Subjects: Breakfasts, pubs and healthy eating, pubcos and the long game, dining at airports and the rise and fall of the fruit machine
Authors: Martyn Cornell, Paul Charity, Ann Elliott and Bill Epsley
Breakfasts, pubs and healthy eating by Martyn Cornell
Tim Martin once said that the best accompaniment to a full English breakfast was a pint of Abbot Ale. The Wetherspoon’s chairman had an excellent point: the carbonation of the beer, and the bitterness of the hops, cut through the grease and fat as well or better than the tannic bitterness of tea, or the roasty bitterness of coffee. It might subtract rather from the healthiness of the breakfast, however – rather more calories in beer than in a cup of tea. But if you were thinking: “Well, there’s not that much that’s healthy about the FEB anyway”, then, courtesy of Men’s Health magazine, Wetherspoon’s can prove you wrong. According to the magazine’s latest issue, out today, Tim Martin’s establishments serve the most nutritious breakfasts in the country. Its 867-calorie “Traditional Breakfast” was hailed, by a judging panel that included expert nutritionists from universities and sports clubs, for sausages that have less salt and fat than many supermarket bangers, and poppy-seed bread that provides more fibre and less sugar than ordinary toast.
Naturally enough, what must be, for most people, a rather counter-intuitive finding – “pub breakfasts are good for you” – has received plenty of publicity in the national prints, which at least makes up for the kicking Wetherspoon’s received last week over its “motorway pub”. But will it encourage more people to grab an early-morning bite in their local Moon Under Water, rather than, in, say, Starbucks (which came second for Best Breakfast)? It’s certainly likely to remove some of the guilt people might feel about eating a fry-up in a pub, if they are told it’s not half as bad for them as they might think. And it’s likely to have a halo effect over the whole of the chain’s food offer. Wetherspoon’s may not be down there with the Poundcafe, but “cheap and cheerful” could almost be part of its name. And it’s likely to be because of this perceived value that food is playing an increasing importance in the whole offer. The interesting statistic on food sales revealed alongside the most recent JDW figures was not so much that grub makes up 40% of total sales at Wetherspoon’s 100 most recently opened pubs as that food and the drinks ordered to go with food – that is, the whole eating-out spend – accounts for two thirds of sales at newer outlets.
People who buy an item because it’s cheap generally feel that they are missing something that those who purchase the more expensive option don’t miss. Price versus quality almost inevitably involves a compromise, not least because, as the American economist Michael Porter pointed out in the 1980s, you can’t compete on both at the same time. There is a very funny video clip from that time showing Porter trying to persuade a member of the Sainsbury family that the slogan “Good food costs less at Sainsbury’s” could not be true, because someone else would always sell better food, and someone else again would always sell food for less: the Sainsbury, naturally, disagreed, but Porter, of course, was proved correct when Waitrose, from one direction, and Tesco, from the other, stole its customers. Wetherspoon, however, may finally have a Porter-buster: “Nutritious food costs less at JDW”.
How important IS healthy eating to the British diner, though? If you glance quickly at Horizons’ latest QuickBite consumer eating-out survey, released this week, you might think: “Quite a lot.” Of the people surveyed by YouGov in the biannual survey, 41% said they were influenced by at least one of the healthy eating factors listed when they went out to eat, including the availability of vegetarian options, calorie information, reduced fat choices and the availability of low-carb dishes. Time to give the menu a thorough health check, perhaps? But if you dig deeper, you will find that individually, each health concern ranks pretty low on the worry-list. Availability of vegetarian options: just 15% were bothered. Calorie information: only 14% cared about this. Reduced fat choices: just 9% wanted more. Availability of low-carb dishes: a bare 4% thought this was important.
The healthiness of Wetherspoon’s breakfasts – and by implication, the healthiness of all its food –therefore seems likely to have only a marginal effect on its popularity. The competition between the Moon under Water and Greasy Sam’s Cafe is still more likely to be down to price and speed of service than whether Greasy Sam’s toast has more fibre and less salt and fat than Tim Martin’s does.
Martyn Cornell is managing editor of Propel Info
Tenanted pubcos and the long game by Paul Charity
Almost wherever you look at the moment, there’s evidence of tenanted pubcos upping their game. In a fiercely competitive world, the tenanted pubcos are doing their bit – acting with a retail-minded focus, investing, using their scale to deliver competitive advantage to their licensees, competing hard to recruit the best licensees.
One small but positive sign was to see senior executives of the major tenanted pub companies last week in Morzine, France, mixing with some of the cream of the UK’s retail community on the Association of Licensed Multiple Retailers annual ski trip. There were senior representatives from Punch, Paul Pavli and David Wigham, the head of Spirit leased, Chris Welham, Mick Howard from Star Pubs & Bars and others in attendance. It’s an important change for the better. There have been times in the past when the tenanted world has seemed like a “them and us” kind of existence. I’ve been involved in major pub sector award ceremonies where the tenanted top brass couldn’t even be bothered to turn up to celebrate their tenants’ successes. The ideal virtuous circle of pubco and quality tenant must replicate the Domino’s UK model where the two sides of the property and retailing equation mix socially to break down the barriers of mistrust that too often have dogged the tenanted world.
Just this week, Propel has reported a host of news stories that point towards much-improved relationships within the tenanted universe. We reported that Spirit Pub Company and Pesto, the multi-site operator led by Neil Gatt, had abandoned a two-pub partnership in Yorkshire – and the pubs will be transferred to Spirit’s managed division. On the face of, it’s a story of failure. I’d argue a contrary view. Spirit has embraced the multi-site community, who now run almost 25% of its leased pubs. It is showing a determination to invest and innovate, with turnover leases introduced for retail partners like Peach Pub Company. The Pesto partnership was more evidence of this eagerness to experiment. But not everything you try when you are being bold will work. In the past world of pubco/tenant relationships, Pesto would, likely, have been made to stick to the terms of its lease, continuing in situ, losing money and creating bad will. It’s a positive that Spirit has allowed Pesto an “out” so quickly. Spirit, with a decent brand portfolio now, has ready-made solutions for the sites – and the quick and non-punitive action here will burnish its reputation among the UK’s growing band of high quality multi-siters.
Punch Taverns led the tenanted pubco way in re-casting its internal culture. Just ask Brian Whiting, of gastro-operator Whiting & Hammond, how eager Punch is now to back quality retailers with investment and support. This week, Propel reported that Punch is applying its Champs sports bar concept to a site in Washington. It’s an example of a pub company generating an exciting and rounded piece of retail format off its own bat.
Innovation and investment is also in evidence elsewhere among the big tenanted operators this week. Marston’s, which deserves credit for pioneering franchising in the sector, announced developments in online communication and Star Pubs & Bars is investing a record amount, circa £18m in its tenanted estate. This morning, Propel reported that almost £1m will be spent on six pubs in Lancashire. Part of the supposed benefits of the tied pubs is that the relationship can support licensees in tougher economic times. Enterprise Inns chief executive Ted Tuppen told Propel this week that the company’s estate in Plymouth has survived the 22-strong pub cull the city suffered last year thanks to the support the pub company model offers. The claim deserves to be taken seriously. And, last but not least, Greene King’s future is clearly all about a growing managed division. But it’s still hard to imagine a Greene King future without tenanted pubs - and it’s good to se it supporting its two Michelin-starred tenant Tom Kerridge with investment, as Propel reported this morning.
One story in Propel this week points to the on-going danger that the major pub companies must avoid. It has been an oft-repeated statement of faith that outstanding pub retailers should not be penalised by their landlords for their success. Too often tenanted companies have moved Fair Maintainable Trade goalposts to earn more in rent. Former Greene King tenants Tony Leonard and Dominic McCartan were stellar performer for the company at their two Brighton pubs over the course of 12 years. They ended up, in my view, over-rented, Lo and behold, they are now producing £1m of turnover from the tiny, tiny Snowdrop in Lewes in East Sussex after walking away from their tied pubs. The long-term plans now being actioned by our large tenanted pub companies will require pubco self-restraint when rent review time arrives.
Paul Charity is managing director of Propel Info
Foodservice at airports by Ann Elliott
I love airports. I love that lazy, relaxed wait before the flight goes when you are full of expectation and when all the holiday stretches in front of you. The bags have been dropped off (and luckily didn’t exceed 23 kilos each, much to the surprise of your family) and the printout of the boarding pass has worked surprisingly well considering you did it at 2am that morning. I love the bit where you decide what to eat and when – before or after the visit to the duty free shop or WH Smith? Probably after visiting WH Smith to buy inordinately heavy books which you won’t have the time to read on your flight.
So after duty free, WH Smith and Boots (to buy the adapter you forgot), it’s off to eat and blow the diet which you made a pledge to continue on holiday but decide to abandon the moment you go through passport control.
The choice of where to eat in airports matches the choice in the high street, with the added surprise of Caviar House (I must try that) thrown in. As I wander up and down the airport, with my extra-large books banging against my shins, I am overcome with options. It’s like Christmas, only with the promise of sun at the end of it all.
Thus last week I had the absolute joy of being taken around Gatwick’s North and South terminals by Charlotte Christiansen (the airport’s business development and retail performance manager) to see what has been happening here recently. It has been a hugely ambitious undertaking to bring Gatwick up to date in terms of food and drink concepts but they have made amazing progress. London Gatwick is the UK’s second largest airport and the busiest single-runway airport in the world. It serves more than 200 destinations in 90 countries, dealing with around 35 million passengers a year on short and long-haul point-to-point services. It is also a major economic driver for the South-East region, generating around 23,000 on-airport jobs and a further 13,000 jobs through related activities. The airport is 28 miles south of London with excellent public transport links, including the Gatwick Express. Gatwick Airport is owned by a group of international investment funds, of which Global Infrastructure Partners is the largest shareholder.
One wonderful element of Charlotte’s role is having access to the opinions of millions of travellers, to really appreciate what they want out of a bar/pub or restaurant and how current options are delivering against very specific KPIs in the eyes of these customers.
Charlotte is understandably demanding when it comes to letting vital space to operators. She needs:
• A brand customers know and want
• One which can provide a great breakfast offer, as more than 50% of food occasions are at breakfast
• One with an obsession with delivering exacting operational standards
• One with a willingness to work collaboratively and flexibly with the airport
• One with a team that can cope with the demands of employing people airside
She will work with the larger “transport” foodservice companies such as TRG and SSP but enjoys working directly with restaurant and bar operators themselves so they can understand her requirements directly. Anchor brands (eg Pret A Manger or JD Wetherspoon) are critical at the corners of trading spaces, to attract customers. At the same time she needs new and innovative brands (often new iterations of older concepts in the market place) to add interest and to delight those customers wanting to experiment. So Comptoir Libanais, where we had lunch, is a prime example of an interesting and less well-known brand.
Charlotte regularly eats and drinks out with her team, in order to really comprehend what’s happening in the market place and to have the background and knowledge to approach some of the recent additions on the high street eating-out scene. She fields dozens of requests from new or about-to-launch concepts but is also prepared to approach brands directly if she thinks they will fit her criteria.
I can’t say how much I enjoyed my visit. No bags, no books (the Smiths there is actually nicely decluttered, and even has a newspaper honesty box), no plugs. But then again no holiday either. It was a joy to see the high street translated so successfully in the airport. Just another reason to start booking my next holiday.
Ann Elliott is chief executive of leading sector marketing and public relations agency Elliotts – www.elliottsagency.com
The rise and fall of the pub fruit machine by Bill Epsley
On January 15 this year, the top prize or “jackpot” on a pub fruit machine was increased from £70 to £100. Although this did receive some coverage in the trade press, there was not the great fanfare that might once have accompanied an increase in the top prize, or any pictures of new prize machines being installed into pubs at one minute past midnight on the appointed date. The fruit machine was once a fixture of almost every pub. But take a look around in pubs today and you will see that they are fast becoming confined to certain segments of the trade and could perhaps be considered as an endangered species.
It became legal to install fruit machines – or Amusement With Prize (AWP) machines to give them their correct name – into pubs in the late 1960s. As their name suggest, they were never intended or considered to be gambling machines but were seen as purely for amusement, with low stakes and small cash payouts. The modest top prize was paid in redeemable tokens, which could either be replayed into the machine or exchanged for goods, but not cash, at the bar. These machines steadily grew in popularity, to the point where even the quaintest country pub would have one squeezed in somewhere. It was not difficult to see why, as the cash profit they generated often made the 2ft square piece of carpet they occupied one of the most profitable areas of the pub.
The site owners, generally brewers in those days, soon began to appreciate the significant profit that these machines generated for them and their licensees. Quickly, most had established machine control departments to manage their machine suppliers and maximise this valuable source of income. As technology advanced from the mechanical “one-armed bandit” to electro-mechanical machines and then to micro-processor control, so machines became even more complex and even more profitable. Indeed, machine income appeared very resilient to recession and the falling beer volumes of the 1980s, and this led to some of the other larger brewers joining the ranks of Bass by either owning outright or holding major stakes in both machine manufacturers and/or suppliers.
Probably the last significant development for the pub fruit machine was in 1996, when tokens were finally abolished and all prizes were paid in cash. This date was also significant for another reason – it was the date when it also became legal for betting shops to install fruit machines in their premises for the first time, a point worth remembering.
As a result of the Beer Orders of 1989, the major brewers were required to free up large numbers of pubs from their tied estates and most also took the opportunity to review their operations as a whole. By the end of the 1990s, all had sold their interests in fruit machine manufactures and suppliers. Indeed, as we know, some went much further, by selling off either their brewing interests or pubs or both.
Since the start of the new millennium we have seen more than 11,000 pubs close their doors for the last time, while those that remain have had to contend with the challenges of the smoking ban and cheap supermarket booze, both resulting in a growing trend for “stay at home” drinking. In order to survive, pubs have had to broaden their appeal and go beyond the largely male-dominated customer base of previous decades. Food is now a crucial part of a successful pub, as is customer service, and a trip to the pub today, particularly at weekends, is now generally an experience for the whole family, while ambience and comfort are a must if you want to increase your female custom. So where does that leave the fruit machine?
Well, not in a great place. Today’s descendant of the one-armed bandit finds itself under threat from a number of directions: first, by loss of venues, as their once most profitable locations, traditional wet-led pubs and estate-based community pubs, have been the biggest casualties in pub closures. Second, as mentioned earlier, fruit machines were introduced into betting shops in 1996 but were never as successful as they had been in pubs. However, within a few years, betting shops had developed their own product, the controversial Fixed Odds Betting Terminal (FOBT). These were generally based on roulette, with higher prizes, and were pure gambling machines, which were not legally permitted in a pub. And without doubt some players would have deserted the pub fruit machine in search of a different gaming experience. The third major threat was the smoking ban, as a large number of machine players were also smokers, who would play the fruit machine while they smoked a cigarette. Now they just head outside for their nicotine fix. The last major threat came from changes in the operating style of those pubs that do remain. Many of these now serve a much wider customer base, by offering good restaurant-quality food, a greater selection of drinks, and all within a comfortable and contemporary environment far removed from the smoky male-dominated pubs of the past. The presence of a fruit machine in these sorts of venues can stand out like a man wearing greasy overalls in a cocktail bar.
All of these factors have taken their toll on the number of fruit machines, with the Gambling Commission reporting that over the past five years there has been a decline of more than 18,500. The declining numbers of machines has also taken its toll on manufacturers, with many of the famous names of the past either concentrating their efforts in other markets or disappearing altogether. Suppliers have also faced tough times and seen their operating margins squeezed as they fight for what business remains. Digital or video-based machines offer a far greater choice and flexibility, as has been demonstrated by the FOBT in betting shops. However, attempts to get the pub machine player to embrace new technology and move away from the traditional “spinning reels” format has had little success to date. Whilst many in the industry still hope for that “magic bullet” or formula that would return the fruit machine to its heyday, this, so far, has remained elusive.
While machine income is not what it once was it still represents an important income stream for many brewers, retailers and licensees and perhaps one day something will happen to rejuvenate this product and give it the wider appeal and earning potential it once had. But, for now at least, we are left with a product which has its roots in the 1970s and that will likely continue, albeit in decreasing numbers and even more confined to larger wet-led, venues while becoming as rare a sight as a dartboard.
Bill Epsley is commercial manager at the London pub retailer Young’s