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Morning Briefing for pub, restaurant and food wervice operators

Fri 31st May 2013 - Friday Opinion
Subjects: Surviving mistakes, pubs as community assets, advocacy groups, changing industry perceptions
Authors: Paul Charity, Ian Fozard, Paul Chase and Suzy Jackson

Surviving mistakes by Paul Charity

Making mistakes is part and parcel of life. And anyone running a business will certainly drop a few clangers along the way. When I was busy building a pub estate in the 1990s with my brother Kevin, we took on an Enterprise Inns pub on the outskirts of Peterborough city centre. It was an attractive building close to large office blocks and, we thought, shoppers. Despite a very substantial investment to convert it into a branded food-led pub, the pub was marginal at best – and never produced the kind of returns we’d hoped for. It backed on to a very challenging housing estate and, despite investment in CCTV to watch cars parked behind the pub, customers were never happy parking at the pub, which held back our food trade. We left the pub older and wiser a few years later.

Fortunately, it was only a setback because it amounted to our first major mistake – and other sites in the company prospered. As it turned out, our setback was somebody else’s opportunity. Our manager took on the pub after we left and turned it into a very good business by focusing on cask ale. We had simply chosen the wrong trading strategy for the pub. Our fault, pure and simple – but not a terminal mistake thanks to the company’s strength elsewhere. It’s surprising how many mis-steps and external calamities you can survive if your basic strategy is correct. I once hosted a very entertaining question and answer session with JD Wetherspoon founder Tim Martin, in which we went through ten of the setbacks that had been visited on the company over the years. They ranged from his bank withdrawing support in the early 1990s when it had just recorded its most profitable year to the well-publicised property fraud that diverted many freeholds to third parties. Martin was also winningly honest about the challenges presented by his own inexperience in the early years running his first pub in Muswell Hill.

For the next edition of our Propel Quarterly magazine, we asked a wide range of sector executives to share the mistakes that they have made along the way. Again, it was typical of this sector that our executives were willing to share their setbacks so publicly. The mistakes they reported covered the gamut. Le Bistrot Pierre founder Robert Beacham admits he failed to stick to the company’s strategy – and went far too high-end at one site in Nottingham. New Pub Company boss Peter Linacre relates how he was sucked into the temptation of borrowing too much when credit was easily available. Glendola Leisure’s Alex Salussolia was ambushed by the legislative changes post licensing reform and fell foul of a new attitude from the police, a mistake that cost several million pounds. Las Iguanas founder Eren Ali admits to mis-judging the business climate after the arrival of the credit crunch in 2008. Mecca Bingo boss Mark Jones reports that he embarked on an ill-judged price war with JD Wetherspoon when he was running the Hogshead high street business for Whitbread. Geronimo Inns founder Rupert Clevely relays the story of the site that gave him nightmares after he failed to follow his site choice criteria. Oakman Inns and Restaurants founder Peter Borg-Neal rues the day he sold one particular business, with great expansion potential, too early.

Perhaps not surprisingly a fair few of our executives’ mistakes relate to people. Peach Pub Company founder Lee Cash reports the financial losses that accrued when he failed to listen to his gut instinct about a particular interview candidate. Benito’s Hat founder Ben Fordham tells of similar financial losses that resulted from choosing the wrong member of staff – and not have the correct procedures in the business. JD Wetherspoon chief executive John Hutson retells a lesson from the early 1990s – you are better off working hard with the managers you have than removing them. “What went out the door at one end, came back in the other,” he says.

Watch out for next week’s summer edition of Propel Quarterly magazine for those non-fatal cock-ups in full!
Paul Charity is managing director of Propel Info

Pubs as community assets – why it is so important that they survive by Ian Fozard

In a recent Propel Opinion, Neil Morgan of Christie + Co argued that use of the 2011 Localism Act by local residents to preserve their local pub was of little value; that the sole reason that pubs close is because of the failure of the community to support them and how appalling it was that convenience store operators faced delays in planning when seeking to redevelop a closed pub.

He is wrong in his belief that all pubs close for the reasons he states.

Firstly, I agree with him that the UK was, and still is, “over-pubbed”, but only in certain areas, due to demographic changes, population shifts and the demise of heavy industry. There can be little doubt that these factors alone contribute to the large numbers of uninvested and closed pubs for sale. But this tranche of pubs would equally be unsuitable as convenience stores, as invariably there are few people living close by.

However, there are many other closed and struggling pubs in communities, which would rue their absolute loss. The main reasons why so many “community pubs” located in well-populated areas struggle to survive are well-documented and relate, in part, to the behaviour of the supermarkets (who, coincidentally, own the major convenience store chains) in selling booze below cost and, in part, due to the large “tenanted” pubcos who have, by common consent, been slow to respond to changing market and economic conditions and simply made so many smaller “locals” unviable under their rigid business model.

There is strong evidence, however, that such pubs can not only survive but indeed thrive under a different model, that of direct ownership, with little or no borrowing and free to purchase their own products at market price with no landlord mark-ups. Invariably, such pubs become successful and valuable community assets, which contribute to social cohesion and help communities to stave off “failure”. Viable pubs employ people just as convenience stores do, so there is no economic argument to destroy pubs in favour of retail.

Once a pub is lost to the community, it rarely, if ever returns. Moreover, whilst it is increasingly easy to obtain new Premises Licences on the high street where few people live, it is not easy to establish a new pub in the middle of a residential community due to lack of suitable available buildings and objections from the anti-pub elements of society who are now empowered under the 2003 Licensing Act. So once a pub becomes a convenience store, or a warehouse or a residential dwelling, it is truly lost to the community. Would Neil, were he to live in a village, prefer one with or without a pub? Because, once it’s gone, it’s gone forever!

Communities without a place to gather – be it a church hall, social club or pub – soon cease to be true communities. So do communities without local shops. But we mustn’t destroy one asset to create another, especially one that is not owned by its local community and – excuse my cynicism – may not even pay its fair share of taxes!

Also, the odds are stacked in favour of the convenience store owners anyway as planning laws allow pubs to be converted to retail without consent, but not vice versa. So please let’s not give them any more of a “leg-up”.

In summary, it is simply not the case that all pubs close because no one wants them, as asserted by Neil, but because the odds are stacked against their survival. So we should welcome the 2011 Localism Act if it helps local communities preserve their pub from the unsympathetic clutches of the major supermarket groups claiming to provide a “community asset”.
Ian Fozard founded and was MD of Market Town Taverns – a chain of 15 pubs in Yorkshire, which is now owned by Heron and Brearley. He is now chairman of his family brewery – Roosters, based in North Yorkshire

Advocacy groups, public funding and parliamentary drinking by Paul Chase

You have to admire the sheer cheek of Alcohol Concern – less than a fortnight after minimum unit pricing (MUP) was dropped from the Queen’s Speech they publish a survey in which “MPs admit to an unhealthy drinking culture in Parliament”. But do they? In actual fact the survey shows that overall 26% of MPs think there is an unhealthy drinking culture in Parliament – so nearly three quarters don’t think so. But this result doesn’t help Alcohol Concern grind its axe, so the story had to be spun a different way. Eric Appleby, chief executive of Alcohol Concern said: “It’s surprising that only a quarter of MPs think there’s an unhealthy drinking culture in Parliament.” Why is it surprising Eric? Do you know something the MPs you was surveying don’t know? Pray tell.

The survey goes on to reveal that women MPs are most likely to think Parliament’s drinking culture is unhealthy (36%); that Labour MPs are more likely to think so (31%) than is the case with Conservative MPs (20%); or Liberal Democrat MPs (19%). So, what is the implied sub-text here? That the Conservatives, as the lead party in power, with the smallest percentage of women MPs and overall smallest number who think there’s a problem were always more likely to ditch MUP than any of the others?

Eric Appleby goes on to comment: “If a quarter of employees reported an unhealthy drinking culture in any other organisation it would provoke immediate reaction by bosses. Surely it’s time for Parliament to rethink its drinking culture and lead by example.” I wonder how they would do that? Perhaps a minimum price on all alcoholic drinks’ sold in the Palace of Westminster? Or the provision of alcohol treatment services for MPs? Or perhaps they could reinstate Alcohol Disorder Zones just for Parliament!

Which brings me to the next point: The drinking culture of Parliament wasn’t the only issue canvassed in this survey. It also revealed that 55% of MPs would be surprised to hear that fewer than 6% of people with alcohol dependence receive treatment for it. There is a large body of evidence proving that people who access treatment services for alcoholism are actually less likely to ‘recover’ than those who self-manage a return to controlled drinking. So why does Alcohol Concern campaign for ‘treatment’?

We know that Alcohol Concern lost its funding from the Department of Health – shortly after it dropped its support for the government’s Alcohol Responsibility Deal at the last minute. Whilst it still receives public money it has been casting about for other sources of funding. One of those sources is a pharmaceutical company named Lundbeck. Alcohol Concern’s press release for the Parliamentary survey notes: “Alcohol Concern partnered with pharmaceutical company Lundbeck Ltd to commission and communicate the findings of the survey.” Now, Lundbeck have just launched ‘Selincro’, a new ‘wonder drug’ designed to treat alcohol dependence. Can you imagine the response that Alcohol Concern would make to any pro-alcohol research if it turned out to be funded by a brewer or distiller? Motives would immediately be questioned and the researchers would be roundly dismissed as poodles of ‘Big Alcohol’!

Lundbeck is careful to stress that use of Selincro is not designed to replace the traditional goal of abstinence, but to offer help to patients who want to cut down their alcohol consumption and regain control of their drinking as they ultimately aim for abstinence. This is an important concession for Lundbeck to make if it wants to win support from agents of influence like Alcohol Concern. The idea that abstinence is the only answer for people who develop an addictive involvement with alcohol is central to their belief system. It will be interesting to see just how this new relationship develops.

While Alcohol Concern is now forced to turn to the pharmaceutical industry for its finance, other public health advocacy groups are still grazing on public-funding fields. ‘Fresh’ and ‘Balance’, which are public health campaign groups from the north-east, found themselves in financial difficulty when Primary Care Trusts were abolished, but quickly found another place to put their bags down. Both groups have now agreed substantial funding from local authorities in the region: Fresh, which campaigns for reduced smoking, has gained an annual budget of £713,000 and Balance, which campaigns for lower alcohol consumption, £680,000. The main priority for Fresh is to secure plain packaging for tobacco products and Balance is a keen supporter of minimum unit pricing. Both have secured a two-year deal, so, in total £2.8 million of public money has been gifted to these two groups to assist them in campaigning for policies that have just been rejected by the government!

I guess if you’re a regional group with a relatively low profile you can sneak this kind of thing under the radar. How outrageous!
Paul Chase is a director of CPL Training and a leading on-trade alcohol policy commentator

Changing perceptions by Suzy Jackson

It all began with a group of like-minded people – pub operators – coming together with the desire to change the perceptions of pubs.

Those of you who know these people can imagine the noise and energy around the table with the likes of Keith Knowles of Beds and Bars, Anthony Pender from Yummy Pub Co, Maureen Heffernan from Leisure PR, a number of other operators and professional bodies - and me, of course.

It was Anthony’s explanation of what he had done with New Horizon, taking some deprived unemployed youths and making a career for them, that kicked it all off. After hearing about Anthony’s success, within ten minutes we knew what we had to do. If we were to set the target of 15,000 work placements would we be able to change perceptions? Would we show the government that we have opportunities to help them turn around youth unemployment? It HAD to be worth a try!

The result, Pub and Bar Careers, isn’t just about work experience but the quality of work experience and we at the Hospitality Guild were able to share experiences from our partners, including People 1st who have had great success getting young people into work. The one thing that makes a difference to young people and employers is pre-employment training which gives people the bones of what they need to be employed and also gives employers access to people who have received pastoral care and have basic skills. These individuals have already demonstrated a genuine will to get into work. They turned up for training and they want a career.

They’re people like Billy, who spoke at the launch about his experience of being at a low ebb and trying many different routes into work before Anthony offered him a placement at Yummy. I can’t do him justice but he makes it so clear that young people do want to get into work. It’s our job in the maze of bad advice that they find themselves in to give them the tools to find jobs. After hearing first-hand the lengths these kids have to go to find a job, don’t anyone dare tell me ever again that young people don’t want to get into work!

From tiny acorns mighty oak trees grow and nine months after we planted those first thoughts we are now seeing the first green shoots of success. The best thing for me is to see that operators were prepared to give up their own time to help get the message out and have practised what they preach in offering placements. I am thrilled that the Guild has been able to be the glue that binds the whole thing together. But in reality, it doesn’t matter who takes the credit because we couldn’t have done it without each other. We left our egos at the door and we made this happen.

Last week, the whole industry came together with the support of the Pubs Minister to pledge support for this scheme and celebrate our successes so far. It’s really hard for operators to understand which schemes are the best to get involved in but I promise you that we can make this easy. Whether you’re from a large corporate, or more likely, an SME, like 99% of businesses in our industry, we can guide you through the process completely painlessly.

We can only achieve our 15,000 placements with operator support so if you have job vacancies coming up in your pubs, tell us. It’s that simple! Make sure that when those headlines go out saying that we’ve achieved our massive 15,000 target that you are able to take great pride in saying you were a part of it.
Suzy Jackson is executive director of the Hospitality Guild

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