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Morning Briefing for pub, restaurant and food wervice operators

Fri 2nd Aug 2019 - Friday Opinion
Subjects: Time to ditch rental principles, veganism – a nationwide movement, consumers’ growing thirst for alcohol information and every detail matters
Authors: Glynn Davis, Loui Blake, Adam Jones and Ann Elliott

Time to ditch rental principles by Glynn Davis

For a long time the commercial property industry was a relatively straightforward place within which to operate. The rentals for shops and restaurants on the high street were set according to the levels achieved by similar nearby units, and these deals were always agreed on the basis of upward-only rent increases at future renewal and break dates. 

But things have changed radically – as a result of the internet pulling customers away from the high street and delivery becoming part of everyone’s lives. This has decimated certain town centres as retailers and foodservice companies have gone bust and left lots of vacant units. Many company voluntary arrangements (CVAs) have also been undertaken, with the result being landlords have taken a hit – not only from store closures but also the rental levels on the remaining units being significantly reduced.

The more successful operators have now come out fighting against the fact they are competing with companies that have negotiated these lower rental levels through CVAs. Businesses such as Primark and Next are starting to demand lower rentals from their landlords by as much as 30%.

This is clearly a nightmare scenario for the property industry as well as retail and foodservice. Roger Wade, chief executive of Boxpark, suggests the industries are on the “edge of a precipice”, but he says it does not have to be an “apocalypse” if landlords and tenants can abandon their long-held adversarial relationship and instead come together and bring about change – with leases and covenants up for debate.

He argues for shorter lease lengths, suggests little value should be attached to covenants, and calls for more of a focus being placed on attracting the right brand mix that will contribute to a rich, attractive environment, which then draws in customers. He also argues for more turnover-related rents.

But it might not be quite as simple as this and the foodservice industry can probably learn something from what the retail sector is experiencing. With turnover-related rentals, or any other rent for that matter, there is an argument we have to move away from the historical reliance of simply charging retailers rentals based on sales per square foot. 

There needs to be some level of customisation of the metrics because as retailers have begun to diversify their store types they have different requirements for each outlet. Whereas some large units could be all about brand building, others could be based more around providing a predominantly click and collect-type function. 

The underlying point is they do not operate as purely drivers of direct sales and thereby warrant different rental levels. These new indirect trading elements are also becoming a part of the foodservice landscape – with a growing number of players opening experience-led units such as Starbucks with its Reserve Roastery outlets. 

Others are opening units on smaller footprints that are skewed towards fulfilling orders taken online. Among those experimenting is Tossed, Tortilla and McDonald’s, the latter of which has just opened its first “To Go” in London’s Fleet Street having removed all the seats from the site and installed lots of touchscreens for taking orders. 

The increased complexity is highlighted by Julie Villet, director at Unibail-Rodamco-Westfield – one of the world’s biggest shopping centre operators – who says a physical store can be a major driver of online sales, which arguably could be factored into the metrics for rents. For foodservice companies this scenario resonates to a certain degree – due to the growing percentage of sales ordered online for home delivery.

Villet says: “The cost of media spending online is high and the returns [achieved] from this are decreasing. Media costs are increasing by 40% each year but e-commerce click-through rates [leading to sales] are more like 10%. A digital [online-only] retailer going into physical space can see their web traffic increase by 52% and for those retailers with fewer than 30 stores the increase can be 84%.” 

This rapidly changing scenario where online and physical spaces are becoming ever more intertwined will clearly cause landlords lots of headaches but until they give some serious consideration of how they manage their square footage and charge rentals on it then life will continue to be difficult on the high street and in the shopping malls for retailers and, increasingly, foodservice companies too.
Glynn Davis is a leading commentator on retail trends

Veganism – a nationwide movement by Loui Blake 

Even the most dedicated carnivore can’t deny the rise of vegan food has really gained traction over the past five years. According to the Vegan Society, between 2014 and 2018 the number of vegans in the UK quadrupled to more than 600,000. 

Historically, however, the rise of restaurants and venues catering for this group has been confined, it seemed, to London – but I’m happy to report this is no longer the case. In recent research commissioned by Nisbets into Britain’s most vegan-friendly city, London didn’t even make the top ten (ranking 11th), below growing hotspots such as Bristol, Manchester and Southampton, to name a few. And of course Norwich – which came out at the top of the list. 

For me personally – coming from Norwich and as managing director of the UK’s largest vegan restaurant, which is based in Norwich – it was amazing to see my home city listed as the most vegan-friendly city in the UK. Historically I’d found it difficult living here as a vegan, but certainly over the past two years there has been an increasing number of restaurants, shops and cafes opening with an emphasis on veganism and sustainability – either incorporating dishes as part of a wider selection, or as dedicated venues such as Erpingham House. 

Even in today’s climate, people can be quick to dismiss veganism as a “fad”. But the growing national awareness of the looming climate emergency coupled with the boom in the wellness industry has created the perfect catalyst for a vegan lifestyle to develop. Not everyone is going full-time vegan, but people are more open to environmentally friendly, healthy foods. Veganism just happens to tick both of those boxes.

On a national level, the increase in access to information via social media, Netflix documentaries and the internet, as well as the plethora of new products coming to market, which has increased availability and driven down costs – albeit not quite to non-vegan levels yet – has meant embracing a plant-based diet has never been easier. Groups such as Extinction Rebellion are creating campaigns that are gaining news coverage across the country. Celebrities including Lewis Hamilton and Kim Kardashian are openly talking about their vegan diets, and even characters on television shows are ditching the meat in favour for plant-based alternatives. All this means the public has never been more aware of what veganism is, and its face is constantly evolving to be more relevant. 

You can see the hospitality industry reacting. Wagamama recently launched its new vegan menu for kids, and is constantly developing new dishes for its main menu. Gizzi Erskine and Rose Ferguson have turned Shoreditch’s Dirty Burger into a plant-based burger joint, Filth. Vegan cooked breakfasts are now a regular feature on most breakfast menus. No longer are vegans submitted to a side salad or stuffed pepper – vegan food is being shown for what it truly is, delicious and inclusive. 

Norwich itself is a small city community where ideas and trends are able to spread quickly. Historically, it is also a very creative, bohemian city and has a very open feel that allows for new ideas to flourish. All reasons why, in my opinion, Norwich has gone from having virtually no vegan options to its new vegan-friendly position so quickly. But of course, not everyone wants to go the “whole-hog” (excuse the pun!), which is why at Erpingham House we’ve focused on positioning ourselves as a health-focused, sustainable restaurant and café, which happens to be vegan. On this basis, we’ve been able to transcend the vegan stereotype and make veganism accessible to a mainstream audience, creating a varied customer base in terms of their dietary habits and beliefs. And this is key to being able to thrive in this competitive hospitality market place, even in a city where locally owned, independent businesses flourish. 

From personal experience, one city I can’t believe didn’t make the most recent round-up is Brighton. A city often dubbed the vegan capital of the UK, to me it the most vegan-friendly city in the country, both in terms of attitudes toward veganism and access to fantastic restaurants cooking delicious food. For us, Brighton was the natural choice for the location of the second Erpingham House, which will have a refined offer that crosses over to appeal to a more general audience rather than exclusively those who consider themselves vegan.
Loui Blake is managing director of Erpingham House

Consumers’ growing thirst for alcohol information by Adam Jones

Alcohol is something millions of people enjoy in the pub, club or restaurant, most of them doing so in moderation without causing any harm to themselves or others. Responsible operators in this industry all do their best to ensure their venues are ones where customers find it easy to control their alcohol intake, and where those who do become vulnerable after drinking too much are supported appropriately. But we’re finding increasing numbers of consumers who want to know more about alcohol. So is there more the industry can do to support them?

At Drinkaware, we have just published our 2018 Impact Report, which outlines our achievements last year. I’m immensely inspired by the progress we keep making towards realising our ambitious plans to further reduce alcohol-related harms, and grateful to our many funders and partners across the industry. That support is vital to our continuing success. 

I’d like to share some of the insights from the Impact Report, particularly around who is visiting our website and what information and advice they are looking for. It paints a picture of the nation’s relationship with alcohol, which is useful information for anyone working in the drinks industry.

Last year, the Drinkaware website attracted 10.5 million unique visitors – the first time it has tipped more than ten million. Of these visitors, 4.4 million were looking for information on the health effects of alcohol. A total of 890,000 people came to the website by searching for advice on “how to reduce drinking”, a 43% increase on 2017. We also saw a threefold leap in the number of people looking for information on stopping drinking altogether. 

As well as analysing our website data, we conducted a survey of 1,752 website visitors. Of these visitors, 31% said they came in search of information on the health impact of drinking, 29% wanted to get a better understanding of their drinking, and almost a quarter (24%) wanted to get help to reduce their alcohol intake. After visiting the website, about two-thirds (64%) said they had a better understanding of guidance and low-risk drinking.

We’ve noticed too there is continued interest in alcohol within a diet and nutrition context, as 1.6 million people viewed our website pages on the calorie and unit content of drinks – our unit and calorie calculator was completed almost 1.2 million times. The Drinkaware app was downloaded by 149,866 people last year, bringing the total number of downloads since launch close to 600,000. Every month, an average of 25,000 people were using the app as a way of recording their alcohol consumption. 

Many operators already include unit and calorie information on their drinks menus, but this strong consumer interest in health when it comes to alcohol suggests people who choose to drink could be looking for more. Perhaps consumers are now more receptive to readily available information and support and are looking for the industry to help them make considered purchases when ordering their drinks. 

Overall, we believe operators running pubs, bars and clubs can take away a great deal of insight from our Impact Report into consumers’ relationship with alcohol awareness. The findings reflect trends we see in relation to alcohol and in society more widely, such as the growing number of people, particularly in the younger age groups, who are drinking less or giving up alcohol altogether. 

We would urge operators to consider practical ways in which they can help their customers control their alcohol consumption in their venue, such as offering a selection of low and no-alcohol products, offering a 125ml glass size for at least some wine, having house wine that is at the lower end of the ABV scale and offering food to help slow down the rate that alcohol is absorbed into the bloodstream. Also, they should think about offering easily accessible information that empowers customers to make healthy choices.

The pubs, clubs and bars that continue to flourish in future will be those who create an environment where their customers can make informed choices about their drinking, and still have a great time. 
Adam Jones is director of business development, partnership and public affairs of alcohol education charity Drinkaware

Every detail matters by Ann Elliott

I was bowled over by my first visit to Circolo Popolare last week. I had read a bit about it of course but was unprepared for how amazing it was from an interior perspective. It was a riot of colour, bustle, noise, shimmering glass, authentic Italian crockery and dripping flowers. Not a piece of space was wasted or unadorned. Every corner had been thought through to the nth degree. It was a dazzling, mind-blowing Instagrammers dream (or nightmare perhaps). Where to start? Where to stop? 

I remember going into TGI Friday's for the first time (or Frankie & Benny’s for that matter) and feeling then that same frisson of excitement at experiencing a game-changing environment – one that would set the pace and standard for others coming along behind it. Mr Fogg’s did it for me too. I'm sure Chamber of Flavours and Secret Cinema would do so too if I was on the ball enough to secure a ticket. 

The food was good on my first visit and great value for money. In fact, it was so good I chose the same dishes again when I went back to experience the madness afresh just six days later. There’s more than enough to think about in this environment than complicating it with menu decisions. The food was almost immaterial. 

As Marina O’Loughlin said in her review in The Sunday Times: “So there you have it, sensation-seekers: let’s all embrace Circolo Popolare (pronounced ‘cheer-colo’, Italian for a kind of social club), a huge, elaborate, wonderful, extravagant, campy gimmick. An opulent joke. I go with two pals, if possible even trickier customers than I am, and we have the jolliest time. They’ve played us like piccolos, but we’re weirdly happy to let them. Welcome to the circus, to the restaurant where the food simply doesn’t matter at all.”

As we were leaving, my guest asked me if I thought the restaurant would be there in five years? Would it stand the test of time or would the glitterati simply have moved on to even shinier, glitterier, even more Instagrammable places (if that was even possible)? To my utter surprise (and his) I said: “No”. Where on earth had that answer come from? I had loved every chaotic part of it I thought, so I had to come up with some plausible explanation for my implausible comment pretty quickly. 

And then it came to me. It was not quite “all fur coat and no knickers” – it wasn’t that insincere. It was more “all that glitters isn’t gold”. One of our four dishes was virtually inedible, instead of soda and lime I was given tonic and juice, there was a noticeable disagreement between a guest and a team member at the door as I came in, I had to ask twice for the drink I wanted and there was no loo paper in three toilets. These were tiny, insignificant, small-minded, petty details that had burrowed into my unconsciousness but patently surfaced when questioned.

The most enduring and successful restaurants, pubs and bars are consistent with brilliant operations at the heart of that consistency. They deliver time and time again. Their attention to detail is phenomenal. They sweat the small stuff. Getting food and drink right is not the small stuff nor is having loo paper. If a restaurant isn’t able to ensure every detail is perfect time and time again when it's new and fresh, then how will it survive the test of time? If each team member isn’t drilled in the art and science of consistency from day one, then what will they be like on day 101 – what will have gone by the wayside then?
Ann Elliott is chief executive of Elliotts, the leading integrated marketing agency in the hospitality and leisure sector –

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