilisation and movement between the three strands. A basic qualification in one is seen as an entry level to allow workers to get to the higher-level jobs in restaurant or hotel management. It is a world where a job in hospitality is an aspiration for a school-leaver, where a qualification is essential to get an entrylevel job, where jobseekers are asking about career progression and where the answer to the question of ‘how can I get a management job?’ is to start by training as a kitchen porter or basic housekeeper – perhaps Vegas is fabulous! ¡ SUMMER 2017 ¡ PROPEL QUARTERLY



Getting tough


Employing mentally tough managers is more important than ever in today’s competitive environment, and has a surprisingly positive effect on the bottom line, says Chris Edger

uring the past eight years I have taught and coached more than 700 managers and executives – many of them from hospitality organisations – on our post-graduate multi-unit leadership programmes at Birmingham City University. During that time, we have measured their levels of mental toughness using the MTQ48 psychometric test, highlighting specific areas they can focus on to improve their impact and effectiveness. Two things stand out from the tests. First, the different sexes have differing development needs; poor emotional control stands out as the main issue for men, while lack of confidence is the Achilles heel for women. Second, aggregate MTQ48 scores for all candidates have slipped over time. Why? Judging by feedback in our classroom and coaching sessions the enormous stress and pressure of being in the “squeezed middle” is intensifying rather than diminishing.

“Winners also possess a degree of self-awareness that enables them to recognise and defuse negative thoughts and behavioural patterns” However, during this period a number of our students have won operations and business manager of the year awards from the Association of Licensed Multiple Retailers (ALMR), with a fair proportion progressing into senior positions within the industry. Delving into their MTQ48 data, we discover their psychometric scores were higher than the mean. They possessed more resilient characteristics! So what stood out about them and how can mental toughness be developed? In addition to obvious factors such as a positive mindset and surrounding themselves with like-minded people radiating energy, three things characterise mentally tough managers: Battle hardened – the toughest steel is forged in the fiercest flame! Mentally tough managers have either consciously or inadvertently confronted and overcome adversity. They have been forced to operate outside their comfort zones, conquering tasks that had previously filled them with deep feelings of anxiety, apprehension and fear. This has given them confidence, making them far more courageous than their contemporaries. They have greater


mental capacity to take on new challenges, coupled with an expectation and mindset that they will succeed. Self-aware – these winners also possess a degree of self-awareness that enables them to recognise and defuse negative thoughts and behavioural patterns. They are able to disrupt and reframe negative “internal conversations” that threaten to immobilise and incapacitate them. This enables them to exercise far greater levels of emotional self control than their peer group, meaning they can concentrate on action and solutions rather than obsessing about setbacks, “noise” and distractions. Goal-focused – the third thing that stands out about mentally tough operators is their clear sense of purpose, aspiration and direction. They know what they want and how (broadly) they are going to achieve it! That is to say, they are agile, flexible and open minded enough to learn new skills and seek out essential resources to help them get there. Their goals are rarely improbable or delusional, being usually well thought out, realistic and – compared with their contemporaries – slightly more stretching. But is mental toughness a “trait” or a “state”? Is it genetic or can it be developed? Given the transformative impact our development programmes have had on individuals who have suffered from cripplingly low scores in the MTQ48 test, I am firmly of the view mental toughness is a state that can be nurtured and strengthened. But how? Courageous coaching – in my next book I highlight how courageous coaching (using the “build-raise” process) enables leader-coaches to help managers to build their levels of self-awareness, stiffen their resolve and move out of their comfort zone, principally by highlighting and eliminating any “interference” they believe is inhibiting them. Often this interference is identified as lying “within” – a lack of courage, underpinned by misguided self-perceptions and perspectives – rather than “without”! Successful facilitation of the build-raise coaching process helps fragile managers build their levels of insight, confidence, courage and – most crucially – impact. Reflective practice – managers in hospitality run flat out round the clock.


They seldom have space to reflect and think about what they do, why they do it and how they could do it better. Also, because of ego, many operators are prone to apportioning blame to anybody but themselves for service breakdowns and failures. On our programmes we see managers grow as they critically reflect on their professional practice within their written work. Making sense of themselves and their environment provides a major boost to their overall effectiveness and well-being. Capacity building skills – in addition, those managers who have learnt the art and science of basic managerial skills (such as strategic delegation, stakeholder influencing, action planning, time management, prioritisation, communication) are far more likely to be more resilient. Why? Because they have built capacity to innovate and focus on achieving their superordinate goals. Recently, prime minister Theresa May acknowledged mental health issues were becoming a serious problem in UK society and spoke about how they needed to be addressed more openly and effectively. Businesses are not isolated from this phenomenon. Helping individuals to become more resilient and mentally tough is overlooked by most organisations, but paying heed to it can pay dividends in terms of productivity, creativity and energy. It is doubly important in the hospitality sector, where a long-hours culture, coupled with a notoriously poor reputation for safeguarding employee well-being, prevails. So, while learning the lessons from those who are mentally tough – experiencing and conquering adversity, having high levels of selfawareness and clear goals – we need to apply more of the developmental techniques that help managers increase their resilience and mental toughness. Organisations would benefit from training their leaders in courageous coaching techniques, encouraging more reflective practice, and inculcating basic managerial skills so their people have more capacity to cope. Having a mentally tough cadre of managers is more important than ever in today’s competitive environment. Those who choose to focus on it will be surprised by its positive effect on the bottom line!

Professor Chris Edger is a multiple author on retail leadership



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Inspirational messages


From Sherlock Holmes and Super Bowl to Veggie Pret and Jamie Oliver, Ann Elliott looks at some of the most inspirational ad campaigns in recent times riting for Propel is always a fun exercise, and the best opinion pieces are the ones where people tell me what has inspired them. There have been some particularly good ones recently:

Budweiser gets the message right

Jamie Oliver’s ‘holiday hunger’ campaign Jamie Oliver has consistently championed issues such as school dinners and the sugar tax. He has now set his sights on what he is calling “holiday hunger”. He is referring to the vulnerable children who receive free school meals but only, of course, on the days they actually go to school. Subsequently, for 175 days a year they are at risk of going without a decent meal. His proposal? Keep school kitchens open during holidays with the sole purpose of feeding hungry children. Proposals to keep this move cost-effective include utilising volunteer staff and endof-life food from supermarkets. There are positives, and negatives in the message. One blogger, Kip Hakes, pointed out: “While the concept is a noble one – in my opinion – it’s a bit ridiculous. Our schools are stretched so much at the moment, budgets are tight and staff are charged with more responsibility than ever before.” Given Oliver’s gravitas, it will be interesting to see how much traction the idea gains. It cannot be denied the issue exists, with 3.7 million UK children living in poverty. ▲

The Elliotts office gets particularly excited about the Super Bowl, not because they’re American football (or Lady Gaga) aficionados but because US brands always push the boat out with their half-time advertising, trying to outdo each other! Evidently, with seemingly the whole of America watching, the average cost of a 30-second ad for this year’s Super Bowl was estimated at more than $5m. Budweiser arguably won this year’s contest. Its campaign took aim at the relevant issue of immigration – controversial but undeniably emotive. The ad traced Budweiser co-founder Adolphus Busch and his troubles when arriving in the US from Germany in the late 1800s. The advert didn’t need to mention Trump or immigration issues dominating the news in the US. The message was that without immigration Budweiser, and the majority of brands on American shelves, would not exist. The Trump regime is showing no sign of relenting at the moment. It will be fascinating to watch how brands continue to interact with the government as its polarisation of US opinion continues. ¡ SUMMER 2017 ¡ PROPEL QUARTERLY


Feature Opinion Fuller’s Michael Fish partnership (when it rains, it pours) With Dry January out of the way, London Pride conveyed a new meaning to the term “wet sales” by installing former BBC weatherman Michael Fish as its social media ambassador to lead a giveaway scheme aimed at brightening up February. Using a live broadcast weather monitor on Twitter and Periscope, the #whenitrainsitpours campaign offered followers in London a free pint each time it rained in the capital. “When it rains, the beer flows!” Followers tweeted to claim their free pint at the majority of Fuller’s tenanted and managed pubs. Fish said: “February can often be one of the dreariest months of the year, with the short days and wet weather, so a free pint of London Pride will certainly brighten up people’s days.” He’s certainly right.

Pret acts on consumer insight There aren’t many things more satisfying than identifying consumer preference and acting on it. Insight is such a valuable tool. Pret A Manger got the formula right towards the end of last year. The company was encouraged to launch a vegetarian-only pop-up in 2016 after seeing overwhelmingly positive results to a simple online poll asking if customers would support vegan stores. The Pret chefs developed more than 40 meat-free sandwiches, salads, wraps, baguettes and protein pots especially for the launch, with the response overwhelmingly positive from meateaters as well as vegetarians. The sales results were so strong the concept went from temporary to permanent “Veggie Pret”, with popular recipes making their way into other Pret locations. Tremendous return on investment stemming from basic, cost-effective research!

Taking on The Times The Sunday Times published its Top 100 list of restaurants in early February, but Gary Usher’s Sticky Walnut restaurant wasn’t one to feature. Evidently Usher decided to take on The Sunday Times at its own game. He was asked by the paper late last year if it could “sample the menu” for the 2017 list. Usher said the request made him feel uncomfortable, adding: “It was the wording of the email. I just had this feeling they wanted to eat for free. Firstly, we can’t afford to give away free food. Secondly, I just didn’t feel right about it. By covering the cost of the lunch we’d effectively be buying our entry in the list.” Usher duly tweeted The Sunday Times to confirm he no longer wished the restaurant to be considered, and the tweet quickly gained traction. Usher garnered support from leading food critics Marina O’Loughlin and Jay Rayner, leading to a formal apology by the newspaper. This isn’t Usher’s first flirtation with controversy. He has previously barred reviewers for making outlandish claims about his food, as well as urging negative TripAdvisor reviewers to never return. But he took on The Sunday Times and won. Good on him.


2017 – the year of literary heroes While UK consumers prepare for the year of Brexit, VisitBritain has started readying European tourists for the year of Harry Potter and Sherlock Holmes. VisitBritain has claimed an overseas visitor will spend £23 for every £1 the government invests in marketing the UK abroad, with 2017 conveniently marking a number of key celebrations across the isles, including the 20th anniversary of the first Harry Potter book, the 125th anniversary of the first Sherlock Holmes collection and the 200th anniversary of the death of Jane Austen, to name but a few. Diversity remained at the heart of the campaign, with different countries within the UK promoting different aspects of what the UK has to offer. Wales, for example, promoted a “Year of Legends” paying tribute to the nation’s epic myths. With uncertainty levels high and consumer confidence low for 2017, we hope Potter and Holmes can make Britain Great again.

Ann Elliott is chief executive of Elliotts, the leading integrated marketing agency in the hospitality and leisure sector – Follow her on Twitter: @elliottsagency


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Technology can fight inflation


Intelligent Business Systems managing director Gareth Powell says EPOS-based hospitality management systems can help alleviate wholesale pricing pressures

he sobering news of an unprecedented 6.0% rise in foodservice price inflation in March highlighted the scale of the “costs” challenge the hospitality industry faces in an uncertain post-Brexit UK. The CGA Prestige Foodservice Price Index published in late April revealed a dramatic rise in the price of fish and continued sugar, meat, cereal and vegetable inflation is at the root of the spiralling costs of production food operators face. “The inflation rate of 6.0% is substantially up on historical averages, and March prices were higher year-on-year in all ten sub-categories of the Foodservice Price Index measured by Prestige Purchasing and CGA Strategy and inflation will remain well above average over the next few months,” it stated in Propel’s Morning Briefing. Although the weak pound, rising oil prices and an increase in the costs of fish, meat, poultry, vegetables and dairy products are out of the direct control of the industry, hospitality operators can mitigate the impact of foodservice price inflation on their businesses by asking their technology providers how EPOSbased hospitality management systems can help alleviate wholesale pricing pressures. There are numerous tools within any good EPOS solution that not only allow you to keep a tab on the prices you pay for your food but also enable you to manage and minimise costs across your business. The latest version of our corporate brochure has literally hundreds of bullet points highlighting the extensive functionality available to our clients. As an example, our smart intuitive Stock Management module can automate the entire product-ordering process. This solution has many clever checks written into the software to ensure price and stock discrepancies and variances are flagged for immediate resolution. For instance, predictive purchase ordering (PPO) enables the system to reorder food and drink products when they reach predetermined stock levels. PPO also scans your supplier database to select the most competitive prices for foodstuff so you’re not unnecessarily paying over the odds. As many of you will know from your own professional experience, prices between suppliers can vary enormously, especially when you are desperate for produce and are buying at the eleventh hour. Without the proper safeguards in place, it is easy to be caught between a rock and a hard place.

Spend checks Checking on what you’re spending and when and where is of paramount importance. Because all our systems operate 100% in the cloud, instant real-time reports are ready for analysis whenever you need them. These reports can be tailored to your specific requirements. Popular reports among our clients include stock-holding and movement, supplier performance, and detailed wastage analysis. According to the people behind The Hospitality and Food Service Agreement, almost one million tonnes of food is wasted each year by the UK’s hospitality and foodservice sector, at an estimated cost of £2.5bn. This is the equivalent of more than 1.3 billion meals (or one out of every six meals served) being wasted every year. Add wastage to food inflation and healthy margins are much harder to maintain.


I was chatting to one of our clients, Nick Wong, finance director of Fulham Shore, which owns and manages the Franco Manca, Real Greek and Bukowski restaurant brands. He appreciates how we design new reports and work with new data streams to give everyone at Fulham Shore a different angle and additional insights into the business. With more than 65 outlets under his supervision, it’s crucial for senior decision-makers like Nick to be able to see the whole global picture. Our head office StockLink Enterprise software helps by centralising supplier and product data while also allowing you to drill down reports to individual purchase invoices within minutes. As we all know, the devil is in the detail. The real beauty is you, like Nick, decide on the information and reports you want and we configure the system to give you the big data you need to make informed decisions.

“The most important thing to remember is never be afraid to interrogate how your technology can help you control and monitor your costs” Our Recipe/Menus module allows you to pre-cost and plan your entire food offering in microscopic detail, right down to costing pinches of salt! This feature can also be used to implement changes so you can simply alter recipes to take into account the cost of the relevant ingredients. For instance, using a different species of fish for a dish. The CGA report highlights a “lean start to 2017 for US salmon fishermen, poor cod catches and sea lice problems adding to farming costs”. Cooking instructions and prep notes for amended menus can be added to the system easily so chefs and kitchen staff are fully aware of the changes. What is more, you only need to make the changes once as real-time and planned updates can be made at head office through one POS terminal or back office PC. Everything automatically updates across the system. Controlling costs also means keeping a tight rein on staffing levels through our own Labour Management modules and thirdparty apps such as S4 Labour and Fourth Hospitality. We link to and share data with more than 30 powerful and popular apps because of intelligent use of API technology. Few EPOS competitors can match this, which is why it is one of our unique selling propositions. Indeed, a client recently commented on the fact our new EPOS solution simplified the connectivity of new apps and improved the speed of service and were two of the major reasons behind their purchasing decision. Obviously I am illustrating our own solutions here but any good EPOS-based business management solution should give you access to similar functionality. The most important thing to remember is never be afraid to interrogate how your technology can help you control and monitor your costs. The world of EPOS is constantly evolving and is usually led by operator initiatives where the question is: “Can we…?”

Gareth Powell is managing director of Intelligent Business Systems –


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