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Morning Briefing for pub, restaurant and food wervice operators

Fri 24th Aug 2012 - Friday Opinion
Subjects: M&B’s chief executive, moral panic over alcohol and the Everards approach.
Authors: Paul Charity, Paul Chase and Stephen Gould.

The M&B search for a chief executive by Paul Charity

The search for a chief executive at Mitchells & Butlers has turned into the stuff of easy humour, a recruitment version of Groundhog Day. At May’s ALMR Business Day conference, Wetherspoon boss Tim Martin grabbed the obvious opportunity to tease Mitchells & Butlers’ chairman Bob Ivell by telling him that he was sending him his curriculum vitae. (Ivell took the leg-pull in good grace and happily spent 45 minutes chatting to Martin after their podium appearance). 

Ivell himself has grown wary of over-stating on the subject and abandoned even suggesting momentum – the results language that stressed progress has been replaced by the flat assertion that recruitment is “continuing”. At one stage, Ivell was making it clear that there was a preferred candidate identified and their arrival was waiting for the completion of some external timeline. Many understandably thought this could only be a reference to the sale of London bar and restaurant operator Novus that was absorbing so much of chief executive Steve Richards’ time, with M&B patiently waiting for Richards to complete this important piece of business. With that deal done and Richards deciding to say at Novus, all bets were immediately off. So almost 18 months after previous chief executive Adam Fowle left the company, there must be a fairly thick layer of dust on the chief executive’s desk at the company’s Fleet Street headquarters in Birmingham. But maybe there’s another unexplored issue here, although it has been touched upon by Ivell himself.  

One analyst who asked about the ceo situation at a recent results meeting was reminded by Ivell that the company has a de facto chief executive – Ivell himself. The passage of time has changed things. A new chief executive at M&B might ordinarily expect to arrive, spend a few months reviewing the company and set out some changes of strategy going forward.  The situation at M&B now is a little different, not really allowing a new chief executive this kind of clear field-of-play freedom. A few months after becoming chairman and after six months of holding pattern stewardship under temporary chief executive Jeremy Blood, Ivell was quickly drawn into the operational trenches. 

In late November last year, Ivell’s presentation of results made it abundantly clear that he didn’t see his job as resting a light hand on the tiller.  In fact, his early months in the chairman’s job had alerted him to a host of fairly radical changes that were needed at M&B. He was happy to list a swathe of technology, culture and operational changes urgently required to galvanise the company. Ivell had already slipped into the role of de facto chief executive and the last nine months has seen him implementing his plan for a root-and-branch re-shaping of M&B. It seems to me that M&B’s dominant shareholder, Joe Lewis, has been pretty relaxed about the appointment of a chief executive because he’s happy to support Ivell’s decisive re-shaping of the company. From talking to Lewis’s close associates, it’s clear that Ivell fits the mould of his ideal candidate – someone steeped in the nitty gritty of retailing. It’s why one candidate from a tenanted pub background got fairly short shrift from Lewis when he arrived on his yacht, business plan in hand. 

Anyone recruited as M&B chief executive at this moment in time would, I’d argue, have to resign himself or herself to becoming a de facto chief operating officer, carrying out the operational blueprint drawn up in the Ivell scriptorium.
Paul Charity is managing director of Propel Info

Alcohol, health and education: a further reply to Dr John Foster by Paul Chase

I’m sorry that my previous reply to Dr Foster made him feel “a certain amount of sadness”, but I rather doubt that this, my final reply, will cheer him up.
I believe that since the passage of the 2005 Licensing Act we have been living through a period of heightened concern about alcohol that can justifiably be characterised as a full-blown moral panic. No one denies that alcohol abuse causes problems and costs, but the advent of what was grotesquely misrepresented as the “24 hour drinking Act” re-awakened the slumbering temperance movement, and the attacks on alcohol and those who make it and sell it have been remorseless ever since. It is undeniable that the medical profession has been at the forefront of these attacks.
Dr Foster suggests that I have made a mistake in lumping together the public health community by suggesting that they’re all pushing a temperance message. Well, is it a mistake to do that? Whilst conceding that individuals may wish to nuance their position in relation to the politics of drinking, the fact remains that the “public health community” has resolved itself into an umbrella organisation that does indeed push a temperance message. The Alcohol Health Alliance, consisting of some 24 organisations, including all of the ‘Great and the Good’ of the public health community, is without doubt seeking to do that.
Dr Foster nevertheless seeks to distinguish his own position from those who have a temperance agenda by citing his support for greater use of the British pub. It is home drinking he doesn’t like and which he regards as symptomatic of a growing societal selfishness. He writes: “I feel the rise in home drinking as opposed to drinking in social spaces, like the pub, is a reflection of this.” Interestingly, he reveals a somewhat different attitude to the British pub in his own ‘blogspot’ where he writes that “alcohol addicts” leaving treatment are often overwhelmed with “drinking cues”: “A cue is something they associate with drinking, such as a pub….” So, for Dr Foster, is the pub part of the solution or part of the problem? It depends on his audience.
Apart from the fact that his tactical positioning is a somewhat transparent attempt to curry favour with the particular readership of Propel, it’s also an attempt to have your cake and eat it. You can’t disparage alcohol as a substance, comparing it to heroin and cocaine, complain that pubs give overwhelming cues to recovering alcohol addicts, and then seek to soften such an extreme position by saying, in effect: “But pubs are nice!” Such arguments smack of sophistry and won’t fool anyone.
Dr Foster complains that I have accused him of wanting to “push propaganda”. He states that he is at a loss to understand what I mean here. Let me see if I can assist: Hugh McLachlan, Professor of Applied Philosophy at Glasgow’s Caledonian University, writing about alcohol policy in the Scotsman on the 10 February 2012, put it this way: “Governments have a legitimate role in compiling and disseminating information about the effects of the consumption of alcohol. However, there is a profound difference between information and propaganda (my italics). To present information to enable people to make informed decisions about their own behaviour is one thing. To try to induce them to make particular decisions and to act in particular ways is another thing. It is appropriate for governments to try to rationally persuade us to believe particular things. In all but extreme and exceptional circumstances, it is not appropriate for governments to try to humour, dupe or cajole us into believing particular things.” 

In rejecting alcohol education because it doesn’t work – doesn’t mandate behaviour change – Dr Foster leaves himself open to the charge that for him ‘evidence-based education’ means nothing more than disseminating propaganda that is designed to do just that. Dr Foster writes of the need to achieve a balance between the importance of alcohol to the economy and the health costs of alcohol abuse. He cites the costs to the NHS, the ageing population and the shrinking tax base and comments “something has to give”. But we know that the level of hospital admissions that are ‘alcohol-related’ is hugely exaggerated by the use of a false counting methodology, which even the Department of Health is now reviewing. The real cost to the NHS of alcohol is between 1.3 per cent and 1.9 per cent of its total budget. Well, if that cost could be halved it would be a great achievement, but hardly a game-changer. It is simply not possible to solve the problem of spiralling public health costs by scapegoating the alcohol industry.
The object of medical temperance propaganda is not to call for the outright prohibition of alcohol, but to take a much more subtle approach designed to achieve a kind of cultural prohibition, by de-normalising and pathologising normal alcohol use – by making precisely the kind of colourful comparisons Dr Foster makes. The object of all this is to salami-slice away profitability and to consign the production and sale of alcohol to the status of a sunset industry. Dr Foster may not want to go the full distance on the cultural prohibition journey, but he’s a fellow-traveller prepared to go quite a long way with those who do.
Paul Chase is a director of CPL Training and the UK’s leading on-trade commentator on alcohol policy

How Everards is re-shaping the landlord and tenant relationship by Stephen Gould

The core of what we try to do at Everards is support 177 small business operators to succeed in business - and more broadly in their career choice of licensed hospitality. We are a very proud family business working together with lots of other family businesses. Here lies the opportunity for a competitive point of difference - but more on that below. The traditional model of "landlord" and "tenant" in this context is really quite dated and connects only to a passive property-based relationship. More inspiring, I think, is to frame the business as having 177 customers (our licensees) who lead their own businesses, which we support, in properties which we own. Some may say this is a mere play on words but I think the reality cuts through (most acutely in the last few years) when one compares the poor level of support delivered by "landlords" to their "tenants" in the retail high street and that delivered by pub-owning businesses to their licensees across the country. The contrast is marked and telling.
We don't operate managed pubs so in addition to brewing top quality ale our primary focus has to be about attracting and retaining more than our fair share of great licensees to succeed in pubs which we own. Against this back drop, we invest lots of time and effort in trying to ensure that our relationships with our licensees are strong and progressive. Delivering in this area is about behaviours not processes.  Our values have to be centre stage at all times: to be straightforward, supportive, ambitious, responsive and to have integrity at all times. We are certainly not perfect and I don't think one ever reaches the destination in these areas but by commiting to independent research (just completed a very comprehensive one with CGA) it means that we won't fall into the trap of believing our own publicity and also, vitally, that we keep continually trying to improve our support for our customers each year. Obviously there is no quick fix in this area but over time the approach attracts and retains customers through advocacy not advertising!
These areas perhaps link with our much-reported (overly even!)  Projects William and Artisan. We have built relationships with lots of first-generation family brewers (often referred to as "micros"- but I don't like the word!) Many, like William Everard, our founder, have a desire to vertically integrate, selling lots of what they brew in pubs which they operate. In the last five years we have acquired and developed 24 pubs, many of which were closed and along with, to date,14 brewer partners created some beautiful pubs. There’s no Everards livery,  just Tiger Premium Ale as a guest beer. I think it is of interest that only one has failed. The retail learnings are, as you can imagine, many and varied but perhaps the main one for me is that the drinks-led pub delivered with personality and style has a bright future. So what about Project Artisan? Well, as we have worked succesfully with Artisan Brewers why not others? With the decline of full-time employment we think that more people will want to run their own business – it’s good news for owners of leased and tenanted pubs! If our role is to attract, support and retain talented people in buildings, which we own, then where does that take us in the context of Artisan?
An ex-snooker supplies shop in Stirchley in Birmingham is where - a derelict building acquired by Everards last year. This week, Tom Baker, an artisan baker (I know you couldn’t make it up) prepares to launch his new artisan bakery, teaching school and co-operative shop in downtown Stirchley. A talented young man who has been commercially baking and teaching from home over the last five years. An enjoyable piece of research and development, but how could this possibly connect with the broader business? First and foremost, if we behave well (see above values) and support professionally then Tom will be a great advocate within the fast growing artisan community. Once done, perhaps many in this community will have ambitions to run their own pub with a twist? Or discuss with us whether they could run a business in a building currently owned by Everards? Or whether Everards could act as a dating agency introducing artisan goods and services to our licensees across the estate? No doubt there will be other themes that emerge but potentially this and other initiatives will help our customers to continually offer their customers a competitive point of retail difference in their local marketplace.                    
Stephen Gould is managing director of Everards

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