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Wed 22nd Apr 2020 - Propel Wednesday News Briefing

Story of the Day:

Two-thirds of hospitality business ‘will not survive three more months of lock-down’: Two-thirds (66%) of hospitality businesses do not think they will survive three more months of lock-down measures while 87% will cease operations without a nine-month rent holiday, according to research by KAM Media. The study, which involved 211 hospitality companies – ranging from businesses operating pubs and bars to restaurants, cafes and street food venues – also showed 42% will have to lose more than half their staff if the current restrictions remain in place beyond three months. Meanwhile, 86% of businesses think consumers will eat out less than they did prior to the lock-down and 82% believe fewer Brits will drink out. A total of 83% said they thought it would take at least six months for customer numbers to return to levels seen prior to the lock-down, while 38% said they would expect it to take at least a year. The research also showed many hospitality businesses are working hard to pivot their business models during lock-down, as well as support their communities. One-in-four of the businesses surveyed had started offering delivery as a result of the lock-down, and 80% said they intended to continue offering this service post-lock-down. Two-thirds (67%) are already pro-actively planning how to attract customers back once they’re allowed to reopen. KAM Media managing director Katy Moses said: “So many hospitality businesses are at risk and we need help in navigating a pathway to safety. We need some fundamental interventions on rents and property, and on finance and loans, and it’s becoming clear much of hospitality will require a much longer extension of the furlough scheme, given businesses will not emerge fully from lock-down for some time. As an industry, we need to get behind campaigns such as #NationalTimeOut, spearheaded by Jonathan Downey and Hospitality Union.” UKHospitality chief officer Kate Nicholls added: “We need far-reaching and continued support, and unprecedented intervention of the order of the proposed nine-month #NationalTimeOut idea or an equivalent concept of similar scale, in order for hospitality jobs and businesses to endure this crisis and to be there to drive the recovery.” 
KAM Media is a Propel BeatTheVirus campaign member

Industry News:

UKHospitality warns of ‘bloodbath’ as it calls for enhanced business support: UKHospitality chief executive Kate Nicholls has warned the sector could be hit by a “bloodbath” and said government’s support must be extended, enhanced and delivered swiftly if businesses are to recover from the coronavirus crisis and jobs saved. Giving evidence to the House of Commons Treasury Committee, Nicholls outlined the problems hospitality businesses faced with many struggling to access support and others excluded from schemes. She also highlighted the need for support to continue past the end of the lock-down if the sector was to fully recover. Despite an extension to the Coronavirus Job Retention Scheme (CJRS), she said an estimated 350,000 hospitality workers are missing out because they are seasonal staff or hit by technicalities, including new starters and those unable to produce a payslip. A survey of the trade body’s members showed 50% had applied for a loan but only 18% of those companies had secured one, with 58% still waiting for a response. Some banks have indicated they will not lend to hospitality businesses while EU state aid rules were getting in the way of investment. Nicholls pointed out 71% of hospitality business was carried out in a venue with a rateable value of above 51,000 and therefore ineligible for a grant. Meanwhile, 71% of UKHospitality members have had insurance claims rejected and Nicholls warned serious damage to the sector was expected when rents are next due without an extended moratorium. She said: "If we don't get a resolution at a global level, if you rely on landlords and lessees to sort it out themselves, it will be a bloodbath come June when we have the next quarter rent due.” Nicholls said businesses require lead time after reopening before beginning to repay rents with a repayment schedule needed. A rent moratorium would allow businesses to focus on paying suppliers. She added the sector has confidence it can return to near full strength if it is supported on rents. Meanwhile, the British Beer & Pub Association has written to business secretary Alok Sharma pressing him to take urgent action in tackling the gaps in support pubs and brewers face over coronavirus. These include extending the CJRS beyond June, underwriting 100% of loans and deferring April’s beer duty payment, and that for the following quarter, to ease the cash flow crisis breweries face.
UKHospitality is a Propel BeatTheVirus campaign member 

Industry chiefs warn over costs of reopening too early: Hospitality industry chiefs have warned the costs of reopening their businesses too early, then having to close them again would be “disastrous”. Speaking to the Evening Standard, City Pub Group chairman Clive Watson estimated it would cost his business up to about £30,000 per site reopening, covering restocking, staff and cleaning. Watson said: “Best for sector and country would be to reopen gently.” He suggests pubs each opening initially at 60% capacity. That could be increased if things feel more upbeat or reduced if there were concerns. Simon Emeny, chief executive of Fuller’s, added: “It is essential pubs reopen at the right time. There would be nothing worse than opening, seeing the virus spread, and having another enforced closure period. A bustling pub is unlikely to be a natural environment for social distancing, but for pubs to remain closed, the industry and its employees will need further financial assistance from the government.” YO! chief executive Richard Hodgson said: “We certainly do not want any false dawns as reopening and then having to close again would be a disaster for most, if not all, of our sector.” Greene King’s chief executive Nick Mackenzie added: “We want to welcome back customers to our pubs as soon as it is safe to do so, but the impact on our 38,000 people is our primary concern and we want to make sure we time it right and avoid a false start by going too early.”

US restaurant industry asks for $240bn in aid to survive: The National Restaurant Association (NRA) has asked Congress for $240bn in federal aid, saying the industry has suffered more than any other and needs a dedicated fund to stave off disaster. Four in ten US restaurants have closed — some for good — and eight million employees have already been laid off or furloughed, according to the trade group. That represents two-thirds of all restaurant jobs in the country. The NRA estimated restaurants lost out on $30bn in sales in March and is on track to lose $50bn in revenue in April. Executive vice-president of public affairs Sean Kennedy said the government’s Paycheck Protection Programme to help small businesses is too limited for most restaurants. The loans only last eight weeks from the time they are granted and require businesses to spend at least 75% of the loan on salaries. The NRA said restaurants will need loans for a longer period, starting when they are allowed to reopen, and need more flexibility on how they use the money. Non-payroll costs are high and even the restaurants that have remained open are struggling to pay them with reduced sales and skeleton staff. Some 60% of the 6,500 restaurant owners surveyed said existing measures won’t help them keep employees on their payrolls throughout the downturn, the trade group said. Assuming the economy begins to gradually reopen by June, the NRA estimated total restaurant losses of $240bn by year end. The group is seeking a “Blueprint for Recovery” plan, administered by the Treasury, to help with operating expenses, worker rehiring and retraining and adjustment to new health and social-distancing standards.

CPL Learning launches ‘cellar to glass’ digital learning programme: CPL Learning, the learning and development partner to the hospitality sector, has launched a “cellar to glass” digital learning programme. It has been developed using the expertise of beer sommelier Annabel Smith. The programme provides a comprehensive guide to implementing best practices in the cellar, behind the bar and ensuring premises are in pristine condition. Delivered in seven bite-size sections and including video demonstrations, the programme has been designed to provide learners with the freedom to explore the content in a way most suited to them. Jamie Campbell, chief operating officer at CPL Learning, said: “I’m immensely proud of the cellar to glass programme as it is not only an invaluable resource for operators, but it’s also the first of our new modular video-led content. The extensive content covered within this programme will equip anyone who completes it with the knowledge and practical skills needed to deliver exemplary standards. With the challenges operators and publicans are facing in getting their premises back open for business cellar management, hygiene principles and product quality are going to be more important than ever.”
CPL Learning is a Propel BeatTheVirus campaign member

haysmacintyre to host live webinar to support finance teams: Sector accountancy specialist haysmacintyre is to host a live webinar to support finance teams during the coronavirus crisis. The webinar, which takes place at 10am on Wednesday, 29 April, will be delivered by John Selwood, who is an expert lecturer in financial reporting and company law, and regularly speaks at Institute of Chartered Accountants for England and Wales events. The webinar will be specifically tailored to finance directors, financial controllers and heads of finance in the hotel, restaurant, pub and bar sector. It will focus on the key accountancy and reporting issues the industry faces at this time including going concern; impairment of fixed assets and investments; onerous leases; accounting for furloughed staff; and accounting for government grants and rate free. The webinar will last about an hour and there will be time for questions and answers at the end. To register, email 
haysmacintyre is a Propel BeatTheVirus campaign member

Job of the day: COREcruitment is working with a mid-size restaurant business that is aiming at expanding internationally, specifically in the US. The business is keen to appoint an international director who has extensive knowledge of taking a UK brand and launching it abroad. Experience in the Middle East, Europe or Asia would be great and US experience would be an added bonus. Applicants must have excellent knowledge of growing quality dining offers and an enthusiasm for creating a great people culture. The salary is circa £100,000. Anyone interested can contact with their profile or CV.
COREcruitment is a Propel BeatTheVirus campaign member

Company News:

Bowley – PizzaExpress taking learnings from Hong Kong, working on virtual brand: Zoe Bowley, managing director of PizzaExpress UK, has said based on the brand’s operations in Asia, the UK hospitality sector “won’t see some semblance of normality for at least a year”. Speaking on Propel’s coronavirus video series, Bowley said the company, which is backed by Chinese private equity group Hony Capital, was learning from the experiences of its restaurants in Hong Kong, where some sites have reopened. She said: “In the UK, people are incredibly sociable and there is one train of thought everyone will be desperate to get back into pubs and restaurants, but the reality is there is nervousness and we are seeing that in Hong Kong. Social distancing is still in place there and some businesses are only at 50% of capacity. That’s where we have modelled for the back-end of the year here and we are saying we won’t see some semblance of normality for at least a year.” Bowley said the company had now moved into a scenario planning stage and thinking about how “we rise up again after this crisis”. She said: “We have 35% of our head office working and furloughed the rest, so we have lots of workstreams around the future phase of the business. We have conservatively modelled the rest of the year and assumed we won’t open until July. It will be very phased from there and we will have to work with our teams and customers to understand the sentiment around the sector. This will not be an overnight fix. What this time has allowed us to do is ask what are the relevant opportunities? The important thing here is not about being opportunistic but it is about having relevant opportunities that come out of the crisis. There are some strategies we have that will remain relevant but some we are going to have to correct and adjust. Our teams may feel differently and so may our customers, and I sense there will be a degree of nervousness initially from certain consumer groups about what eating out and socialising means on the other side of this. I don’t think we can be arrogant enough to assume we know what that will look like. We will need to speak to our customers to understand what the new sentiment is going to be. Clearly, we will have to reprogramme our Future Express investment but there will also be some things we can accelerate. For example, we were working on a virtual delivery brand and it feels relevant we can accelerate that.” Bowley will share more of her thoughts in the video, which will be released on Wednesday (22 April). Meanwhile, readers can support independent sector journalism and get their news 12 hours early (at 7pm each night) with a Propel Premium subscription. It costs £395 plus VAT per annum for operators and £495 plus VAT for suppliers. Email to sign up.

Comptoir Group in ‘reasonably healthy’ cash position with ‘minimal’ bank debt: Comptoir Group, the owner and operator of Lebanese and eastern Mediterranean restaurants, has said it is in a “reasonably healthy” cash position with “minimal” bank debt while all its venues are shuttered following lock-down rules. The company deferred all rent payments for the three months to June; postponed all non-essential capital expenditure, including a new site opening; and cut directors’ salaries. The government’s business rates relief will save Comptoir circa £1.4m over 12 months while the company is applying for the Coronavirus Job Retention Scheme to pay furloughed employees. It comes as the company reported revenue dipped 3% to £33m for the year ending 31 December 2019 due to temporary extended closures for refurbishment at three London sites. Loss before tax narrowed 20% to £520,000, while cash at year-end was £5m. The company said it would not recommend a dividend in line with previous years. Chief executive Chaker Hanna said: “The board believe the group's current restaurant estate continues to have potential for further organic growth through selective new owned sites and opportunities with our franchise partners when the right economic conditions return. Setting the coronavirus outbreak and the related current challenges aside, I believe our business continues to be well-positioned in the restaurant sector and can continue to provide our customers with a unique experience, offering excellent quality, well-priced, healthy food, with welcoming family hospitality, differentiated to many other restaurant operations.”

Paul UK reopens another trio of London sites with three more to follow: Paul UK, the French bakery and cafe brand, has reopened another trio of its London sites with three more to follow next week. The company has reopened its Holland Park, Hammersmith and South Kensington outlets for takeaway as well as delivery via Deliveroo and UberEats – taking the total to seven. This will be followed by Chelsea, Earl Court and Islington next week. The shops are open daily from 8am until 2pm. The grocery market at its Acton bakery remains open daily between 8am and 2pm to pick up essentials such as milk and fruit and vegetables as well as bread and pastries. The delivery radius has been expanded to include select south west London postcodes as well as west London. The team is wearing personal protective equipment at all times with handwashing and surface sanitising stepped up to take place every ten minutes. All seating has been removed, transactions are cashless and the use of reusable cups has been paused. Paul UK chief executive Mark Hilton said: “We took the careful decision to responsibly open some of our stores to extend our delivery miles and give access to those who can’t get to the supermarkets easily. Our team members have returned on an opt-in volunteer basis and the free coffee for NHS workers is a small token of our huge appreciation.” Paul UK also continues to donate meals to London hospitals and unsold bread and freshly baked bread pudding to London-based charity The Felix Project, which distributes surplus fresh food to those that need it most.

Wingstop reopens two sites for delivery: Lemon Pepper Holdings, which is rolling out US chicken brand Wingstop across the UK, has reopened its contactless delivery service from two of its three sites in London. The group, which secured a fourth site in the UK last year at Bluewater, has reopened its Dalston and Battersea sites for deliveries through Deliveroo. The company said it had put in place a number of measures to keep staff safe, including wearing protective kit, making sure hands are washed every five minutes, and social distancing in kitchens. Lemon Pepper Holdings opened Wingstop’s debut UK site in Shaftesbury Avenue in London’s West End in 2018. Wingstop, which has more than 1,000 restaurants globally, entered its agreement with Lemon Pepper Holdings in 2017.

Crussh joins #FeedNHS initiative: London-based healthy food and juice brand Crussh has become the latest sector operator to join the #FeedNHS campaign being spearheaded by natural fast food brand Leon. Crussh started its part in the initiative this week with a delivery of 2,000 hot meals to the Royal Marsden hospitals in Chelsea and Sutton. Separately, the company began delivering its cold-press juice to NHS workers at the beginning of April, delivering 500 bottles a week to Kings College Hospital in London. Nick Nathan, supply chain and operations director at Crussh, said: “Our cold-press juice was so well received, but we just felt we needed to do more. The work that Leon has done during this time is absolutely brilliant and we were really keen to get involved and show our support. We’re now making and supplying more than 2,000 hot meals a week. It’s not only important the NHS workers are fed, but they’re also provided with nutritious and well-balanced food, to help keep them fit and healthy; that’s definitely where we can help.” The company is also working to further expand its home delivery service and is now providing fresh fruit and vegetable boxes and store cupboard essential boxes. It said it would soon be launching more items across bakery, dried good, drinks and snacks.

Farmer J reopens site for delivery: All-day market concept Farmer J, which is backed by Imbiba, has reopened its site in London’s Broadgate for delivery only. The company is now offering the service through Deliveroo at its Finsbury Avenue site. Last month, the Jonathan Recanati-led, four-strong group, launched a grocery and prepared meal delivery service. The initiative – The Farmer’s Market – sees menu items, recipes, groceries and sauces delivered to those unable to leave their home. 

I am Doner to reopen two sites on Friday: I am Doner, the Think Hospitality-backed brand, will reopen its Headingley and Harrogate sites on Friday (24 April) for delivery and contact-free click and collect. The brand is also in talks with a number of restaurant and pub venues to franchise or joint venture, giving access to its brand as a dark kitchen offer. Investor and director James Hacon said: “We have been working on a franchise model for more than a year and were quite far down the line with an international deal before the coronavirus outbreak. We have a solution ready to go and it feels like an obvious opportunity for operators whose existing concepts are not easily converted to delivery-only, and are therefore struggling to trade given the current circumstances. Our national supply chain can plug and play relatively simply, and our team is ready to support new partners with everything from operations to communications. We are happy to talk to anyone who may want to collaborate.”
Dalata agrees sale and leaseback of Dublin hotel for €65m: Irish hotel group Dalata, which has a growing presence in the UK, has agreed the sale and leaseback of its Clayton Hotel Charlemont in Dublin to German investor Deka Immobilien for €65m. The deal includes the purchase price of €61.95m and a rent-free period of one year. The agreement will see the hotel let on a new fully repairing and insuring lease for a 35-year term, with a rent of just over €3m per annum. The rent will be reviewed on a five-yearly basis. The four-star hotel has 187 air-conditioned bedrooms, a bar and restaurant, a fitness suite and meeting room facilities. Opened in November 2018, some €41.6m has been invested into the construction of the hotel by Dalata. The company will complete the final part of the hotel development, converting 38 Charlemont Street into additional bedrooms and a Red Bean Roastery Cafe. The hotel was valued at €77.4m on 31 December 2019 on the basis of Dalata owning and operating the asset, and contributed €4.3m to Dalata’s Ebitdar in its first full year of operation. Goodbody leisure analyst Paul Ruddy said: “Overall this is a good bit of business for Dalata. Firstly, completing such a transaction is a positive in the current environment, but achieving a yield as keen as 4.25% is a real vote of confidence from Deka considering the hotel is currently closed. This also reduces bank debt and gives Dalata additional liquidity. If we were to value the Ebitda from the hotel at eight times, the group retains circa €20m of valuation post transaction for the hotel.”

JW Lees appoints new non-executive director: North west brewer and retailer JW Lees has appointed Jim Tully as a non-executive director. Tully is senior partner at law firm Slater Heelis and has more than 25 years’ experience as a corporate lawyer. JW Lees managing director William Lees-Jones said: “Jim has been working with JW Lees’ board since June last year when he succeeded Roy Ellis as an external advisor. Jim brings a fresh perspective to JW Lees and we look forward to working with him as we come out of lock-down and continue to build the business in these challenging times.” Tully added: “I have long admired JW Lees as a business and look forward to helping to support it embark on the next stage of its history.”

DesignMyNight Launches DeliverMyNight platform: DesignMyNight, part of Access Hospitality, has launched a new platform, which it said will showcase and support the “best in online events and deliveries taking place across the UK” during coronavirus. The booking resource said it had recorded a huge spike in deliverable cocktails since the end of March, resulting in more than 100 UK bars now bottling their drinks and dispatching them. It has also witnessed a 310% increase in hampers and deliverable DIY food kits since lock-down began. Online events and experiences that people can enjoy from the comfort of their own homes have also seen a 13,000% surge on DesignMyNight.

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