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Morning Briefing for pub, restaurant and food wervice operators

Fri 20th Oct 2017 - Friday Opinion
Subjects: High-end bubble in danger of bursting, goodbye to one of the industry greats, alcohol and cancer – again, and Michelin status losing relevance to guest experience
Authors: Glynn Davis, Rooney Anand, Paul Chase and Steven Pike

High-end bubble in danger of bursting by Glynn Davis

The Araki restaurant in central London has just earned itself a coveted third Michelin star and, in doing so, joins a particularly rarified group in the world’s restaurant hierarchy. It is only the second place to hold such an accolade in the UK’s capital, alongside Restaurant Gordon Ramsay.

It also holds the position of being London’s most expensive restaurant because it only has one set menu – priced at £300 excluding drinks, although it is rather pleasing to note VAT is included. It also has only ten seats, which are used during two sittings for six dinner services a week. That equates to a mere 120 people served every seven days.

Araki doesn’t need to worry about hitting full capacity at each service and the cost to dine there is almost immaterial because it combines a heady cocktail of the highest level of quality and great rarity due to its limited seating. Be in no doubt the world will beat a path to its doors in New Burlington Street and pay whatever chef Mitsuhiro Araki chooses to charge the Michelin guide disciples.

In recent years, people have also been beating a path to numerous smart restaurants in London – with or without Michelin stars – and they have been able to justify their increasingly expensive proposition on a supply-and-demand basis. However, are things about to snap for some of the more high-falutin’ establishments that have grown fat on the largesse of a largely willing customer base in London?

Leonid Shutov, owner of Bob Bob Ricard and the soon to open Bob Bob Cité in London’s Cheesegrater building, is among those in the industry who harbour concerns many high-end restaurants are in a bubble that has been inflated to dangerous levels. 

As operating costs have continued to rise across a raft of items – energy, currencies having an impact on imported goods, salaries, rentals, business rates and ingredient costs – Shutov says this has simply been passed on to the customers in terms of higher prices. These have now reached levels he thinks are unsustainable. Shutov calculates total operating costs have risen by 15% to 18% across the board which, when you are operating on thin margins, is causing massive pressure.

Unlike operators in the middle market and quick service end of things, which have mitigated cost increases through improved efficiencies by implementing better systems and technology, the upper strata have done very little. They are often independently owned and been built around personalities in the kitchen who may be more rich ingredients-driven than margin-sensitive.

What they have done, however, is diminish the offering by compromises. They have undertaken such moves as removing linen tablecloths, only bringing out top-end glassware when customers order the finer wines, and pushing tables ever closer together to accommodate additional covers. The space for toilets, reception areas and cloakrooms has also been stripped back. While many of the customers at these restaurants will no doubt live in airy houses and apartments, they are dining out in rather cramped accommodation.

Shutov suggests even the idle rich buck at prices when they reach unjustifiable levels. Such a situation of ever-rising prices and a level of service and overall proposition that is materially deteriorating is a bit of a worry and will undoubtedly result in issues for many operators in this section of the market. When a growing proportion of their customer base takes the decision things have gone too far and deem there to be no more value left in the transaction, then it is a big deal.

A £100-per-head bill for a meal in a supposedly top-end restaurant is pretty much par for the three courses these days when you throw in an average bottle of wine. Even though Araki is undoubtedly expensive, the level of cuisine and personal service is likely to make it stack up financially for the market it seeks to appeal to. Whether other high-end restaurants in the capital offer the same value in the context of the overall experience is becoming increasingly debatable.
Glynn Davis is a leading commentator on retail trends

Goodbye to one of the industry greats by Rooney Anand

Last month we lost one of the industry’s greats – Ian Smith, deputy managing director of Matthew Clark. 

Ian started working in the sector at City Vintagers in 1978, going on to build an impressive career at Matthew Clark where he contributed to the drinks distributor’s success. It was a company he was very passionate about and one he was proud to be part of, and for so many years he was a driving force for both the company and the UK’s wine industry.

Ian loved helping people, enjoyed social events and was one of the industry’s best-connected people. He certainly knew how to bring people together and those who knew him I’m sure will agree he would do it enthusiastically and with a huge heart. He really loved the industry and would use his rare talent of being able to bring together even arch rivals to break bread and sip wine together, helping to build bridges and create enduring relationships.

I met Ian through work as a business partner but he was also a partner and adversary during our regular and numerous “battles” on the golf course. I always admired Ian for never taking anything too seriously, genuinely being one of the funny guys, and for being so kind to others. For those qualities alone, I will really miss him.

I will remember Ian for four things – his passion for being with people, he was such a social animal; his love and appreciation of wine; his love of golf and, most importantly, being a devoted and dedicated family man.  

Ian was a hugely gregarious and fun-loving character who had and made time for everyone, irrespective of rank or importance – a true Kipling character who would walk and talk with anyone and everyone, and regularly did!

Many of you will know Ian was a true connoisseur of wine. I remember him taking me to taste 144 wines in one day at the en primeur tasting in Bordeaux in 2010. He never lost enthusiasm for his “task”, taking copious notes of the 144th wine at 4pm even though we had started with Sauternes at 9am and worked our way through more than 120 clarets.
He was a fantastic golfer albeit a bit of a “bandit”, declaring a handicap that, while fair, was never really a true reflection of his prodigious ability. When growing up, Ian was a schoolboy golf champion in the Midlands. Fast forward to 2004 and I’ll never forget being with him when he hit a pitching wedge, normally a 100-yard club, through the 17th green (over 170 yards) at Royal Troon with effortless power and grace and our team winning the R&A golf day. I fondly remember these as one of many brilliant days of “banter and bravado” with Ian on the golf course. 

An incredible family man, Ian brought up his children single-handedly after his first wife Pauline was cruelly taken from him when the children, Matt and Georgina, were young. He then remarried, to Cheryl, and had a son, Oliver, who is now 14 years old and who he was hugely devoted to.

Ian was incredibly courageous when it came to battles with his health. In 2016, he valiantly and brilliantly fought a heroic fight against lymphoma only to be told later that year he had a brain tumour, which he fought for a year before sadly passing away last month. His love and passion for wine were surpassed only by his generosity of spirit, warmth and humour. 
Rooney Anand is chief executive of brewer and retailer Greene King

Alcohol and cancer – again! by Paul Chase

Barely a day goes by without some new “threat” to our health being announced by epidemiologists or other health campaigners. For these people, the meaning of life appears to be the elimination of anything enjoyable in order to achieve maximum longevity. Key to this is the elimination of “risk factors” from our diet and lifestyles. The key technique used to frighten us all into abstinence is to concentrate on cancer risks. Here an old trick is used – take a very small baseline risk and measure the increase to that risk that arises if you engage in “heavy” drinking. The effect of this is to give prominence and publicity to very large percentage increases in very small baseline risks.

The Alcohol Health Alliance (AHA) has taken to Twitter to publicise its message that alcohol = cancer = death. The Twitter headline reads: “Alcohol is linked with at least seven types of cancer” and then lists them on a handy infographic of the body as mouth and upper throat; larynx; oesophagus; breast; liver; and bowel cancers.

Of course, a “link” is not the same thing as a “cause” but they would like you to think it is. This scare-mongering is entirely consistent with a revision of the low-risk drinking guidelines on the basis there is “no safe level of consumption in respect of the epidemiological risk of developing cancers”, and “the cancer risks of drinking is a game-changer”. It is, of course, accepted that excessive consumption of alcohol is causally related to a small number of cancers – but the risk is dose-related.

Taking oral cancers as an example, what is the overall risk caused by drinking alcohol? According to Cancer Research UK, about 7,300 oral cancers are diagnosed in the UK a year. Of those, tobacco smoking was identified as the cause in 65% of cases. Alcohol consumption accounted for 30% of these –2,190 cases. In total, 30 million adults in the UK drink at least once a week. Of those, 2,190 of them develop an alcohol-related oral cancer – that is 0.007% of regular drinkers. And remember, these figures include very heavy drinkers as well as moderate and light drinkers – so don’t be panicked into abstention just yet.

Every such death is a tragedy but the actuarial risk is tiny. The proposition anything that raises the epidemiological risk of a cancer “isn’t safe” is therefore problematic. In everyday life people make trade-offs. They don’t ask “is this product or behaviour safe?” they ask “is it safe enough?” We do this all the time and not just in relation to food and drink. We don’t ask whether driving a motor vehicle is safe, we ask is it safe enough? In other words, do the benefits of driving justify me in taking the risks? When we are told tobacco-smoking results in the premature death of half of all smokers, that may deter people from starting or persuade existing smokers to quit. However, if you were told 0.021% of regular drinkers die from an oral cancer, would that put you off? It is this kind of epidemiological paranoia that leads health cranks to call for abstinence, and lowering of the lower-risk drinking guidelines is but a staging post on that journey.

However, what is missing from the AHA’s misleading messaging is any reference to the beneficial effects of moderate alcohol consumption. The life-prolonging effects of moderate alcohol consumption are on a firm scientific footing. Despite the AHA and its cronies’ science denial, Sir Richard Doll (the epidemiologist who discovered the link between tobacco smoking and cancer) has revealed there have been dozens of studies in the past 30 years that have vindicated the J-curve that illustrates the benefits of moderate drinking in terms of greater longevity for moderate drinkers compared with “never-drinkers”. If science indicates that alcohol conveys significant life advantages, why does the AHA act as though alcohol is evil?
Paul Chase is a director of CPL Training and a leading commentator on alcohol and health policy

Michelin status losing relevance to guest experience by Steven Pike

The announcement by chefs Karen Keygnaert and Sébastien Bras (with restaurants in Belgium and France respectively) that they have decided to return their Michelin stars is nothing new. Plenty of others have made the same decision in the past, including Marco Pierre White, who returned his three stars after he became convinced the Michelin standard was irrelevant. He was quoted as saying: “The future of dining is casual dining. Let’s be real.” 

It was a sentiment way ahead of its time and one that resonates with us here at HGEM. External standards no longer feel like the best yardstick to measure hospitality businesses against, and they’re certainly an ineffective way to judge guest experience. This year, the owners of Michelin-starred restaurant Boath House in the Scottish Highlands spoke out to say it was impossible to live up to Michelin standards while maintaining a healthy profit margin, announcing they would take a new tack and offer simpler and more authentic food. Skye Gyngell, now head chef of Spring at Somerset House, garnered considerable press when she described Michelin recognition as “burdensome”, when she was awarded a star for her food at Petersham Nurseries in Richmond.

Aside from the impressive PR response, there is a sense Michelin’s ways of measuring the quality of food and service, which for a long time were considered the holy grail for restaurateurs, now have a much more limited appeal. Michelin’s rigid emphasis on formalities (from overly attentive staff to particular ingredients), seems more anachronistic than it did even ten years ago. Its rulebook is at best particular and rather traditional and at worst totally out of step with what most guests want – a comfortable setting, friendly but not stuffy service, and good food that isn’t overly fiddly or intimidatingly pretentious.

The hospitality goalposts have moved. In the past, consumers wanted a trusted authority to guide them in their choice of restaurant, looking to bodies such as Michelin as a mark of quality that gave them confidence. Now there is so much information online a positive TripAdvisor review or a glowing post by a respected blogger can have more real-world persuasive power than Michelin status. Consumers are setting their own standards.

Keygnaert makes the point that fine dining culture is shifting. He says: “People now go for dinner in another way – casual, quick, just for fun or a quick bite. In my new restaurant, the food remains the same but the formula for offering it will change. I continue to serve quality food but not as a (set) menu, so people can decide for themselves how expensive or long they want their meal to be.”

For hospitality providers, the onus is on them to recalibrate their internal standards to match their customers’ priorities. This is where HGEM can be incredibly helpful. When guest experience management ties in with the individual brand and concept, this gives a far more accurate perspective on how a provider is doing at delivering a great guest experience.

It’s understandable restaurants get hung up on comparing themselves with competitors – it has a significant influence on perception and it’s important for marketing purposes. However, guests don’t want their experiences at different restaurants to conform to the same set standard every time. Measuring something as personal and varied as the guest experience against a rigid rulebook should be balanced against defining what it is about your brand experience that makes it unique – and ensuring this is delivered consistently time and again.
Steven Pike is managing director of guest experience management expert HGEM

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