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Morning Briefing for pub, restaurant and food wervice operators

Fri 8th Feb 2019 - Friday Opinion
Subjects: What the Dickens, sowing the seeds of sustainable success, the village with no pub, and politics and its influence on food trends
Authors: Glynn Davis, Louise Ellison, Ann Elliott and Lucy Pedrick

What the Dickens by Glynn Davis

When Charles Dickens wrote “It was the best of times, it was the worst of times” in A Tale Of Two Cities, he could have been describing the present state of brewing in the UK from a consumer perspective. In the same week it was announced Fuller’s was selling its brewing business to Japan-based Asahi for £250m, it was reported 430 breweries opened during the past year.  

On the one hand we are in the glorious position of having the best of times in terms of beer choice. We have most diverse range of beers available at any point in my lifetime as craft brewers open up in every town and village across the land. On the other hand, it could be seen as the worst of times as the likes of Fuller’s find it tough to compete. 

At one end the small brewers are nibbling away at Fuller’s lunch – helped by Small Brewers Relief they receive on beer duty – while at the other end the rest of the meal is being eaten by the massive macro brewers such as AB InBev, Heineken and Carlsberg, which are benefiting from their economies of scale. 

This situation has been hurting an array of mid-sized brewers in the UK including Shepherd Neame, Charles Wells, Moorhouse’s and Batemans to name a few. The upshot is some have scaled back their output to ease their duty burden while others have sold their brewing elements and chosen to concentrate on running a pub estate instead.

While the Fuller’s sale came out of the blue, it shouldn’t have been surprising. The reality is the company has been in a tough spot for some years and justifying the retention of the brewery to its investors for some time. The question of why keep the capital and labour-intensive brewing business when the pubs – and increasingly hotels – are what drives the group’s profitability has been increasingly hard to answer. In its most recent results, Fuller’s pubs division accounted for 87% of operating profit.  

The pubs and hotels also have the advantage of typically being appreciating assets while breweries are depreciating assets. The one (big) bit of value is the land they stand on, of course, but let’s not go near that right now. The thought of Asahi building luxury flats on the prime bit of Thames-side real estate in Chiswick where Fuller’s brewery sits (and has done since 1845) is beyond comprehension at this stage. We’ll get too sentimental if we go down that road.

The family’s undoubted attachment to the brewery has kept investors at bay for some time and ensured Fuller’s has kept on churning out its prize-winning cask ales. Unfortunately, this brings us on to another niggling issue that has been troubling the company’s management – the continued decline in sales of cask beer. It can’t have been easy to keep up the argument about retaining the brewery when the core product it produces is on a downward trend. In its recent results the beer and cider volumes in totality remained level but the cask beer portion continued to fall. 

Admittedly it’s at the extremity of the Fuller’s pub estate but my local, The Great Northern Railway Tavern in north London, has more than 20 taps of which only four are cask and generally only two of those are Fuller’s beers. The company has a number of these more craft-led outlets in which it is experimenting with the mix of beers on offer.

What unites them is the Fuller’s beer range clearly plays a role but each brew has to justify its place on the bar alongside a sizeable variety of beers from all and sundry – including a growing number from the small craft brewers. Such a move is simply satisfying the ever-changing consumer demand.

Yes it’s sad to see the sale of the brewery – and with it a bit of London’s rich brewing history – but against what is a difficult backdrop, Fuller’s has ultimately taken a rational business decision. Now, with its investors onside and about £120m from the sale burning a hole in its pocket, it can hunt further pubs hopefully just as classy as my local. “Death may beget life but oppression can beget nothing other than itself,” Dickens noted.
Glynn Davis is a leading commentator on retail trends

Sowing the seeds of sustainable success by Louise Ellison

A burger brand launched its first UK site at The Oracle in Reading last month. At first glance, Miami Burger resembles most other fast-food restaurants with its breakfasts, burgers, hotdogs and shakes. However, looks can be deceiving – you won’t find a beef patty, chicken wing or deep fat fryer here. 

Miami Burger’s USP is to offer “great-tasting fast food without the bad stuff”. The “bad stuff” doesn’t just mean meat, its saturated fat and sugar too. The brand also “has a beef” with non-recyclable materials, plastic and leather, with all three absent from packaging (I’m sure guests are welcome to wear what they please). This is all great stuff but can one restaurant chain, however inspirational, change the world?

Miami Burger is part of a new wave of dining options that are responding to rising consumer interest in conscious consumption – whether that’s around their own health and wellbeing or that of the planet. Notdogs at Birmingham’s Bullring is playing to the same crowd, while @Pizza at Grand Central, while not vegetarian, leads with its sustainability credentials. So it’s not about one restaurant changing the world, it’s about consumers, which is how it should be of course. Customers increasingly expect a product’s origin to be transparent and free from exploitation. 

The popularity of Veganuary this year – reported to have received record sign-ups – is the latest indicator of a shift in consumer choice and behaviour, and may help more than our own health. As the planet struggles to make headway in cutting carbon emissions the focus has shifted to meat production, one of the biggest contributors, and the significant carbon benefits of eating less of it.

Some statistics are surprising. Producing a kilo of beef takes an estimated 15,000 litres of water, 330 square metres of land and generates 16kg of carbon. Poore and Nemecek’s research on the environmental impacts of agriculture concludes the food supply chain is responsible for more than one-quarter (26%) of human-generated greenhouse gas emissions, sparking debate about the potential benefits of cutting our meat consumption.

The UN estimates more than two-thirds (70%) of the world’s fresh water consumption goes into agriculture, while further data suggests meat production alone uses roughly a third of the globe’s crop land, water and grain. Part of this impact is the transfer of land from forest to crop production to feed intensively reared animals. This is particularly problematic in countries where acres of rainforest are destroyed to make way for feed crops, giving the double whammy of more emissions from production and less rainforest to absorb them. Added to this are the production of methane by cattle – a highly potent greenhouse gas – and the impact of nitrous oxide from manure as a potential land contaminant.

Carnivorous considerations aside, consumers and brands are beginning to acknowledge and respond to evidence of the environmental impacts of plant-based supply chains, whether around intensively grown avocados and almonds or apples flown in from New Zealand. A report published by Morrisons, which has introduced vegetable boxes with “wonky” and seasonal British-grown products, found two-thirds of respondents would prefer to buy British, although less than one-quarter (23%) of the fruit and vegetables eaten in Britain are grown here.

When it comes to cutting meat consumption, consumer opinion and behaviour is shifting. Customers are putting their money where their mouths are and brands are responding, not only for Veganuary. Nando’s, famous for its chicken, continues to introduce meat-free options to its menu while Greggs’ infamous vegan sausage roll has sold out daily since its launch. The market isn’t limited to food. Morphe’s vegan make-up brush set, Dr Martens’ vegan boots and Stella McCartney’s vegan tote bag are all catching our attention.

Whatever our personal preferences as consumers, as retailers, restaurateurs and landlords we must recognise plant-based diets, beauty and textile choices are not a fad but part of a deeper cultural shift. Through early identification and responsiveness, industry can implement the changes consumers want to see, making good business and environmental sense.

Veganism may become more popular and more prevalent but it’s just one way consumers can reduce their environmental footprint. Mindful spending choices, switching to a more plant-based diet, buying local and seasonal produce, and cutting food waste are all increasingly popular habits that reduce an individual’s impact on the planet. 

You might not be vegan but that can’t stop you enjoying a Sausage, Egz and Cheeze Muffin at Miami Burger or selecting a vegetarian dish from any restaurant you visit. Changing diet alone can’t solve the climate change conundrum, but it would certainly help.
Louise Ellison is head of sustainability at Hammerson

The village with no pub by Ann Elliott

Both pubs in our village have closed. One of them, The Crown, has been put up for sale by the landlord (it’s with Fleurets) and the tenants have moved out. It overlooks the village green and is next to the church with some parking on the green itself. 

It’s small, though, with no more than 40 covers. It would need more than £750,000 to extend into a courtyard and a large storage/meeting building at the rear. It would also need a lot of patience and determination as it’s listed and our village isn’t particularly keen on change.

It has crossed my mind to sell our house and buy it as we have run five pubs in the past but with the excellent Betsey Wynne down the road – owned by Oakman Inns and Restaurants – we would be up against stiff competition. It probably doesn’t help that we have been agitators for change in the village, and I can’t say I am keen on running a pub dependent on customers who aren’t – it doesn’t feel like a recipe for success.

So there is a sense of unease about what will happen to the pub. Its not really viable as a going concern – the last tenant also had a part-time job and a catering company – it can’t return a decent ROI on the required level of spending, the village won’t want it to become a house and its unlikely, considering its listed status, to acquire planning permission anyway. While we didn’t go to the pub a lot, it was at the heart of the village and it’s disheartening to drive past it and see all the lights out and the pub in darkness.

The pub closest to us, The Swan, was bought by Charles Wells just after we moved into the village and has had a succession of tenants, some more successful than others. It’s on the main village road but has room for tables outside, a car park, an enclosed pretty garden and two bars. Last time I looked it had a rent of £35,000 so would realistically need to turn over more than £5,000 a week to be profitable. The fact so many people have tried to make a go of it suggests this is unachievable.

We hear, as you do through village gossip, that Charles Wells has sold the freehold and the new owners want to turn it into private housing. They could probably get two-to-three houses on the site if the village elders allow them. We last heard permission had been refused.

So what now for the village with no pub? Both pubs have tried at different times to be intrinsic to the community by supporting events, fetes, jubilees, sports teams, weddings, birthday parties, pensioners’ meals, quiz nights, feast nights, carol singing, wakes, christenings, village societies and advertising regularly in the village magazine. Could they have tried harder? Perhaps. Could we have all made a real effort to go once a month at least? Maybe. Could we have gone to one of them instead of the Betsey Wynne – well, no, because the whole experience there is so much better.

Of course, therein lies the rub and it’s a debate we need to have. What exactly does it mean for a pub to be part of the community? Is it really possible? What do they have to be and do to deliver that promise?

We don’t go to the Betsey Wynne instead of the pubs in our village for a sense of community, we go because it’s consistent, the service is friendly and efficient, the environment is lovely, and the food is great. It also has a big, well-lit car park and fantastic outside space. We don’t even ask one another where we are going when we go out – we just go there because it’s always good.

I feel sorry we don’t have a pub operating in the village and I suspect neither of them will reopen as a pub, despite what the village wants. We have chosen consistency over community and that feels a really harsh thing to have done now the lights are out in both pubs.
Ann Elliott is chief executive of Elliotts, the leading integrated marketing agency in the hospitality and leisure sector –

Politics and its influence on food trends by Lucy Pedrick

Political, social and economic factors continually influence consumer spending habits and trends. In 2018, we saw social aspects such as sustainability and veganism have a significant impact on menus and product development. Looking at the year ahead as one likely to be beset by political uncertainty, which food trends will come out on top?

It’s safe to say 2019 will be a memorable year with challenges and opportunities for consumers and businesses alike. In a time of uncertainty caused by Brexit, staff shortages and rising food costs, operators need to consider how this will affect their own business as well as consumer spending habits, loyalty and food preferences in the coming months.

Nostalgia on the menu
Nostalgia is one food trend borne from the many “unknowns” on the horizon. If we’re looking for a touch of comfort amid uncertainty, what better way to experience this than through our food and drink?

Comfort food is synonymous with indulgence, including warming and familiar dishes that make us feel better. In 2019, nostalgia will continue to be given a modern twist as we see more and more operators put new spins on traditional dishes, whether that’s exaggerating flavours, adding an ingredient that unexpectedly complements the flavour profile or creating overfilled, over the top food and drinks that add a touch of fun and luxury to eating occasions.

Exploring the trend for nostalgia further, a new study of British adults recently revealed “mum’s roast dinner” was the meal that most reminded people of their childhood, while shepherd’s or cottage pie has always been a firm favourite. Operators looking to elevate this dish for the plant-based trend could replace mince with puy lentils and mushrooms. It offers the same great meaty flavour and delivers a warming combination of umami, creamy mash and layers of bubbling, grilled cheese.

Importance of the dining experience
Aside from the food and drink, it goes without saying the current climate will affect the overall dining experience too. Time and money are both precious commodities, arguably growing in value in the eyes of today’s discerning diner. When deciding where to eat, consumers are increasingly seeking social occasions with friends and family and need to be convinced their time will be spent wisely. They don’t want to compromise on their food preferences and, above all, they expect their dining experience to offer great value for money. It’s these key themes driving choice of venue and encouraging evolution and innovation in the current out-of-home sector.

Looking at 2018 alone, Bidfood’s research confirmed people were eating out slightly less compared with the previous year, with 45% actively reducing their leisure outgoings. This presents operators with a chance to create a standout experience that facilitates social occasions, opportunities to share food, and enjoy innovative and experimental dishes.

Social and economic developments will continue to affect the foodservice industry in exciting ways. Right now, nostalgic and familiar foods appeal to consumers as they look for a sense of sanctuary in a constantly changing political landscape. In fact, in a recent poll 43% of Brits said food that reminded them of their childhood made them feel comforted. This is also manifesting in food and drink trends and dining experiences. Operators can grab a slice of the action by putting their own twist on a classic or experimenting with bold flavour combinations or sharing concepts.

For more insight into the big trends set to influence menus in 2019, click here
Lucy Pedrick is senior insights manager at Bidfood

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