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Fri 28th Oct 2016 - Friday Opinion
Subjects: The sustainability of home foodservice delivery, neo-temperance strikes back, and scrutinising the Licensing Act 2003
Authors: Glynn Davis, Paul Chase and Sarah Clover

The sustainability of home foodservice delivery by Glynn Davis

If I were to ask you when you would most likely order a takeaway meal I suspect it would probably be Friday, Saturday or Sunday evening at about 8pm. As for something like 4pm on a Monday afternoon I reckon you probably wouldn’t even contemplate having a meal delivered from your local restaurant or takeaway (even if it was open). For dedicated food delivery businesses, this is just the sort of lumpy demand that makes it challenging for them to manage their employees. What makes it even tougher is that each of these deliveries will have to be completed within the hour and in some cases within a 30-minute window. When you then also throw in a massive amount of competition in the food delivery market then this strikes me as a difficult place to be operating right now.
So often – and rightly so – in the food industry there is talk of sustainability as more and more businesses look to adopt practices that reduce waste, improve efficiency in terms of their use of utilities, and optimise the skills of their employees. It seems to me that one of the more unsustainable aspects of the food industry is home delivery. The phenomenon has been led by Deliveroo, which launched in 2013, and now has a presence in 70 UK cities as well as 11 other countries. It has about 3,000 delivery guys on its books that deliver food from many restaurants – including more than 2,500 in London alone apparently.
It certainly has some big high street names onboard such as Zizzi, Carluccio’s, Byron, PizzaExpress, Wagamama and top-end players like Gymkhana just about to launch. It’s easy to see the attraction to these brands because there is no accounting for the increased laziness of the British consumer. Consider that takeaway food has gone through the roof. In 2013 it was worth about £4.4bn and today it is a chunky £5.5bn. And the home delivery element is enjoying its own impressive growth, with a 23% increase in sales over the period 7 July to 28 August this year compared with last year, according to Cardlytics.
Such has been the ramping up of turnover for Deliveroo that it has just signed off on a new 51,500 square foot headquarters in the City of London, which is five-times larger than its previous premises. I’ve no idea how glitzy this new building is but City rents are not typically low so I do hope this move does not signal an element of hubris taking hold. Needless to say the revenues being churned out by Deliveroo have attracted other players into the market – UberEats being the most high profile and there is also the likes of Stuart, which is working with Burger King among others food brands.
It is easy to see why the restaurant chains are being seduced into signing up to these delivery firms. It’s because all their competitors are doing exactly this. A similar situation is taking place in the retail industry where a delivery arms race is being fought – with click and collect, delivery to lockers, one-hour deliveries, next day delivery for purchases made online before midnight etc, which are all offered as a supposed competitive advantage. The problem is that much of this is so costly to provide that the margins are extremely low (if in fact they are even positive) and there is also the issue of cannibalisation, with online sales replacing store purchases in many instances. In such a situation the margin takes a significant downturn.
With Deliveroo and its ilk demanding a hefty percentage of each order they deliver as well as a fee of £2.50 from the customer its model might look okay, provided it continues to ramp up its sales and keeps the discontent among some of its employees at bay as they bear the brunt of the lumpy demand for their services – and its venture capital backers eventually see a return. But as for the restaurants things could be a little less attractive.
Clearly restaurateurs miss out on the alcohol sales when it comes to home deliveries, which help bolster margins in the restaurants. In fact such is the margin squeeze for home deliveries that many have adopted a dual pricing strategy – with the home delivery menu pitched at prices above those charged in the restaurant. This is a practice that Just Eat is very much against and the reality is so is the customer. They feel they have paid for the delivery element with the disclosed fee (ie £2.50 in the case of Deliveroo).
For a number of years retailers had a dual-pricing strategy, with their online prices different to those in the stores. But this became unsustainable as consumers demanded transparency and consistency as they increasingly shopped across channels. I’d argue it is very much the same with food home delivery and that it might not be sustainable to operate this way for many restaurants. But this is only one point of concern and I’d suggest there is arguably a big question mark hanging over the sustainability of the whole of the home delivery market as it currently stands.
Glynn Davis is a leading commentator on retail trends 

Neo-temperance strikes back by Paul Chase

On Friday, 21 October, Propel Opinion published an article written by me titled “Old Cider in New Bottles” in which I discussed the significance of a piece of research done by four member organisations of the Alcohol Health Alliance (AHA) into how cheap white cider is still being sold at “pocket money prices”. I pointed out Alcohol Concern had published a very similar piece on strong, cheap white cider in 2012, and creating moral panic around “demon drinks” was just a well-rehearsed way of smearing the entire drinks industry.
This article was also published on my blogsite “A Menace to Sobriety” where it attracted a response from Dr James Nicholls, of Alcohol Research UK (ARUK). ARUK is a neo-temperance charitable trust that has legacy funding from the “Licensing Compensation Scheme”, a licensed trade levy established under the Licensing Act 1904 to facilitate reductions in the number of licensed premises – which kind of tells you where Dr Nicholls is coming from. In his response Dr Nicholls angrily defended the AHA research and attacked my article. His full response can be read on my blogsite. Below I have responded to the main points that Dr Nicholls makes:
Dear James,
Thanks for your reply to my article. I am disappointed if the only message you can take from this is that I “object to any concerns about alcoholic drinks from any quarter”. I don’t. In fact, I make it clear in the article that I am neither a drinker nor a defender of strong white cider made from cheap apple concentrate. I actually wish this stuff was simply not produced, not least because its production provides a stick to beat the sector with, for those so inclined.
You also complain that I reject “whole population” approaches (to alcohol-harm reduction) “out of hand”. Firstly, insofar as I am opposed to whole population measures, such as minimum unit pricing, I have rejected such measures only after full and due consideration. But, actually I am not opposed to all whole population measures. Let me give you two examples of such measures that I favour – the system of licensing for the sale of alcohol, and alcohol duty. Let’s take each of these in turn.
What is a licensing system if not a set of measures to manage the risks of alcohol misuse across the whole population? Licensing is where we square the circle between the individual’s freedom of choice and societal impacts. You and I might differ about how effective the present licensing system is at doing that, but we agree that there needs to be a system. I have certainly never suggested that the sale of alcohol should be completely deregulated and replaced by a free-for-all.
In relation to alcohol duty, again, we might disagree about the level of duty or about whether it needs to rise, but I accept the principle that if alcohol misuse causes “negative externalities” that result in a cost to the public purse, then the state is perfectly entitled to recoup these costs from alcohol drinkers, even if the tax is not hypothecated. Indeed, as the research produced by the Institute of Economic Affairs (“Alcohol and the Public Purse”, Snowdon 2015) makes clear, the amount of money collected from alcohol duty, and VAT on alcohol duty, exceeds the cost of alcohol to the public purse by some £6bn a year.
You also comment that “I know you believe everyone expressing any concern about alcohol secretly wants to force the entire population onto sugar-free lemonade, but I’d have thought even you would realise that white cider arguments really are not the thin end of a whole population wedge”.
James, I’m guessing that this was your attempt at mockery, but let’s just pretend for a moment that you were trying to make a serious point. In January we saw the publication of the chief medical officer’s low-risk drinking guidelines – 14 units a week for both sexes. This was coupled by the declaration that “there is no safe level of drinking”; and to dramatize just how unsafe any level of drinking really is we were given an insight into chief medical officer Dame Sally Davies’ anguished personal lifestyle choices: “Before I reach for my glass of wine I think about the cancer risk.” It seems to me abundantly clear that both the direction of travel and the destination that “public health” has in mind for alcohol is identical to that for tobacco – the end-game is an alcohol-free world, or as close to it as it can get. And that objective certainly isn’t a secret!
And do you mean to tell me that sugar-free fizzy drinks aren’t a health community ambition? I’m shocked.
My article simply suggests that singling out “demon drinks”, in the name of saving “problem drinkers” from themselves, is little more than a neo-temperance marketing ploy that uses a drinks category with negligible market penetration to leverage further restrictions on all drinks and all drinkers – precisely in order to reduce consumption across the whole population. If you doubt that, then just look at the demands that the authors of this research make on the back of it – increase the duty on high strength cider (regardless of whether it is the cheap variety drunk by problem drinkers); reinstate the alcohol duty escalator; tax all alcoholic drinks according to their strength; and implement minimum unit pricing.
Finally, you indignantly complain that “individuals or organisations concerned with reducing alcohol-related harms – however much you may dislike them – are within their rights to draw attention to the issue”. Well, of course they are – even neo-temperance lobbyists like ARUK can do so! A difference of opinion is just a difference of opinion James; it’s not an attempt to suppress opinions I don’t like. This is a classic example of a paranoid “public health” pivot – claiming that criticism is an attack on your right to free speech is just a way of distracting attention from the angry silliness of what you have to say.
Paul Chase is a director of CPL Training and a leading commentator on on-trade health and alcohol policy 

Scrutinising the Licensing Act 2003 by Sarah Clover

The ten-year anniversary of the Licensing Act 2003 has attracted more interest and analysis than any I can ever remember. That may be because of my perspective from within the Institute of Licensing, and the licensing community, who inevitably pay close attention to their primary statute. Licensed industries, and practitioners were already on the case with the Licensing Act 2003; deep in contemplation of the first decade of their relationship, well before the House of Lords Select Committee came along in May 2016. 

The ten-year landmark produced a flurry of publications, pointing out that the act had, indubitably, made things better, or worse, or changed nothing whatsoever. Data over the period does show that the culture around alcohol has changed in that time, with a decline in national consumption, particularly amongst the young. But people have changed how they choose to drink, with consequent impacts on health. From sofa to street, having a drink means different things than it did years ago. A pub may be important in peoples’ lives, but it is not the same place it once was, when the “local” might have been more homely than home was. Now we expect not only electricity and water on tap, but digital televisions, box sets and a bottle of something red, white or brown within easy reach. Going out takes on different significance to different groups. The night-time economy may be seen as the preserve of the young, and if fewer of them indulge, then perhaps those that do make their presence more acutely felt.

When the Home Office gave evidence to the House of Lords Select Committee, the message was the government had got the Licensing Act 2003 right for everyone. When pressed, it said the balance must be working fairly because nobody thought they were getting a good deal, and everyone felt victimised. It can often seem that way, but it might not be the best test for the success of a statute. Licensees are convinced that authorities and residents crush them to breaking point. Residents and police will publically declare that the law is heavily weighted in licensees’ favour.

Not many people anticipated the scrutiny of the act by the House of Lords Select Committee, but most now welcome it. The response to the consultation has been significant and vigorous, and that will not surprise anyone who works with the licensed industries, and certainly no one connected with the Institute of Licensing. One of the remarkable features of this regulated area is that everyone involved in it seems passionate about what they do. It is a specialist field, but a special one that sets it apart from any other field of law that I know. It’s not just a job; people involved at every level really care. When the Home Office told the select committee it knew what stakeholders thought about the act, it was no exaggeration. Those with a licensing interest are not slow to give their feedback, and it is detailed; informed; erudite and powerful. 

The number one question that I am currently being asked is whether the committee will make a difference – will it actually identify any need for change and will that change ever be made? I believe it will. The simple act of co-ordinating this much attention to the performance of the legislation highlights the flaws and weaknesses. That could not be ignored by those who work with it, and it will come under scrutiny and challenge in the future through one route or another. The voice of the licensing world, pointing together to something that undoubtedly needs to change is a very powerful thing – we saw that fairly recently in the context of the proposed changes to personal licences. It is very hard to ignore that level of consensus, and it sparks action and change. Not everyone agrees on everything, of course, but the select committee is the embodiment of the desire to improve and change licensing legislation for the better. That desire drives change forward, and whilst it is impossible at this stage to say precisely how or when that change will be seen, I firmly believe the things that do not work in the system will not be allowed to remain long term.

This is a sufficiently active and motivated community already – on the industry side and the regulation side. I see the Institute of Licensing as being a fulcrum in that community. The select committee provides an opportunity to focus and channel that motivation to strive for better. This is not an industry that can or ever does stay still. In 50 short years, our leisure time and relationship with alcohol and entertainment might be regarded as unrecognisable. Who knows what the next 50 years might bring.
Sarah Clover is described as “the top licensing barrister outside London without doubt” (Legal 500 15/16). She’s nationally recognised as an expert in the hospitality and leisure industry. Chair of the West Midlands region of the Institute of Licensing, she provides advice and representation to local government, licensees, residents, pubco’s and the police. She has been involved in some of the most important cases to emerge in the past decade and sits as the specialist adviser to the House of Lords Select Committee on the Licensing Act 2003 

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