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Morning Briefing Strap Line
Fri 25th Sep 2015 - Friday Opinion
Subjects: The talent pool at Mitchells & Butlers, why brands perish, the enigma of Samuel Smith’s and a day out in Brighton
Authors: Paul Charity, Chris Edger and Tony Hughes, Glynn Davis and Ann Elliott

Has the talent pool at Mitchells & Butlers been depleted? by Paul Charity

Tony Hughes, the highly respected former boss of Mitchells & Butlers’ (M&B) restaurant division, has a very simple business philosophy. “If you employ the best people, you win,” he says. There’s no doubt that M&B has been a formidable recruiter and trainer of talent over the years. It hired really high quality people and tended to keep them – careers with M&B, historically, would stretch into the decades. That’s not to say that people couldn’t be tempted away. But it’s significant that many of those who have been tempted away went on to have illustrious careers elsewhere in the sector – Simon Emeny now leads Fuller’s and Jonathan Webster has long been one of the key executives in Greene King’s managed division. It’s only natural that ambitious and talented executives move on occasionally to opportunities elsewhere. But, equally, M&B seemed to excel in keeping high quality staff for very long periods. In the past few years, M&B has leaked quality staff in a manner that has amounted to a diaspora.

There’s seems to be two major issues. First of all, we appear to be at the stage where the very top tier of entrepreneurial chief executive is difficult to attract to the top post. When Alistair Darby, leaving the company today (Friday, 25 September), was appointed to the position, the choice of candidates seemed strangely narrow. The current Casual Dining Group chief executive Steve Richards was in the frame for an extended period but then opted to remain at Novus. A former M&B staffer, Karen Forrester, who achieved a very rapid turnaround at TGI Friday’s, might have been an option – she certainly knew the M&B culture and surely had the track record of transformational change that was required. Perhaps the very brightest talent is more excited by the challenges and rewards of leading a private equity-backed business than leading a company beset, as it has been in recent years, by boardroom wrangles. Perhaps also surprising was that M&B itself had no obvious candidate to take the chief executive’s chair prior to Darby’s appointment – after all Kevin Todd and Vanessa Hall, both of whom left to becomes chief executives elsewhere where on the staff at the time of his arrival. There is a lot to be said for the continuity provided by an internal candidate, proven over the years – with high levels of tacit knowledge about the company and foodservice market – moving into the top seat. It’s a route The Restaurant Group took last year when Danny Breithaupt took over from Andrew Page. M&B itself previously opted to elevate veteran staffer Adam Fowle to the top job in the wake of Tim Clarke’s resignation. There’s always an argument for introducing fresh blood to any organisation. But, equally, appointing a candidate from outside amounts to an implicit suggestion that, in the case of M&B, 40,000 staff members provide no-one of the appropriate quality to lead the business.

When anybody leaves an employer there are always push and pull factors. Nobody observing from the outside is well equipped to judge the extent to which departures reflect a drop in company morale. But certainly, the rumble of disgruntlement emerging from departing M&B staffers has been hard to ignore. And it has got to the point at M&B where the departures have become so regular that it’s fair to wonder whether the quality of M&B’s talent pool has been depleted in recent years. Certainly, M&B’s losses have been the wider sector’s gains with departing staff finding senior positions relatively easily. A non-exhaustive list would include: Adrian Frid (operations director at Caffe Nero), Vanessa Hall (running YO! Sushi) Noel Darcy (Big Easy) Adam Fowle, Sam Anstey, Tom Crowley and Adam Martin (all now working for Tesco), Simon Cope (Wagamama), Steve Cash and Karen Baskett (both formerly running Harvester but now steering a course for Enterprise’s fledgling managed division), Simon King (at the helm of Burger & Lobster) and David Singleton (busy in the Middle East running Al Tayer’s food division). Recent years have also seen the departure of towering figures such as the aforementioned Todd, Ian Dunstall and Roger Moxham. One sure test of retail skills comes when executives of a large company start their own business. There’s been no shortage of these emerging from M&B – Chris Gerard (Innventure), Nigel Pinegar (Pug Pubs) and Alastair Scott (Malvern Inns) to name but a few.

Does another talent pool negative arise from M&B’s acquisition of Orchid last year? Canny buyers understand the need to capture talent as well as assets. Greene King provided a case-in-point when it acquired Hardys and Hansons in 2006. Almost a decade on, its chief executive Jonathan Webster, praised in the past by Greene King chief executive Rooney Anand for the clarity of his strategic thinking, is overseeing the integration of Spirit on behalf of Greene King. It was disappointing that M&B was unable to retain the services of Orchid’s commercial director Simon Dodd, who, for my money, is one of the most talented pub retailers of his generation – he has since joined Fuller’s. 

A strong and innovative M&B has always been good for the sector and its talent pool has cross-fertilised the UK retail landscape to its betterment. Its lacklustre performance of recent years is, no doubt, the result of multiple external challenges. But the company has also suffered a series of self-inflicted defeats that began with its disastrous flirtation with interest rate swaps. One key challenge for new chief executive Phil Urban will be to arrest the damaging net leakage of talent.
Paul Charity is managing director of Propel Info

Why brands fail by Chris Edger and Tony Hughes

The ultimate reason for the failure of a brand is obsolescence. That is to say the concept no longer possesses any viable consumer franchise. Dying foodservice brands fail to have a compelling culinary positioning, coupled with indistinct emotional and functional benefits that fail to meet changing customer needs, feelings and aspirations, resulting in rejection, switching and detraction. They have reached a point of no return because they are perceived as outdated and have been overtaken and usurped by fresher, younger upstarts. They have no “voice” or traction within the marketplace. A “hard core loyal rump” user group might have “stayed on” providing brand leaders with some (illusory) cause for optimism that the brand might have a future! However, in truth, these users only remain because they feel disenfranchised and detached from the rest of the market and because (curiously) they have “moonie-type” loyalty that inures them from negative aspects of the brand. But what are the most common explanations for brand obsolescence? What are the customer-driven reasons for their disappearance from the foodservice landscape?

Outmoded cuisine: At the heart of the demise of any foodservice concept lies a failure to “wow” customers with food quality levels (this being the foremost requirement of customers’ need in foodservice). Customer perceptions of food quality don’t necessarily only relate to views concerning the “standard” of the food (ie hot, cooked to specification etc), it is a measure that also encapsulates feelings regarding taste and contemporaneousness (ie whether it is bland and boring in comparison to other brands for instance). Brands that are failing generally have cuisine that might not only be badly executed, but be perceived as being inferior cuisine; totally off trend compared to other foodservice offers.

Outdated service delivery system: Another factor that customers pinpoint as a major attractor/detractor in foodservice brands is speed of service. Long queues and high “wait” times “in service” (ie slow seating processes, ponderous order taking, tardy food and beverage delivery and cheque settlement) are major detractors that can really erode the reputation of the brand; particularly when competitors have demonstrably sharper order fulfilment processes in place. The term “full table service” is perceived as an oxymoron in some concepts; service is perceived by customers as being poorer when they are allegedly waited upon “hand and foot” compared to contexts where they are expected to complete elements of the service cycle themselves; in self-serve buffet and/or fast-casual contexts for instance. Increasing perceptions of “accessibility”, through decreasing “barriers to entry” has been a major achievement of the fast-casual dining movement. Brands that have remained stuck in the past by failing to reduce the number of service steps or speeding up the cycle through technology (ie handheld ordering systems) have placed their business model at serious risk.

Low perceived value: Foodservice concepts need to keep the major elements of their “value proposition” in balance. That is to say product quality, environment, service and price must be viewed holistically rather than a “sum of parts”. Deadly combinations will destroy the foodservice brand if, for instance, there is an obvious incongruence between these factors (ie what customers are being asked to pay for is out-of kilter with product quality, amenity and service). The problem that failing foodservice brands have on this count is, how they shift perceptions concerning the value proposition when they can ill-afford to rectify the imbalance (because it would “blow up the P&L”). Obviously, foodservice brands should always seek to give benefits that give high perceived value to the customers at minimal cost to themselves. But in some failing brands inexpensive gestures are futile; they will do little to resolve terminal perceptions of low perceived value.

Unloved: The final factor that drives a brand towards extinction is simple; customers have fallen out of love with the brand. Not only does it now fail to meet any of their basic needs, it no longer elicits strong feelings of “attachment” or aspiration. Customers feel ambivalent about the brand – it has slipped way down their repertoire of choices because they really don’t care for what it offers and stands for. It means nothing to them. Worse than that, brand employees share and reinforce their feelings! Front-line service providers who are supposed to personify the brand and “bring it alive” now act in a detached, disillusioned and dispassionate manner because they lack any deep emotional connection with a brand, which they sense is sleepwalking into oblivion. They display few signs of excitement and joy “on the floor” – this is either consciously or subconsciously picked up by customers, degrading their experience, leading to their fatal decision (for the brand) not to return.

But what are the remedies for brands sliding into obsolescence?

Re-brand: Brand leaders can opt for a total re-brand, remaining within the category with a “re-crafted” proposition. They design a new compelling culinary concept that addresses the same consumer channel, trial it in existing sites and – if it works – “back it into” the entire estate. Can such a course of action work? Replacing the existing estate with a new “start up” concept is a highly complex process requiring multiple resources. It is possible if the brand owner has deep pockets but the chances of success are extremely remote.

Substitution: One option that is frequently deployed by multiple brand owners is the substitution of a failing brand with concepts from their wider brand portfolio. Given the fact they are likely to have liabilities and covenant responsibilities in a number of “failing brand” sites they are able to minimise losses through a process of replacement; swapping out the failed brand for new vibrant concepts that add immediate value to the overall portfolio. They must take care, however, that they do not make matters worse by putting the wrong branded “solution” out of their portfolio into the wrong site. Often multi-brand owners will attack portfolio underperformance with the wrong brands, making highly expensive mistakes that exacerbate rather than resolve the problem (ie some sites are just not suitable for any “foodservice” offer).

Honourable administration: Finally, the brand leader can accept the inevitable (although they rarely do!); either the brand wasn’t a brand in the first place – merely a whimsical “here today, gone tomorrow” fad that never stood any chance of longevity – or the erstwhile successful concept has run its course. The brand leader should “dissolve” the asset in an orderly fashion (see above), minimising the pain and fall out for all stakeholders. 

Professor Chris Edger is the UK’s leader teacher and author on the subject of multi-site leadership. Tony Hughes is the former managing director of Mitchells & Butlers’ restaurant division. The article above is extracted from their forthcoming book “Effective Brand Leadership – Be Different. Stay Different. Or Perish”, published in 2016

The Samuel Smith’s enigma by Glynn Davis

Sat next to renowned US brewer Doug Odell (founder of Odell Brewing Company) some years ago at a dinner, held at the equally renowned White Horse on Parson’s Green in West London, he told me a rather amusing tale about his time in the UK. He was in the country with other top US craft brewers on the annual Brewers’ Association pilgrimage to the UK to visit various breweries. Typically a call from this illustrious grouping would quickly open doors but for once their standing in the global beer world had failed them. They’d put a call in to Samuel Smith’s brewery in Yorkshire to request a visit and the reply had been a blunt “no” followed by the phone being placed swiftly back on the receiver.

He wasn’t as amused about this rejection as me but he did manage to raise a chuckle when I described the Tadcaster-based brewery as akin to Willy Wonka’s chocolate factory. We all know it produces some fine products but nobody ever makes it through the iron gates to see exactly what goes on in there. As a Yorkshireman myself this combination of bluntness and eccentricity combined with a genuine ability to produce high quality beers and sell them in some of the best Victorian pubs in the country was a heady cocktail. It had kept me regularly visiting the likes of The Angel, the Princess Louise and Ye Olde Cheshire Cheese in London since decamping to the capital in the late 1980s.

Since starting to write about beer around the early 2000s, the unwillingness to communicate with the outside world simply added to the mystique around Samuel Smith’s. Occasional rumours would circulate about specific management eccentricities, but without anyone at the company willing to verify or deny any such stories these tales would be merely added to the brewery’s ever-rich tapestry of intrigue. Such a rigid, unusual, stance on communications is undoubtedly matched by the company’s commitment to plough its own furrow. It has resolutely stuck to producing the beers it wants to produce. No market trends have impacted on the styles it has brewed. It was exporting craft beer to the US before that country even knew what it was, and then before this country realised that the US knew what it was.

The Americans recognised some of the styles that Samuel Smith’s was brewing were from a bygone age of British brewing and wanted to copy them. Samuel Smith’s didn’t exactly categorise anything within an age or an era (bygone or not), it simply continued to produce good beer. It just so happened the American brewers started to appreciate Nut Brown Ale and English Pale Ale before other British brewers. It also began brewing under license a high-quality German lager (developed with the brewers at Ayingerbräu in Bavaria) decades ago at a time when there was no credible UK brewer producing an authentic version of this great beer style. A wheat beer then followed and again Samuel Smith’s was ahead of the game.

Or rather, it would have been ahead of the game but it doesn’t really play the game. Actually, that’s not true, it plays the long game. Cycles come and go but it steadfastly sticks to its policy of producing high quality beers in styles that interest its management and brewing team. It would be a policy of: “If we brew it, they will drink it.” Provided they did policies of course. It is a similar story with its pub estate. The portfolio it has built up in central London is not bettered by any other operator. It has a catalogue of pubs that individually would stand up as flagship venues for other breweries or pub companies. From the Cittie of Yorke, to the Windsor Castle, The Chandos, and The Champion, it has accumulated a portfolio over many years helped by the fact it recognised these assets well before many other brewers (certainly any traditional regional operators).

It has steadily accumulated freeholds and is now systematically committing serious resources to bringing them back to their former glory. The Princess Louise and the Windsor Castle are Victorian gems that have been lovingly refurbished to such a high standard that other operators would question it because the return on investment might be a little too long for them. Samuel Smith’s is not bothered about single generational timeframes – it is more likely to work on 50 or maybe 100 year-time periods. I know this for sure because Sam Smith told me. Yes, in the upstairs room of their most recent refurbishment, The Cock Tavern on London’s Great Portland Street, the fifth generation of the Smith family ran me through the thinking and the philosophy of the company. Thankfully, after all my years of drinking its quality beers in its glorious pubs, it stubbornly stands for everything that I thought and wished it would.
Glynn Davis is a leading commentator on retail trends

A day-trip to Brighton by Ann Elliott

Keith Waterhouse, who wrote the book “Billy Liar”, the screenplay “Whistle down the Wind” and the play, “Jeffrey Bernard is Unwell”, made some interesting comments about Brighton – although I can’t find out why he felt moved to do so. He said “Brighton looks as though it is a town helping the police with their enquiries”, “the beautiful thing about Brighton is that you can buy your lover a pair of knickers at Victoria Station and have them off again at the Grand Hotel in less than two hours” and “without putting a finger on it you feel that Brighton is up to something”. I should probably have read these words before I took my team there for a food and drink tour last week but I did trust them to hold on to their underwear and not end up in a police cell (they did succeed on both fronts).

We arrived at lunchtime, were dropped off at our “hotel” and then briefed our four teams (each with six members) on their tasks for the afternoon. They had to visit about 30 bars and cafes and take photographs on a variety of subjects including point of sale, ingredients, allergens and green issues (not very inspiring it has to be said but it forced them to be creative). These photos had to be sent back via an app called Goose Chase to headquarters (a great vegetarian restaurant called Terre a Terre where our leadership team were giving out and deducting points indiscriminately). It was a brilliant team building exercise as well as ensuring that they saw the Brighton food scene in all its glory. Extra points (and bottles of wine) were given for the final presentations, back at the hotel. It was great fun and highly recommended.

The “hotel” was a Youth Hostel right in the middle of Brighton – a converted four-star hotel that was bright and cheerful and cost about £20 each. I must admit I was a bit dubious about it having not stayed in one since I was 17. It has changed a bit (thankfully), was quite an experience and served a purpose – it was a good job we checked and had rented towels beforehand.

The evening was tremendous as we visited about ten pubs and bars guided by Gavin George of Laine Pub Company starting off at his brilliant bar, North Laine Brewhouse. George was incredibly generous with his time and help and really helped us really understand Brighton’s pub and bar scene. The company manages 45 pubs, of which 39 are in Brighton and six in London, with a seventh London opening planned for the autumn. All pubs are individually designed to reflect the heritage and culture of the area in which they are located. They are fabulous; we had a great time and learnt a lot.

The next day saw us up bright (not) and early ready for our breakfast in Bill’s in Brighton which was frankly awesome – the team were superb and welcomed us all with open arms. The portions were generous, the food was tasty and the service was fast and seamless. I love Bill’s here and in Lewes but also love where Roberto Moretti and his team have taken the brand. We then piled back on our coach to visit Chapel Down in Tenterden, Kent, and be taken around the winery and participate in a wine tasting (www.chapeldown.com). It was absolutely fascinating and brought so much to life by the passion of Frazer and his team for their whole business. We could not have wished for more and the team learnt a lot here too. It’s a great company. So not quite a normal trip to the seaside but really enjoyable and full of brilliant learnings for each and every one of us. Can’t recommend it highly enough – just ignore the comments from Keith Waterhouse.
Ann Elliott is chief executive of leading sector public relations and marketing firm Elliotts – www.elliottsagency.com

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