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Morning Briefing Strap Line
Fri 23rd Jan 2015 - Friday Opinion
Subjects: The return of confidence, the ordinary pint pot and early highlights of 2015
Authors: Chris Edger, Martyn Cornell and Ann Elliott

Raise a glass to the return of confidence by Chris Edger

Over the past 24 years, Professor Mike Brown of Birmingham City University has run the Britain’s Most Admired Company Survey, known for short as BMAC (the last 21 in conjunction with Management Today magazine). The BMAC survey, which covers 26 business sectors in the UK, locates the top ten companies in each sector by capitalisation/scale and then distributes a survey to company leaders and analysts requesting them to rank their perceptions on a one to ten Likert scale relating to nine key attributes/characteristics about the their own business and competitors. The key attributes/characteristics that are assessed in this largely peer-based perception survey are: quality of management, financial soundness, quality of goods and services, ability to attract and retain talent, value as a long-term investment, capacity to innovate, quality of marketing, community and environmental responsibility and efficient use of corporate assets.
What do the November 2014 restaurant and pub sector results tell us and, more pertinently, how do they compare/differ from the year before? (See the table below – November 2013 figures are in brackets.)

Comparing aggregate results over the two-year period, sector confidence has risen by 5.5%. This is significant. Other sectors within the 2014 survey fell from their 2013 highs, including food retail, utilities, oil and extractive, food producers and business support services. Overall the post-recession exuberance of the 2013 survey was curbed in 2014 as the total BMAC index score dropped slightly. Clearly, restaurants and pubs are on the bounce compared to other sectors – but what are the main drivers behind this growth? 

Looking more deeply into the micro-detail at attribute/characteristic scores, “financial security” (up 10% year-on-year), “value as a long-term Investment” (up 10%) and “quality of goods and services” (up 8%) are revealed as being the main factors behind the sector’s surge. Clearly, leaders and analysts within the sector believe that economic fundamentals and a concomitant improvement in the sector’s overall consumer propositions are major causes for optimism. 
Single-value brands outshine: McDonald’s (ranked 9th overall in the entire 2014 BMAC survey), Domino’s and JD Wetherspoon showed good growth on the previous year, continuing to fill the first three spots in the table. Single-brand organisations with huge scale (relative to their segment competitors) and clear value positioning clearly continue to outshine in this sector. But key drivers in their improved performance also point to reasons for their continued momentum: McDonald’s saw “quality goods and services” up 25% year-on-year, Domino’s had “value as a long-term investment” rated 13% higher and Wetherspoon was voted up 13% on quality of goods and services. Interestingly, “financial security” scores for these organisations were relatively flat year-on-year, hinting at pressures on margins arising from “better” brands and concerns around margin sustainability. 
Urban casual dining climbs: The urban casual dining restaurant operators Restaurant Group and Gondola showed the most dramatic rise in fortunes. Confidence has clearly returned to a market segment which depends heavily on the vicissitudes of household income and levels of leisure-related discretionary spend. Restaurant Group rose to number four in the table (up 9.5% year-on-year), the main drivers including “financial security” (up 13%) and “capacity to innovate” (up 14%). Gondola’s improved ranking at number seven (up 11.8%) was assisted by a great leap forward in its “value as a long-term investment” score (up16%); unsurprising, as its extraordinarily successful PizzaExpress divestment was unfolding during the time of the survey.
Vertically integrated retail consolidates: Greene King and Marston’s, placed at number five and number six, have shown respectable rises in their scores (up 4.8% and 2.5% respectively), their provenance-based balanced portfolio approach (upstream production married to multiple format downstream retail) continuing to win admiration from their peers. The survey was conducted before Greene King’s bid for Spirit, but both companies saw notable upticks on “ability to attract and retain talent” (Greene King up 6% and Marston’s up 9%) and “capacity to innovate” (Greene King up 18% and Marston’s up 12%). These scores suggest that both company’s attempts to revitalise their estates through acquisition (Greene King) and new builds (Marston’s) are having a positive effect on attracting/retaining great people. Notably, both companies’ “quality of management” scores remain high relative to the survey.
Multi-brand pub retail flatlines: Mitchells and Butlers and Spirit, coming in at number eight and number nine, flatlined in the BMAC survey (down 1% and up 0.7% respectively). Scores that degraded Mitchells and Butlers progress included “quality of management” (down 8%) and “ability to attract and retain talent” (down 2%). In Spirit’s case, progress was hampered by factors such as “quality of goods and services” (down 3%). In the case of Mitchells and Butlers, its recent purchase of Orchid and its return to like-for-like sales momentum might change perceptions in the future. But the scores for both suggest that their multi-brand complexity might lead observers to conclude that they both suffer from sub-optimal resource deployment/decision-making. Indeed, Spirit’s proposed takeover by Greene King, might have come at just the right time for the target company, judging by this survey. 
The pubco model improves: The biggest movement in scores came from Enterprise Inns, which, though still firmly rooted to the foot of the table, improved by 15.2%. The main drivers behind this increase included “value as a long-term investment” (up 24%) and “financial security” (up 18%), suggesting that survey participants are now more confident about the company’s future prospects after its post-recession return to modest growth and improved financial gearing. A rise in its “ability to attract and retain talent” score (up 23%) might also be reflective of its recent retail appointments and widely touted decision to leverage some of its “slack” assets by forming a managed division.
So what do the comparisons between 2013 and 2014 tell us? First, we can still detect synchronicity within the sector according to business model positioning/segmentation. Second, the sector – exemplified by the biggest beasts – has momentum and confidence which undoubtedly washes down to small and medium-sized players. Looking back over the survey since its inception, it is clear that the sector tends to experience five to six-year “bull runs” before its exuberance is punctured through macro-economic setbacks that punish the over-leveraged. But for the moment, the BMAC survey confirms that confidence is growing, and that is a good thing for all of us who have a strong vested interest in the sector’s success. 
Professor Chris Edger is the author of Effective Multi-Unit Leadership (2012), International Multi-Unit Leadership (2013) and Professional Area Management (2014)

Raise a glass to the ordinary pint pot by Martyn Cornell

In the history of the pub over the past 100 years, there is at least one unsung giant whose influence persists through to today: Alexander Hardie Williamson. You may never have heard of him, but it’s very likely you have drunk out of one or more of the glasses he designed, on thousands of occasions. Hardie Williamson, who was born in 1907, began designing glassware for United Glass in 1944, and within a few years produced a host of simple design classics that are, in many cases, still with us today: the iconic Nonik beer glass, first made in 1948, with the bulge near the top intended to keep the rims from being chipped or nicked by rubbing or banging together in the glass washer or on the shelf (and with the added advantage that the bulge made it easier for the drinker to hold on to their pint); the champagne saucer, picked up and personalised by Showerings as the Babycham glass, also first made in 1948; the Paris wine goblet, designed in 1952; the “Waterloo” half-pint goblet, as seen in Newcastle Brown Ale ads, the Harp lager tankard, and many more.
Hardie Williamson is sometimes credited with inventing the dimple beer mug, which first appeared in 1938. That particular icon, however, was down to an in-house designer at Ravenhead of St Helens whose name is now, for shame, long lost. Together the Nonik and the dimple were easily the commonest types of beer glass in the last half of the 20th century. To be frank I have always thought the Nonik was one of the ugliest beer glasses ever designed, and while I quite like the dimple, I prefer its predecessor and rival, the 10-sided fluted pint glass of the sort seen in old Beer Society “Beer is Best” ads, which was manufactured from the 1920s through to the mid 1960s. However, many drinkers find beer mugs, with handles, too awkward, thick and heavy, and refuse to drink from them: my father, for one, always insisted on a “straight” glass, saying he hated the feel of the rim of a dimple glass against his lips.
There came a time when the dimple mug, too, looked as if it would end up on the rubbish tip of history, along with the mochaware pottery mugs it replaced, condemned by the Design Council’s in-house magazine in 1990 as “short, fat, ugly and increasingly shunned by beer drinkers”, its thick glass “eco-unfriendly”. When Ravenhead and its rival beerglass maker Dema of Chesterfield both went into receivership within months of each other in 2000 and 2001, the headlines insisted: “Dimpled Pint Pots Doomed”. Fortunately for traditionalists, that hasn’t happened, and in the past few years the dimple beer mug has actually become trendy in pubs and bars frequented by bearded hipsters. Today, however, your dimpled pint glass is most likely to have been made by someone like the Zibo Hondao Trading Co Ltd of Shandong, or Bengbu Longyu Glass Products of neighbouring Anhui, or the Shanghai Jingsheng Glass Co Ltd, minimum order 100,000 glasses, cost FOB as low as 20p a glass, depending on order size.
Still, it’s thought-provoking, surely, that in 2018 we will be celebrating the 80th anniversary of the dimple pint, and the 70th anniversary of the Nonik, two items of such everyday ordinariness it is doubtful many of their millions of users have ever given much thought to their origins, history and current place of manufacture. It has been estimated that 60 million beer glasses are supplied to British pubs, clubs and other drinking establishments every year (which implies that every establishment is breaking two to three a day). Let us take a very broad-brush guess and say that over the years a quarter of all beer glasses used in British pubs have been either dimples or Noniks, with the rest tulips, straight-sided beakers, other types of tankards and so on. That would mean more than a billion individual Noniks and dimples have clattered over British bartops since the 1940s.
I suspect you’ve got at least one dimple pint mug at home, as does almost every other British household: I’ll admit to having a small collection – not stolen from pubs, but picked up mostly in charity shops, where for £2 you can find one stamped “GR” that is clearly among the very first that Ravenhead produced in the early years of George VI, soon after that unknown designer drew up the blueprints for the dimple mug in 1938. I have never seen a Nonik glass stamped “GR”, though they must exist, but their thinness was always going to make them rarer survivors, despite their being produced in hundreds of millions. All the same, the designs themselves are still with us, despite all else that has changed about the pub in the past 70 years. That’s worth raising a glass to.
Martyn Cornell is managing editor of Propel Info

My early 2015 picks by Ann Elliott

I am currently sat in the Blue Boar Smokehouse & Bar near Westminster, having dined on a table next to the MP Keith Vaz at lunchtime – very exciting. I suspect it is full of politicians and journalists most of the time, but despite that it’s a gorgeous place and the food, particularly my rib eye, was tasty, well presented and not bad value for money. Worth another visit at the end of a busy day when wine is in order I think. The lack of table service, though, is really annoying, especially when you are on your own, writing articles, with only a weak cup of tea for company
A few weeks ago I had lunch out of town in Hermitage Road in Hitchin, Hertfordshire, one of James Nye’s Anglian Inns. I remember going to see this when it was a building site and wondering what on earth they had bought. It was a vast run-down space, above a shop and with no noticeable entrance. It brought back those days of trying to entice unsuspecting Pizza Hut customers into subterranean, dark and uninviting dining spaces when I was the marketing director for the brand. Nightmare. Anyway this is fabulous. Just beautiful. They have created the most amazing piece of space and on the first Monday post-Christmas had 90 covers booked that evening. The menu is simple, all cooked from scratch and wonderfully tasty.
Back to London and a meal at the Colony Grill at the Beaumont hotel which is beautifully designed if a bit male for my liking (in décor, not customer base). I did eventually find something to eat on the menu (as I do at the Wolseley and the Delauney as I don’t want to risk ever going hungry) but it is not the most enticing menu in the world and it feels like it’s been like that forever.
I keep going back to Sticks ’n’ Sushi, as the food is to die for and I choose about three times more than I will ever eat (or at least think I am going to eat). My meal there the other week with Jaclyn Bateman was as stunning as usual, though the costs did mount up, due to lack of self-control when ordering – it was £108 for two with no alcohol. They will now have opened in Greenwich, and are no doubt going great guns.
It will be interesting to see who wins ( if anyone needs to ) the rapidly expanding pan Asian/Thai restaurant market with Giggling Squid, Banana Tree, Busaba and Thaikhun all performing really well ( all in different geographies, though). I haven’t had a bad meal in any of these: they are all at the top of their game, with really talented and determined management teams. The consumer will be the main winner here.
As for coffee shops, Fernandez and Wells is an interesting concept on Duke Street in Mayfair, London, where you drink coffee surrounded by beautiful clothes (Jigsaw, I think). This adds to my rapidly expanding range of really intriguing coffee shops to visit, including Tap on Wardour Street in Soho. In contrast I had afternoon tea at the St Pancras Renaissance Hotel last Wednesday, which was pure decadence. There must be more of a market here for budding restaurateurs. I had nearly £40 in pure sugar (good margins, surely?) so I was safely over the venue’s frankly outrageous minimum-required spend levels. It is nice, though, and a real treat. I need to go and have more green juice now as a penance.
I also had good experiences recently at the Audley in Mayfair, Browns in St Martins Lane, All Bar One in Euston, Caravan in Exmouth Market, The Swan at Denham, and Princi and Ciao Ciao in Bath. I know January trading has been a bit slow but the year has got off to a good start in terms of personal eating out. Long may it continue.
Ann Elliott is chief executive of the leading sector PR and marketing company Elliotts –

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