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Morning Briefing for pub, restaurant and food wervice operators

Fri 9th Dec 2016 - Friday Opinion
Subjects: No shame in bringing your own, looking forward to 2017, and the challenges ahead
Authors: Glynn Davis, Paul Chase and Paul Charity

No shame in bringing your own by Glynn Davis

After booking dinner at Tomo Pizzeria in north London, one of my family’s favourite local restaurants, I pondered for a few days whether I should call them back to enquire if I could bring my own wine. My reluctance to pick up the phone is a result of still feeling that taking your own bottles to restaurants is an underhand activity – almost as if you are pulling a fast one.

This thinking is driven by the fact restaurant owners and sommeliers have traditionally looked down on the practice. It has been a nerve-racking experience to even hint at bringing your own booze.

However, Terry Threlfall, wine and spirits buyer at Selfridges and former head sommelier at renowned restaurant Chez Bruce in south London, thinks the younger generation of sommeliers and restaurant owners are much more relaxed about the practice – especially when the wine is not on their list. If it is a particularly good quality bottle, there is an element of excitement for the sommelier potentially being able to sample it.

Threlfall thinks local restaurants have become more receptive to this bring-your-own mentality because when times are economically tough for customers, giving them the opportunity to cut their bill by a few pounds can be the difference between them never returning and becoming a regular.

Tomo Pizzeria fitted comfortably into this camp and my concerns about putting in the call were unfounded because they had no qualms whatsoever about me bringing a couple of bottles along – and they quoted me a corkage fee of a mere £4 per bottle.

Now that’s what I call good value and, since one of the bottles was a decent Italian red and not on their wine list, they seemed to respect having it brought in to complement their rustic Italian cuisine. Being Italians, though, they seemed indifferent to the white burgundy I’d also brought along. Either way, because of this ability to bring my own vino at a ludicrously low corkage cost, I shall return to Tomo much sooner than I would have done otherwise.

Threlfall points out that those in the trade will invariably take their own wine when dining out – provided this has, of course, been discussed ahead of time with the restaurant and the cost of corkage agreed. His view is a flat fee should be charged rather than a sliding-scale amount depending on the value of the bottle.

My own recent experiences at two Italian restaurants (no, I don’t just eat Italian food) showed fixed corkage in use at Sartoria (£35 per bottle), while there is a sliding cost implemented at Locanda Locatelli (starting at £25 per bottle). For particularly good bottles there is clearly an advantage to be had from taking your own because, for mere financial mortals, the price charged on the restaurants’ list is likely to be off the scale.

Mark-ups on restaurant wine is hardly a new issue. However, the Spectator suggested last month that the price charged in some establishments had reached “astronomical levels”. It cited some high-profile restaurants that were pricing their wines at up to four times their retail values. In the firing line were The Fat Duck, with some bottles hitting a five-times mark-up; Jason Atherton’s Social Wine & Tapas, which had one particular bottle at a staggering ten-times multiple; and Nobu failed to come out particularly well either.

Perhaps such places will reach the point where they need to reassess how they price their wines because there is a new breed of operator that is making wine more egalitarian. This involves pricing it at a level that tempts customers to actually buy it rather than it simply bulking out a wine list and satisfying only a thin tier of exceedingly wealthy people.

Examples include Portland and Bonhams Restaurant, which both have Michelin stars. There is also a new breed of wine bar/restaurant, including Noble Rot and Humble Grape, that are pushing the same ethos and have particularly fine wine lists – covering all bases – and are run by young operators looking to make their mark by cutting the mark-up and introducing more people to good wine.

If you don’t happen to be dining at such progressive-thinking places, my recommendation is to shed your inhibitions, take a deep breath, and make that call to enquire about bringing your own bottle. Who knows, you might never look back?
Glynn Davis is a leading commentator on retail trends

Looking forward to 2017 by Paul Chase

In terms of the ongoing culture war in relation to alcohol, there have been three signal developments during the past 12 months that I think will reverberate over the course of 2017. They are the development and publication in January of the UK CMOs’ new, “low-risk” drinking guidelines; the establishment of the House of Lords all-party committee inquiring into the Licensing Act 2003; and the decision by the Scottish Inner Court of Sessions that minimum unit pricing (MUP) is, after all, lawful – a decision which the Scotch Whisky Association (SWA) has announced it will appeal to the Supreme Court in London.

Let’s take a look at each of these in turn and what the likely developments mean for the beverage alcohol trade.

The ‘low-risk’ guidelines
The real significance of the new alcohol drinking guidelines is not that they set a new, “low-risk” level of 14 units a week of alcohol consumption for men and women, but the assertion there is “no safe level of consumption”. Any pretence that official advice on alcohol consumption was about influencing drinking behaviour and encouraging moderate consumption was destroyed when the new “low-risk” guideline was set at a level that was widely derided by the drinking public and the industry alike as having no basis in the reality of peoples’ drinking habits. Since “public health” has no belief in the efficacy of education as a driver of social change, because it believes it’s a soft option embraced by Big Alcohol as a means of warding-off real change, the only purpose of the new guidelines is to influence public policy. Specifically, alcohol policy.

Fundamental to this latest attempt to demonise alcohol is a determined effort at science-denial. Denial there are any health benefits to moderate alcohol consumption despite decades of science showing regular, moderate drinking results in lower all-cause mortality and greater longevity than that associated with abstinence. Coupled with this is the attempt to link low and moderate consumption of alcohol with a range of cancers on the basis of, largely, very weak epidemiological associations.

By establishing the “no safe level of consumption” and the “every time I reach for a glass of wine I think of the cancer risk” mantras, “public health” seeks to establish through propaganda what it can’t establish through science – that alcohol can’t be part of a healthy lifestyle.

The House of Lords committee on the Licensing Act 2003
The positive aspect of this review of the effectiveness of the Licensing Act 2003 is that, by all accounts, their Lordships really do “get it” – they are very much aware of the issues and the differences of opinion and are seeking evidence. My concern at the outset of this inquiry was it might simply be a cover for seeking the introduction of a fifth licensing objective – “promoting and protecting public health” or even “promoting and protecting health and welfare”.

The introduction of a “health” licensing objective would open the door to all the career alcophobes of so-called “public health”, such as James Nicholls of Alcohol Research UK, and Jon Foster of the Institute of Alcohol Studies, to encourage local PCTs to oppose applications for new licences. It’s probably not a practical possibility for them to do this for every application, but if your fundamental belief is the availability of alcohol drives consumption and harm, under what circumstances wouldn’t you object?

Minimum unit pricing
The Scottish Parliament legislated to introduce this in 2012. Since then it has been subject to legal challenge by the SWA and others in respect of whether its implementation was contrary to European Union competition law. In Scotland, the Outer Court of Sessions ruled it was legal, then the Inner Court of Sessions quashed that decision and sent it off to the European Court of Justice (ECJ) to be determined. The ECJ pretty much gave it the thumbs down but returned it to the Scottish courts to determine. They gave it the thumbs up!

The position now is the SWA wants to appeal this to the Supreme Court in London and have lodged an application with the Scottish Court for leave to appeal. The SWA’s decision to appeal has, of course, been subject to expressions of faux outrage by the cranks at Alcohol Focus Scotland, who have characterised the decision to appeal as an affront to democracy, with comments such as “it beggars belief”!

I am opposed to MUP because I think it is bad policy. If it also turns out eventually to be unlawful, I think that would be enormously helpful. But then we’re supposed to be leaving the EU aren’t we? So whether we continue to be subject to ECJ rulings will depend on whether we want access to the single market.

All three of these issues will continue to make waves in the coming year. Watch this space!
Paul Chase is a director of CPL Training and a leading commentator on on-trade health and alcohol policy

The challenges ahead by Paul Charity

This is a uniquely challenging period with the emergence of a host of new threats but also plenty of opportunities. On the threats side of the equation we have an unprecedented set of new challenges emerging in the form of regulatory costs – business rates hikes, the ratcheting up of wage levels, and rents reaching new heights. London operator Young’s has reported that business rate hikes would add an extra £5m to costs over the next five years, a rise chief executive Patrick Dardis described as “ludicrous” and a punishment for those operators that have created profitable businesses through heavy investment. Glendola Leisure has already been forced to sell its Rainforest Cafe site in Piccadilly after 19 years of operation because its rent bill shot up by circa 50% to £1.5m.

One leisure analyst, Tim Barrett of Numis Securities, has described the various pressures as an unprecedented margin threat. He calculated that Mitchells & Butlers alone faces additional costs of £14m for the National Living Wage and £10m for business rates. He added: “Together this represents 110 basis points of margin attrition. We estimate total cost inflation of 3% to 3.5%, meaning like-for-like sales growth of at least 4% will be required to be margin neutral next year. Most operators plan to pass this on via price increases after several years of price restraint. We view this as sensible. While it may provide a welcome stimulus to like-for-likes, the danger is that imported inflation on consumer staples and fuel erodes consumer discretionary disposable income.”

On the opportunities side there are new and exciting marketing channels, the opening up of new and cost-effective third-party delivery opportunities, as well as new funding routes, particularly helpful for small and medium-sized operators.

One clear theme of the past two years has been an intensification of competition within the sector – CGA Peach claimed the market saw 16 new concepts opening every week last year. Our own database at Propel indicates we now have more than 1,000 five-site-plus foodservice companies operating in the UK market. What has become clear is the UK market increasingly apes the US market, where mature brands face pressure from new and emerging brands that are often more agile and more able to meet the demands of ever more demanding customers. Large companies will need to focus on their best sites and it’s no coincidence JD Wetherspoon, Mitchells & Butlers and The Restaurant Group have all been trying to sell dozens of sites from the bottom-end of their estates. In this climate it has become harder, although far from impossible, to grow sales. McDonald’s in the UK is an example of a mature brand that has achieved continuous sales growth for a number of years, with the rest of the McDonald’s global business attempting to learn lessons from the UK business.

The UK market has this year already witnessed the dangers of brand over-expansion, with Ed’s Easy Diner and Burger & Lobster both having to retrench after ill-advised openings. The market is, of course, likely to see other examples in the coming couple of years, not least because the aforementioned cost pressures will increasingly punish those operators whose margins are already too slim.

What is needed in this context is a mindset of constant restlessness, dissatisfaction, mild paranoia – and a willingness and ability to evolve at speed. This needs to be underpinned by ever-tighter control of costs – and speedy adoption of the technologies that create efficiency. It’s very much game on.
Paul Charity is managing director of Propel

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