Australian Hotelier Stronger Together

AUSTRALIAN

AUSTRALIA’S NATIONAL HOTEL INDUSTRY MAGAZINE

July 2020

We are #StrongerTogether Getting the on-premise through shutdown and recovery

ED’S NOTE TAG

WE ENCOURAGE RESPONSIBLE DRINKING Get the facts DrinkWise.org.au

PUBLISHED BY: Food and Beverage Media Pty Ltd 41 Bridge Road GLEBE NSW Australia 2037 Tel: 02 9660 2113 Fax: 02 9660 4419 PUBLISHER: Paul Wootton EDITOR: Vanessa Cavasinni vcavasinni@intermedia.com.au

Editor’s Note THERE’S LITTLE

supplier partners have been supporting pub and

doubt that the last

bar operators through the #StrongerTogether

three months have

campaign, a digital resource hub for operators

been the toughest that

that provided government updates, support and

Australian on-premise

advice, supplier offers to the on-premise trade,

operators have had

and examples of how some businesses were

to endure outside of

coping with the shutdown.

wartime. With little

As venues start to re-open, we will continue

warning, pubs and

to support this dynamic industry in its toughest

bars had to shutdown

trading conditions by providing you with the

for two months, or eke out significantly less

information and insight necessary to get your

revenue through takeaway and delivery.

business through this pandemic. Because if this

Overnight, staff had their hours cut, were stood

crisis has taught us anything, it’s that we truly

down indefinitely or were let go completely.

are stronger together.

Pub operators have had to navigate through the unknown, adapting to shifting conditions at

Vanessa Cavasinni

a pace that has never been experienced before.

P: 02 8586 6201

Throughout this time, Australian Hotelier and its

E: vcavasinni@intermedia.com.au

Road to Recovery virtual summit Leading industry mastheads, Australian

Hear from the likes of Stephen Hunt (Hunt

Hotelier, Hospitality, Bars&Clubs and TheShout

Hospitality), Mikey Enright (Barrelhouse

will be hosting ‘The Road to Recovery’, on the

Group), Hamish Watts (Applejack

morning of Wednesday 15 July. The webinar

Hospitality), Zara Madrusan (Made in the

will address the challenges that still lie ahead

Shade) and Morgan Kelly (KPMG), Jennifer

for pubs, bars, restaurants and cafes; and

Russell (W. Short Hospitality) and Andy

highlight best business practice for hospitality

Mullins (Sand Hill Road).

venues in the current environment.

2 | Australian Hotelier

You can register for the webinar here.

NATIONAL SALES MANAGER: Jason Wild Tel: 02 8586 6213 jwild@intermedia.com.au GENERAL MANAGER SALES – LIQUOR & HOSPITALITY GROUP: Shane T. Williams GROUP ART DIRECTOR – LIQUOR AND HOSPITALITY: Kea Thorburn kthorburn@intermedia.com.au PRODUCTION MANAGER: Jacqui Cooper jacqui@intermedia.com.au SUBSCRIPTION RATES

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Copyright © 2020 - Food and Beverage Media Pty Ltd

Average Total Distribution: 4,743 AMAA/CAB Yearly Audit Period ending 31 March 2019.

Thank you to our industry partners for supporting the #STRONGERTOGETHER initiative

These businesses have remained keen advocates and supporters of the on-premise industry throughout the shutdown.

Thanks to our valued partners

MY MARKETING DEPARTMENT

www.theshout.com.au/stronger-together

BUSINESS MODELS

4 | Australian Hotelier

BUSINESS MODELS

A new way forward

Restrictions may be lifting, but the traditional pub model no longer works post-shutdown. Here’s some of the ways hotels will have to adapt their operations.

THE PRESSURE of the two-month shutdown has eased somewhat for venues all over Australia, as restrictions have been lifted to varying degrees, and pubs can begin in-venue trade once more. But with caveats to that trade in the form of social distancing and health safety measures, as well as patron wariness in an ongoing pandemic, pub operations cannot go straight back to business as usual. It will be a long time before pubs trade at pre-shutdown conditions, if at all.

“Whilst devastating, COVID-19 will force many, if not all operators to rethink elements of their business model to establish a more robust operation and somewhat ‘future-proof’ themselves to a certain degree,” states JLL Hotels & Hospitality senior vice president Ben McDonald.

Almost all aspects of pub operations will have to change somewhat – some just a little, while others will have to be overhauled completely.

Hygiene protocols With concern for people’s safety being paramount, hygiene protocols in venues will have to become even more stringent than they have been in the past. This is not only to ensure the immediate safety of staff and patrons alike, but in order to minimise the chances of a second wave of COVID-19 once more shutting down the country. With fears that a ‘Ruby Princess incident’ could take place in a hospitality venue, operators are taking more precautions than ever. As an industry that has always been stringent about hygiene, particularly around food, upping protocols to be stricter than ever will not be too big a leap.

“The hospitality industry has always had a heightened focus on food safety.

So that’s one big advantage for restaurant and pub owners to have some degree of confidence that they already have a strong hygiene culture,” states SafetyCulture COO, Alastair Venn.

While back-of-house protocols remain at the highest level, it’s in the front of house where things will have to change. First is a reconfiguration of your dining and other seated areas to create space between groups of patrons. Next is hand The Sporting Globe in Knox, Victoria

sanitiser made available around the venue. While pump bottles on every table

July 2020 | 5

BUSINESS MODELS

Watch

video here Venue configurations We spoke to Paul Kelly of Paul Kelly design to get his take on how operators will need to reconfigure their venues to not only accommodate social distancing restrictions, but to make patrons feel safe in their surroundings. Watch the interview left.

and bars are a place to start, Steven Speed at WDS

getting business going again. The faster that we can

Hotels has gone one step further.

monitor and intervene on risks, the more we’ll be

“We’ve got proper sanitising stations. I think

able to open up things a little further.”

sanitising is going to be here for quite some time.

COVID-19 will force many, if not all operators to rethink elements of their business model to establish a more robust operation and somewhat ‘future-proof’ themselves to a certain degree.

Ben McDonald, JLL Hotels & Hopsitality

We’ve gone with ones you don’t touch and they’re

Less contact, more comfort

branded, so they’re going to be here for quite some

One of the most fundamental shifts to the way pubs

time. People see it as soon as they come in, so it’s a

operate, is a switch to a model that reduces the

statement that we’re taking this seriously.”

amount of communal touchpoints and gathering

There are a plethora of different hygiene protocols to seriously consider now, including

main source of this shift, is a move from queuing

staff and patron temperature checks, the removal

and ordering at the bar, to a table service model

of communal cutlery stations, the inclusion of

that will see patrons stay mainly at their tables, and

sneeze-guard screens, and the regular disinfecting

order both food and beverage either from front-of-

of touchpoints like ATMs and handrails. There are

house staff or through apps. This reduces the need

even air filtration systems to help remove germs

for congregation, and long queues around your

from a space.

public bar area.

With so many new protocols that you can enact,

How ordering and payment is processed is also

having checklists to stay on top of it all will be

going through a big shift, as patrons and staff

handy as you and your staff get used to this new

alike are uneasy with handling physical menus and

facet of operations. At SafetyCulture, the iAuditor

cash – items which could be touched by hundreds

app is a free tool that includes checklists from

of people per day in a pub setting, so enforcing

everyone from Australian governing bodies to the

or highly recommending electronic methods of

World Health Organisation and the CDC. You can

ordering and payment are another way in which

use any of the checklists and even modify them to

venues can make everyone feel at ease.

best suit your venue and keep staff on top of all that needs to be done.

While table service is currently a trading restriction in most states, some pubs groups have

“You can create really short checklists that

begun enacting the move long-term, as a method

your team can take two minutes to check. But it

of reducing community transmission and to make

gives you almost a real-time feedback within your

patrons feel more comfortable within their venues.

business to know in an analytics model that in this

Signature Hospitality Group has introduced a new

location they missed inspections today, and what

tap-to-order system to all of its The Sporting Globe

are the most commonly failed items. So you can

venues. After being seated, guests will use their

take action on that really quickly,” explains Venn.

own smartphones to tap the new devices set up

“That really is what we believe is the key to

6 | Australian Hotelier

among different patron groups within the pub. The

at the tables, which opens up the relevant website

BUSINESS MODELS

Extensive changes have been made by WDS Hotels at The Russell Hotel and Fortune of War

or app, allowing them to order their

setting? Stevan Premutico, founder

food direct to their table. The device

of me&u and a long-time advocate

There are more than 100,000

also automatically enters the venue

for the need for operators to adopt

free checklists available

location and table streamlining the

technology within their operations,

through SafetyCulture. You

ordering process and limiting contact.

says it’s all about the atmosphere

Checklist galore

can find a collection of

“This technology was designed in-

and the human connection –

hospitality checklists here,

house to complement and support the

something we’ve all missed while

that cover everything from

existing team structure and to create a

pubs have been closed. He uses an

re-opening for the first time,

safer and more compelling dining out

example of a host as a way pubs

employee procedures, food

experience for guests,” said a Signature

can adapt to this new scenario.

assessment and key area

Hospitality Group spokesperson.

inspections, plus much more.

At Australian Venue Co (AVC), the group has partnered with Mr Yum

becomes really critical. A host meets

across all of its venues for at-table

you, greets you and seats you upon

ordering via app.

arrival. That person is not there to

“We’re going to have a lot of focus

The faster that we can monitor and intervene on risks, the more we’ll be able to open up things a little further.

Alastair Venn, SafetyCulture

“In the evolution of the pub industry, the role of the host

do the low-value stuff like take your

on contactless options for ordering

order and organise payment. Tech

and payment. I think it’s inevitable

can do that low- value stuff better

that there’s going to be greater social

than a person,” suggests Premutico.

distancing [long-term], so looking at

“The high-value stuff is the

things like placement of tables and

connection, the rapport, the fun,

gaming machines are crucial,” states

the banter that happens when a host

AVC CEO Paul Waterson.

interacts with a table. So if we can get

So with a move from bar service

rid of the low-value crap and allow

to table service and less mingling

the high-value magic to take centre-

and movement in between areas

stage, then everyone wins. It’s not a

of a pub, how does a venue retain

tech-centred experience – far from

a casual pub feel, rather than

it, it’s a human-centred experience,

becoming a more formal restaurant

that’s driven by tech.”

July 2020 | 7

BUSINESS MODELS

Spaces will need to be reconfigured in line with social distancing rules

Cash flow options

Changes in patron behaviour

With so many mandatory or recommended changes to be made to the pub business model,

In late April, me&u

significant expenditure is inevitable. While

conducted a survey of

capex is part and parcel of any hotel business,

Australians nationwide to

the need to spend it now is particularly painful

gauge attitudes around

when there has been very little revenue coming

hospitality in light of the

in over the last two months – let alone profit.

COVID-19 pandemic.

At WDS Hotels, which is located primarily

The results showed a

in the tourism and corporate end of Sydney’s

public that was keen to

CBD, Speed has been very comprehensive in his

get back to pubs, bars,

overhaul of the Fortune of War so that his venue

restaurants and cafes, but

will be in its best position to recommence trade.

with some slightly different

But it has come at a cost.

behaviours. Here are the

“The Rocks and Circular Quay relies on ships, tourists and corporates, so we have to do it better than ever because people want to feel

Fortune of War’s branded hand-sanitising stations

safe to come back into a venue. We’ll be under the spotlight. [But] it’s going to cost us money to

thinking about the new trading environment that

do this, we will lose money.”

pubs have to contend with and adapt to. The

So how can venues get a hold of funds

points made here barely touch the surface, and

at such an imperative time? Morgan Kelly,

it can feel overwhelming when thinking about

partner – restructuring services at KPMG, says

what the future will hold for pub trading.

now is the time to talk to your bank, as well as

But in the midst of all of that, the need to

consider reaching out to private equity firms.

restructure certain parts of your business can

But for the best results be prepared with a

be seen as an opportunity; a chance to reinvent

detailed business plan.

parts of the business – and in fact, the wider

“If loans can’t be sorted out look to business

industry – that were stagnant before COVID-19.

restructuring options. But make sure you go in

It’s a chance to look at things that ‘we’ve always

with your revised business plan that demonstrates

done that way’, and reassess their worth.

how you will continue to be a viable and newly innovative business,” suggests Kelly.

There is so much to consider when it comes to

8 | Australian Hotelier

And amid all the chaos and stress, that’s a silver lining if there ever was one – the chance to create something new, and something better.

key takeaways for pub operators to consider.

• 65%

have

a preference for a digital menu

• 60%

are wary of

standing in queues due to hygiene concerns and;

• 95%

want to

pay on card or via their mobile device.

ROUNDTABLE Will Connolly, vice president investment sales for JLL Hotels & Hospitality, spoke to three savvy publicans to get their take on how COVID-19 has impacted their businesses and the industry.

Hardimans Hotel

Leaving lockdown: A publican’s perspective SINCE THE beginning of June we have

Inn, South Brisbane and The Collective

form of an ever-expanding economic

witnessed the easing of restrictions for

in Palm Beach. Global industry stalwart

bubble, where costs have been increasing,

our industry across Australia with varying

Michael Thiele re-entered the industry

there has been pressure on real margins

degrees of limitations, depending on

by purchasing Hardimans Hotel in

through ever increasing competition, a lot

which state you call ‘home’.

Kensington, Victoria which he re-opened

of it through price driven sales strategies.

in 2018. And having owned and operated

If our industry is to survive as we all

While many of our nation’s publicans feared how they would survive the

pubs throughout Perth, George Bagios’

know it, then all stakeholders, federal

uncertainty surrounding the COVID-19

most recent pub project has been the

and state governments, landlords and

lockdown, we’re now faced with many in the

establishment of The Coppersmith in

operators need to come up with strategies

industry deeming it ‘the great unknown’.

South Melbourne as a premier

and solutions for the biggest issues that

hospitality destination.

face the industry.

The general public certainly made no secret of their desire to be back to at the public bar, but will the coming weeks be viable for our industry as it works with limitations no one would have ever predicted?

This week, we spoke with three publicans who between them have

Our industry over its lifetime has faced numerous challenges. With the COVID-19 crisis being the worst, how quickly do you believe we, as an industry, can recover fully from it?

• Simplify the Federal Hospitality Award and remove penalty rates • Lower business tax • Raise GST • Abolish FBT • Abolish payroll tax • Abolish stamp duty

decades of experience within pubs

Thiele: There has never been anything

• Rents re-evaluated, at a more realistic

establishing and heading up brands

like this current pandemic in my or anyone

level for pure hospitality businesses,

such as Beer DeLuxe and Open Door

else’s experience or lifetime. However,

unless landlords want to be looking at

Pub Co. Craig Shearer of Open Arms

this is the opportunity of a lifetime; the

increases in vacancy rates

Hospitality currently operates The

chance for the industry to RESET.

Terminus Hotel, North Fitzroy in Victoria; and two Queensland venues, the Plough

Unless the above can be resolved, I

I believe that the industry has been

don’t believe things are going to get back

living too long in a fool’s paradise in the

to anything like “normal” for a significant

July 2020 | 9

ROUNDTABLE

period. Those with deep pockets will survive, but a

think most businesses that do survive this will come

lot will not.

out of this with a leaner business model.

Shearer: None of us have ever been through a

This is a chance... for all venues to look at how they can best position themselves going forward.

George Bagios, The Coppersmith

Bagios: I certainly think the takeaway option will

situation like this, so not having the ability to crystal

live on with us and most other venues. We’re located

ball likely scenarios has meant we just have no idea

in a dense residential area of South Melbourne,

what a recovery looks like, how long it may last, or

so I believe it makes sense for us to continue on

if people will return to normal social and spending

with delivery of boutique wine to some of our more

habits again. I don’t think there is a quick fix.

‘well-heeled’ neighbours and also continue to offer

We are now seeing a few outbreaks occurring

ready-made meals and even the pre-packaged ‘finish

through Victoria that show just how quickly the virus

off at home’ dining experiences which has been an

can get going again, so I feel that without a vaccine in

excellent initiative of our industry.

place, it will be very difficult to kick start our industry again. I am confident we will get there eventually, it may just take a little longer than we all hope.

Has this made you consider keeping some of the initiatives you’ve been forced to make implemented even after the lockdown?

Do you think this could in fact be a positive long term for our industry given the public has potentially been given a reminder of what they ‘have lost’ during this time?

Thiele: The public is very aware of what they are missing out on, but will they be prepared to pay more for what is a very expensive service and

Thiele: Labour is our largest single cost so

product to provide under the current restricted

initiatives we would consider keeping would

trading conditions? We’ll have to wait and see.

be contactless ordering from an app, whilst

Unless there is significant change in regulation and

also limiting the kitchen trading hours to more

our industry RESETS, the public is going to end

commercially viable times.

up with less to choose from in terms of hospitality

Some of the services we have suspended we would simply discontinue or perform ourselves. I

offerings when they go out.

Shearer: Quite possibly. It might be a very long time before we look back on this in time and say,

Plough Inn

“that helped my business/industry”, but I think eventually we might. I am pretty sure that with improved hygiene and cleaning processes, there will be a long-term behavioural change we see from our operators and yes, just maybe there may be a little more love for your local.

Bagios: I certainly think it could be a positive. A few days after the lockdown came in, we began to get our head around the fact that it was a chance for not only our venue to revisit some of our practices, but for all venues to look at how they can best position themselves going forward. We all certainly

The Coppersmith

hope that we never experience anything like this again, but who knows? All venue operators will now be even stronger than before in their resolve, along with the greater public buoyed by their desire to support our pubs – that must be a positive.

On behalf of the JLL Hotels team, we stand in support of all publicans as they begin their journey across Australia’s easing of restrictions to in turn, build a stronger and even more resilient industry than before.

10 | Australian Hotelier

OPERATIONS TAG

The

Post Pivot The complexity of re-opening is taking form as we digest the proposition of not being able to return to unhindered trading conditions for many months to come. By Luke Butler, managing director of Hastings People.

economic impacts will mean it is unlikely that pre COVID-19 customer levels will return immediately.

Secondly, a considerable percentage of consumers may have less money to spend and will be apprehensive about general visitation, or large event gatherings due to health and safety concerns.

Finally, operating costs will likely normalise before trading conditions or revenue. Labour may be reduced in some instances, however cost of goods and rent will return with gusto.

AS COVID-19 took hold of the industry,

and those who continue to develop and

a number of businesses took creative

adapt once the season has started will

you begin to realise that returning with a

action over the last three months in an

take the cookies.

‘business as usual’ approach is not going

effort to counteract the loss of trade,

Customer expectations are not going

When you combine these three points,

to suffice. Even a moderate forecast on

while others chose to simply accept it

to mirror a pre COVID-19 world once

trade levels, will cause alarm bells to ring

and enter full hibernation.

play resumes, and the playing field will be

for many operators.

Takeaway felt like an obvious choice

unlike any we have experienced. In order

for many, but it is expensive to execute

to navigate this successfully, thinking

Time for innovation

and sufficient volume has been difficult to

really needs to shift from the short-term

It is my position that through necessity,

generate. It is an activity that might make

to medium- or long-term.

re-opening will require a time of rebirth

operators feel like they are doing something but most commonly, it is a loss leader.

There are a few of assumptions on which we can base our thinking.

for venues, and this is when I believe the real innovation needs to take place.

Navigating our way through partial

Firstly, venues will not return to full

or full hibernation is akin to pre-season

trading capacity for some time and even

to drive multiple revenue streams, both

Venues need to be viewed as platforms

training. The real test of skill is on its way

when legally permitted to do so, broader

inside and outside of their four walls.

July 2020 | 11

OPERATIONS

MENTAL HEALTH

Yes, one could expect gaming revenue to return quickly for certain venues and demographics, however who knows to what level. Player patterns will definitely have shifted, maybe by a little, maybe by a lot. Perhaps some players will lack the desire or funds that once led to them sitting in a room for an extended period of time.

A moderate change to player behaviour will heavily impact many hotels, not only in As on-premise trading resumes, takeaway can be viewed as an ancillary revenue driver

revenue but to the valuation of businesses and properties, which when applied across a portfolio of venues, can significantly impact a company’s net position.

will still be attractive for peak periods, so

So, what could a post pivot look like?

re-evaluating promotional activity at these

Offering takeaway makes more sense

times, or pointing activity at different

when a venue is trading. Kitchens will

trade periods, is worth considering.

be staffed regardless and this service

Reservations are a great way to ensure

could supplement on-premise revenue by

available seats are fully utilised during

encouraging more food and beverage out

peak times. Seat wastage is an issue

the doors.

exacerbated by restricted numbers, so if

Bottled cocktails, draught beer,

you can ensure every seat at every table is

ready-to-heat and ready-to-eat meals

fully occupied, you will make more money.

will continue to be in demand as people spend more time at home. Enabling sales through your website or over the phone is easy to establish and, if actively pushed, could effectively increase revenue with minimal cost implications.

Running promotions might require some thought. Do you need to discount food in-house or is this an activity that is better reserved for takeaway items only?

Getting out of the house and into a pub

Supporting reservations and general

Venues need to be viewed as platforms to drive multiple revenue streams, both inside and outside of their four walls.

punters with table service while ensuring tables are turned over a couple of times a night will improve upselling ability and overall revenue.

Offering packages to increase the per-head spend is something worth considering. Perhaps they can be a combination of products to be consumed in venue and others to be taken home.

Corporate and social events are going to take a completely different form. Creating

Hampers can help capture some of the functions market that has not yet returned

a service product that can cater to this market off-premise is a big opportunity.

A number of operators have experienced success selling ‘party packs’ or hampers to customers during hibernation and this could be another example of offers that make more sense when venues are trading.

The value of a customer has never been higher. Understanding and then catering to their needs inside or outside of your venue is a great strategy. Increasing innovation from the outset and then scaling back once trade patterns become clear might just be the difference.

12 | Australian Hotelier

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