Subjects: There must be 50 ways to leave the EU, cutting choice, coffee shops can lead the charge to save our high streets and coping with a crisis 

Slip out the back, Jack

Make a new plan, Stan

You don’t need to be coy, Roy

Just listen to me

 

Hop on the bus, Gus

You don’t need to discuss much

Just drop off the key, Lee

And get yourself free.

 

Paul Simon (50 Ways To Leave Your Lover)

 

During the referendum campaign the majority of the establishment tried to frighten the public by the spectre of Armageddon in the immediate aftermath of a Leave vote. Its forecasts were embarrassingly wrong.

 

Since then the CBI, chairmen of Whitbread and Sainsbury’s, the Financial Times and their allies have perpetrated the myth food prices would automatically rise if we left the EU without a “deal”. As the last edition of Wetherspoon News predicted, the dishonest campaign to dupe the public about food prices was followed by a “solution” – stay in the “customs union” and the problem will be solved, say Clegg, Clarke, Adonis, the CBI, the House of Lords and others.

 

However, staying in the customs union effectively means staying in the EU without having a say in the creation of the rules. But the public has an instinct for the truth and a parliamentary committee (EFRA, Brexit: Trade in Food, 18/2/18), dominated by remainers, has admitted through gritted teeth that under World Trade Organisation (WTO) rules: “The UK government could decide to reduce all tariffs on imports into the UK. This would lower the cost of imported goods, reducing prices for UK consumers.”

 

Contrast this with a fib in the Financial Times (17/10/16) that a “hard Brexit will lead to 22% EU food tariffs”, or the Guardian (7/7/17) “there would be customs duties of… 19% on drinks and an average of 12% on meat and fish”. The Sunday Times (15/10/17) also falsely stated a “no deal Brexit would raise the cost of shopping”. The “Resolution Foundation” (17/10/17) said: “Under a ‘no deal’ Brexit scenario… tariffs on clothing, footwear, beverages and tobacco will rise by 10%. Tariffs on dairy products will rise by 40% and by 37% for meat products.”

 

Let’s not beat about the bush. These organisations were talking rubbish and involved in a concerted campaign to mislead the public. It is clear MPs can vote to eliminate import taxes post-Brexit, reducing food prices at a stroke, but the desperadoes have now switched tack by arguing, absurdly, that food standards will fall if we leave the EU without a deal and UK farmers will be devastated.

 

What nonsense! The reduction in food prices from leaving the customs union relates to food and beverages that are already sold in the UK. In any event – whether it be cars, electrical goods or food – imports have to comply with UK legislation so there is no legal or logical reason why food standards should slip. As regards the effect on UK farmers, the majority of whom voted to leave the EU, the government has pledged to support them financially through environmental subsidies, helping to relieve economic pressures.

 

Countries such as New Zealand abolished agricultural subsidies and protection decades ago and their farmers have thrived – there is no reason why the UK should not match this performance. In the long run, farmers know there is no security in trade barriers anyway. They didn’t help the UK’s Morris Oxford in the past, did they?

 

In fact, the EU’s customs union is a sham. It masquerades under the banner of free trade but is really a protection racket. It imposes taxes on the 93% of the world that isn’t in the EU, including new-world wine, oranges, rice and coffee, as well as children’s clothes and hundreds of other products, most of which aren’t even produced in the UK.

 

For example, Wetherspoon’s customers pay import taxes on every glass of Aussie and Kiwi wine consumed in our pubs. The government collects these taxes and sends the money to Brussels, where it disappears into the unaudited coffers of the EU. In its tax policies, the EU is like Monty Python’s Dennis Moore, who robbed the poor and gave the proceeds to the rich – since the least well-off are affected most by taxes on food and drinks.

 

To placate the paranoia of the CBI, the House of Lords and the other elites who control so many of the levers of power in the UK, the government has agreed to pay Brussels £39bn as a leaving present – which is also supposed to facilitate a “deal”.

 

This is a tragic mistake. If, instead of being paid to Brussels the £39bn was divided among the UK’s 650 electoral constituencies, that would amount to about £60m per MP that could be allocated to local projects.

 

If you were to ask the public: “Do you think your local MP should spend £60m in the constituency or send the money to Brussels?” What do you think the answer would be? As government lawyers have repeatedly pointed out, the UK has no legal obligation to shell out these vast sums to Brussels and it is astonishingly muddled thinking to agree to do so. The muddled thinking results from the mantra, promoted by the CBI and others, which says the UK would be in “dire trouble without a deal”.

 

By promoting this idea the UK’s negotiating position has been undermined. In fact, the UK doesn’t need a deal but the EU does, since we import from the EU twice what we export. If, for example, trade barriers or indeed pub customers themselves were to create an effective embargo on excellent EU products such as Lavazza coffee, Moët Champagne or Kopparberg cider, Wetherspoon would be able to find high-quality substitutes from the UK or the rest of the world. So who would suffer most? Not the UK, that’s for sure.

 

The second tragic mistake is to have agreed to a “transition period” of two years as requested by the pusillanimous CBI and its lazy big-boardroom supporters. Wetherspoon is ready to leave the EU now, even though we have an extensive European “supply chain”. Believe me, leaving the EU requires 95% of companies to do almost nothing so this is an elitist attempt to delay leaving as long as possible.

 

The public can now see there is no point in our democratically elected politicians doing backwards somersaults to reach an agreement with the unelected presidents and apparatchiks who run the EU. If the EU is keen on a free-trade agreement, so are we. If not, no problem, we’ll be better off under WTO rules than we are today anyway.

 

In the meantime, we should not be held to ransom but should take the following sensible actions that will help to ensure our prosperity in the future. First, as indicated above, abolish import taxes, thereby increasing the spending power of the UK consumer and providing a boost to the economy – a dividend for the hard-working taxpayer!

 

Second, don’t pay £39bn to Brussels bureaucrats but allocate £60m each to UK MPs for spending in their own constituencies on local projects. The taxpayer pays the piper and should call the tune, Mrs May!

 

Third, re-establish control of our own fishing waters, helping to regenerate coastal communities and reversing the damage done in recent decades as a result of 60% of fish from these waters being landed by EU boats. The rod of iron rules, OK?

 

Finally, take the moral high ground and grant citizenship to EU migrants who have legally moved to the UK. This will inevitably happen in any event so it’s pointless and demeaning to be involved in phoney negotiations in this area.

 

If the UK adopts these suggestions it is likely the EU negotiators will opt for a free-trade deal, which their exporters will welcome. If they don’t, UK shoppers and the economy will still benefit. So come on MPs, the time has come to stop cowering and copy free-trading nations such as New Zealand, Australia and Singapore. It’s not in the interests of democracy or the UK public to be beholden to the arrogant and overbearing demands of the unelected Juncker, Barnier and their friends – or to perpetuate dishonest scare stories about food price rises in the event of a “no deal”. As the man said: “Just drop off the key, Lee, and get yourself free.”

 

How many people does it take to change a light bulb? This is not a joke. If it was then we know the answer could be any number of people. In reality it should only take one person but I’ve found the amount of time it takes to replace said bulb has increased over time because of the sheer number of different types of bulbs that now exist.

 

It used to be screw type or bayonets along with a couple of choices of wattage but today the options run to hundreds. Among the many spares you no doubt have stashed in your cupboard at home you invariably don’t have the specific one required at the point when one of your bulbs calls it a day.

 

It would be an exaggeration to say this issue leads me into an incandescent rage but I do find myself having to commit ever more time to making choices for what are extremely mundane things. We are inundated with far too many choices in all parts of our lives today. Going to a restaurant or pub is a time to escape from such annoying real-life irritations but even here we are all too often given far too many options to be able to relax.

 

Thankfully, I feel we are nearing a point where consumers are suffering overload (I certainly am) and operators are acting accordingly. Evidence of this has been clear in the land of extreme choice – the US. Starbucks has made the decision to remove 200 items from its offer. This equates to 30% of the types of merchandise it sells in front of the counter.

 

Such a move is being replicated by fast food chains, with Dunkin’ Donuts initially cutting 10% of its items. Chili’s was more radical and, at the back-end of last year, it removed 40% of the options from its menu. These organisations recognise choice is not only giving customers a headache but is leading to indecision. When my children are presented with a list of anything more than three flavours of ice cream they freeze on the spot.

 

It’s the same with craft beer. The beer revolution has led to many fine bars emerging but many newer customers to the category seem lost in the process of making choices from what are often ludicrously long selections. The US has prided itself on its craft beer bars offering the widest selections.

 

At a recent Propel conference Jon Collins, former chief executive of CGA, recalled working in Chicago and initially thinking there was no such thing as a bad pint. However, having returned far too many beers back to the server he revised his opinion and concluded choice adversely affected quality because some of the beers sat around for weeks with hardly anyone buying them.

 

Having a massive numbers of beers also meant it was tough for bar staff to make informed recommendations to customers, which itself increases the potential for unsuitable beers being returned from unhappy customers. This invariably led to greater levels of waste. Increased choice clearly leads to a requirement for more staff training, which pushes up operating costs and, in turn, has a negative effect on margins.

 

There has long been proof that simplicity and offering little choice can add value to a business. This is the jack-of-all-trades and master of none scenario. Many burger aficionados regard In-N-Out Burger in the US as an exemplar in its category. But as tasty as its food is, I can’t help but feel part of its appeal (and quality) is down to its simplicity (and freshness) in having so few options to choose from on its menu. You either opt for the double-burger, cheeseburger or hamburger.

 

Cutting choice from their food and drink menus and focusing zealously on core components could be a light-bulb moment for those operators that currently find themselves in a bit of a dark place.

There are more shop closures on our high streets than openings so how can we encourage people to stop checking out of these once thriving centres? At Morar HPI we believe adjusting the offer and becoming more of a leisure destination than a shopping location with “experience-based” outlets will draw people in. Coffee shops can lead the charge.

 

The British have always loved shopping – Napoleon called us a “nation of shopkeepers” – and at the heart of every town and city a high street indicates our love affair with retail. However, Next posted its second consecutive fall in annual profits in 2017, with its chief executive describing last year as the toughest in the “past 25 years”.

 

This is only one of many retail casualties seen in 2018 so far. In February, Toys R Us and Maplin entered administration, while in March fashion retailer New Look announced plans to close 60 stores, affecting about 1,000 jobs. Most recently RBS announced the closure of 162 branches in England and Wales, reinforcing a 2017 study of the top 500 British town centres that revealed only 4,083 shops had started up compared with 5,855 closures, a net deficit of 1,772 sites.

 

Today’s retailers face an assault on multiple fronts such as the National Living Wage and spiralling property prices, with Brexit helping push up the cost of many items. According to Morar HPIs latest Consumer Compass, the British public remains cautious due to the uncertain political climate in spite of a slight recovery in confidence surrounding the economy. They are concerned about personal finances, disposable income and job security, and limiting their spending accordingly.

 

Almost one-third (31%) of consumers are feeling squeezed, up 4% on February 2017, and are taking action by buying “cheaper brands and trading down”. This trend is exemplified by the rapid rise of e-commerce giants such as Amazon as more consumers see online shopping as a cheaper and easier option than the high street. Furthermore, the British Retail Consortium has warned sales are likely to remain sluggish throughout the rest of 2018, especially for non-essentials such as furniture and electronics, and brands with a large bricks-and-mortar presence.

 

Beyond retail, other high-street stalwarts face a testing time, in particular the UK’s £9.6bn restaurant industry. There are mixed reports as to how well operators are doing but the pattern suggests an increasingly challenging market. Some communicate good results while others are entering Company Voluntary Arrangements. Jamie’s Italian and better burger brand Byron are struggling, while Prezzo is shutting 94 of its 300 outlets and putting 500 jobs on the line in the process. This is reinforced by the 20% year-on-year increase in UK restaurants entering administration and, according to London accounting firm UHY Hacker Young, it’s estimated more than a third of the top 100 groups in the category are losing money due to weak consumer spending and a saturated market.

 

It’s not only retailers trying to cope with the amount of choice consumers have. Restaurant operators have been partnering with brands such as Deliveroo, Just Eat, Hungryhouse and UberEats, which resulted in demand for home deliveries growing ten times faster than dining-out last year.

 

Is this the end of the traditional UK high street as we know it? Increasingly, consumers are refining what they think is a good retail experience, sometimes preferring online and other times the high street. Brands will need to think more creatively to win back wallet share and providing a different “experience” to online will be key.

 

Despite the lowest rate of high-street store openings in seven years, it appears experience-based propositions are bucking the trend – namely beauty salons, bookshops, ice cream parlours and coffee shops. This is further reinforced by the fact 3.3 coffee shops are opening daily across the nation and are expected to overtake pubs by 2030, resulting in the coffee shop industry pouring £9.6bn into the UK economy in 2017, an increase of 7.3%.

 

There are currently about 24,000 coffee shops in the UK – non-specialists, independents and major chains such as Starbucks, Costa and Caffe Nero. All the major brands are continuing to expand their portfolios via acquisition, different store formats and new product development and are proving the market has yet to reach saturation. Small and medium-sized boutique chains such as Joe & the Juice and Taylor Street Baristas are also gaining momentum and driving comparable sales growth across the sector.

 

Such is the interest in coffee that, according to the Morar HPI BrandVue Eating Out brand tracker, awareness is almost total across the UK, with Costa, Starbucks and Caffe Nero at 99%, 98% and 94% respectively. Moreover, MorarHPI estimates the “big three” make up about 19% of total coffee shop sales, with sales per store ranging from £450,000 to £750,000 and estimated store-level Ebitda margins at 41% to 43% depending on unit size.

 

What is driving consumers to these coffee shops? Firstly convenience – one-third (33%) choose to go as they are “near an outlet at the time”, indicating food and drinks plays a central role in an impulse-led high-street experience. Consumers implicitly expect these experiences as part of their shopping trip, and capitalising on such demand and using available floor space wisely has been central to attracting trade.

 

With consumers tightening their belts, value-seeking behaviour is becoming more common. According to BrandVue, price perception (affordability and good value) is the main differentiating aspect for repeat visits. Average spend for the top three coffee brands is £5.23 and has remained flat during the past two quarters, ensuring the price entry point is still achievable for many despite recent tightening of belts, especially when compared with an average spend of £13 per head for branded casual chains. Half (50%) of customers see Costa, Starbucks and Caffe Nero as value for money and this means more visits – annual frequency sits at an average of 5.4 times a year versus 2.6 for branded casual dining. The big coffee operators have a business model that targets a modern set of consumers (mostly Generation Z with a female skew), who want a quick bite to eat and drink and have a good idea of what they’ll order before entering.

 

The main rationale for 43% of consumers who visit the top three coffee shop brands is the perception they “provide great coffee and hot drinks”. Costa leads in terms of affinity (consumer opinion of a brand), 19% in front of Caffe Nero and 10% ahead of Starbucks. However, Caffe Nero leads the charge as the best brand for coffee quality and choice. In London, Starbucks is the favourite big coffee shop brand.

 

With a coffee shop on every street corner, coffee has become the ultimate drinking commodity. Satisfaction levels among customers have remained stable and, unlike other food and beverage outlets that have used discounting, the big three tend to focus on loyalty programmes rather than two-for-one offers. Generally, the greater the store share, the greater the number of respondents who say they have a loyalty card with Costa (43%), Nero (40%) and Starbucks (37%).

 

How long will satisfaction levels remain as they are and what happens next? Coffee has the power to generate footfall in the high street and significant sales but, according to Morar HPI’s specialised drinks team Cardinal: “If coffee shops are to further thrive, consideration must be given to providing an exceptional and stand-out offer in a competitive market. They must have the benefit of a focused offer supported by well-trained baristas, a range of coffee beans and seasonal coffee-based recommendations as well as impressive equipment. These all signal expertise.” Findings also highlighted that while filter coffee is popular, cappuccino (27%) sits top of the list of preferred coffee drinks alongside the Americano. While latte is another popular choice, 25% of respondents were looking for other options, showcasing demand for variety in the sector. Different styles should be considered but, alongside different preparation methods to showcase expertise, this adds to the overall coffee experience.

 

It is clear the environment for drinking coffee is important for customer experience. Operators must create a space that is coffee-friendly as well as using their venue’s USP to stand out and make a statement. Increasing dwell time is one way to drive spending – coffee operators with a dwell time of about 30 minutes convince consumers to spend an average of £5.23 but a BCD operator where customers sit for 45 minutes receives £13 per visit. For each minute of dwell time gained, 12p is added to the bill. So while this isn’t good news for coffee brands, there is opportunity to differentiate through upselling (only 27% of respondents order a second drink) or competing head-on in food “flavour and freshness”.

 

Look at companies such as Pret A Manger and Leon – they are almost defined by their healthy range of food and this has established a higher price point aimed at more affluent consumers. According to BrandVue, Pret customers are the most satisfied with “flavours and freshness” and the brand’s ability to cater for “different dietary requirements”. All coffee chain brands are working to improve their food. In 2015 Costa launched its Fresco trial in London, focusing on fresh and healthy food to broaden its range and credentials. However, it has yet to be rolled out across the UK. A few years ago vegan, gluten-free and vegetarian options were barely considered when concocting a menu. Now they are critical to success with almost one-quarter of 18 to 30-year-olds claiming to have an allergy or food intolerance – 50% higher than other groups.

 

The big three coffee brands fulfil a range of occasions, the most popular being while out shopping (20.4%), to “take a break” (10.7%), or a “quick refuel” (10.3%). With consumers feeling the pinch, there may be an opportunity to focus on more expensive, artisanal and indulgent treats. However, this is likely not to be the right move for all coffee brands.

 

Whatever the next step for the big three, they need to be clear on their point of differentiation. Consumers have a huge array of food and drink brands to choose from so it’s critical to a brand’s success that its offer is razor sharp. Think Wagamama and McDonald’s. Whether their cuisine or service style, both have a clear focus and place in people’s minds. This is reinforced by BrandVue tracking data, with both brands achieving the highest spontaneous awareness scores across the 140-plus UK brands monitored. If you try to stand for too much to too many people, it will be a challenge to fix your brand at the front of a consumer’s mind.

 

The future of the high street will lie in playing a supporting role rather than being the main attraction, with coffee shops integral to that success. Perhaps we are still a nation of shoppers, just with fewer shopkeepers and a lot more baristas.

 

The “right to work” issue wouldn’t normally trouble me as chief executive of a marketing agency, I must admit, because it has HR stamped all the way through it and therefore best left to the experts. Karen Davies, managing editor of RTW Checker, had a different perspective, though, when she invited me on a panel to discuss the issue at the RTW conference she organised earlier this week.

 

She was right of course. The impact of employing illegal workers and those workers then being “discovered” by the Home Office can be really horrendous on brand image and performance, as witnessed by the Byron debacle in July 2016.

 

Some of the articles on the episode were truly excoriating, as witnessed by this excerpt from The Guardian in August of that year: “This saga also brings into focus the debate we are all too often denied – who are the real scourges of society? Rather than undocumented waiters we should perhaps spend more time examining the tax practices of companies such as Byron. Like all too much of corporate Britain, the company reportedly uses clever ruses pertaining to corporation tax – in this case borrowing from subsidiaries run by Byron’s owners in tax havens and using UK profits to pay it off.”

 

It would seem no matter how strict a business is regarding its recruitment vetting procedures, some workers can (and do) slip under the net – and that can be due to no more than a single number difference on a relevant document. Obviously using someone such as RTW Checker can stop that happening.

 

It’s also critical, I believe, to be prepared for any scenario by implementing detailed crisis planning. When asked, not many in the conference room had crisis plans in place to cope with a fallout in the media from major issues. Operators have to be able to respond quickly to all sorts of problems – dead mice dropping from the ceiling on to plates below, food poisoning, badger milk, the employment of illegal immigrants, mice running around restaurants, worker injury, fights in bars, offensive emails sent to customers – it’s an endless list and we have dealt with a lot of them. Some may not even look like crises likely to hit the press in the first instance but it’s always wise to think of the worst thing that could happen as it probably will.

 

In a crisis, speed is key. Getting a holding statement out early shows the issue is not being ignored or minimised and limits speculation and misreporting, particularly on social media. If an apology is required, it needs to be immediate and should always stick to the facts.

 

Preparation is everything. Developing and implementing an effective crisis communications strategy helps teams pre-empt situations, trains them how to recognise and deal with them, addresses key stakeholders in an efficient and effective manner, and limits damage to a brand and its reputation. A clear and consistent strategy will remove any room for misinterpretation, sensationalism or emotion to take over in what can be a heightened and heated time. Crisis communications management is something that needs to be practical, pragmatic and process driven, it’s not necessarily the crisis itself that will have an impact on the brand, it’s how it is handled.

 

Rigorous planning encourages everyone to take a step away from the day job and ask some tough questions of themselves and the business. What do we not do well? What do our customers and stakeholders complain about? Where are the weak points in our company? What is the absolute worst thing that could happen?

 

Other crisis preparation for consideration include:

– Media training

– Scenario planning

– An issue-specific holding page that can be edited and made live quickly in the event of a major issue

– Crisis PR support

– Business/reputation recovery plan

 

We use a very simple “do” and “don’t do” list, which is easy to understand and communicate (email me if you want a copy). Of course not employing illegal workers in the first place can now be sorted by companies such as RTW Tracker, but not all issues are as easy to spot or resolve.