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Tue 28th Apr 2020 - Propel Tuesday News Briefing

Story of the Day:

Pho co-founder – opening with social distancing measures in place could be catastrophic: Stephen Wall, co-founder of Vietnamese concept Pho, has said opening pubs and restaurants with social distancing measures in place “could be catastrophic”. He told Propel: “Eating out is a fun social occasion here in Britain, not a function. It’s about interaction with friends and the staff, enjoying the vibe and having a good social time – not being served by someone in a mask and gloves in a clinical environment. Even the ‘fearless’ younger demographic who are more likely to return to restaurants will be put off by social distancing measures such as this. And, who are you going to dine or drink with? Does it have to be a member of your household or one of your allotted mates? Or does your dining companion need to sit on a table two metres away? Take a site and divide it by two to account for loss of tables (probably the best possible case) and then subtract customers choosing not to come in due to the complete lack of a social fun experience. What are you left with, 30% of sales on average? This is what we’re potentially looking at. Albeit delivery and takeaway could compensate to a degree, it’s not going to help those whom eat-in sales make up 80%-plus of total sales, especially with the fight for market share that will take place. It’s quite simple to see – opening pubs and restaurants with social distancing measures in place could be catastrophic.”

Industry News:

Darwin & Wallace managing director Mel Marriott to feature in next ‘navigating the coronavirus’ interview: In the latest of Propel's video interviews with leading operators about how they are “navigating the coronavirus crisis”, Propel insights editor Mark Wingett talks to Mel Marriott, managing director of Darwin & Wallace, about the issues surrounding social distancing in a social sector; appealing to new demographics; and making sure sustainability remains part of the agenda in a post-covid-19 world. The video will be released on Tuesday (28 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.

Chancellor announces micro-loan scheme for businesses with £50,000 limit but BBPA warns 10,000 pubs still without support: Small firms are to get access to 100% taxpayer-backed loans after they raised concerns about slow access to existing coronavirus rescue schemes, but the British Beer & Pub Association (BBPA) warned there were still 10,000 pubs without any financial support. Chancellor Rishi Sunak told the House of Commons the scheme, which will be for businesses with a turnover of up to £200,000 and for up to 25% of their turnover, would start next week. It aims to unlock a backlog of credit checks by banks amid fears many small firms could fold before getting loans. The scheme requires filling in a two-page self-certification form online. Unlike the existing Coronavirus Business Interruption Loan Scheme (CBILS), banks will not retain any of the risk for these loans. The loan terms mean no capital or interest repayments will be due for one year. Instead, the government will pay the interest for the first 12 months. However, Sunak resisted pressure to increase the current 80% guarantee on loans under CBILS to cover their full value. BBPA chief executive Emma McClarkin said: “The chancellor’s ‘bounce back loans’ will help some pubs, which is welcome, but sadly only a minority. For many pubs, taking on debt in the form of a loan isn’t even a viable option. With this announcement, the government has forgotten there are still 10,000 pubs in the UK who aren’t getting any government support at all.”

MP urges chancellor to protect workers failed by coronavirus job support scheme: Treasury Select Committee member Rushanara Ali, MP for Bethnal Green and Bow, has written to the chancellor demanding urgent action “before hundreds of thousands across all sectors are thrown into even greater financial difficulty, because they are being failed by the government’s Coronavirus Job Retention Scheme”. Ali said the problem is the cut-off date of 19 March for a worker to be eligible and “does not take into account workers in the real, flexible economy”. She is calling on the chancellor to shift the date to the end of March. The government scheme does not take into account the significant numbers of employers that submit Real-Time Information to HM Revenue & Customs, and add employees to their payroll at the end of the month. This means many people who are starting a new job will still be ineligible under the scheme. While there is the option for those who have been made redundant or stopped working for an employer between 28 February and 19 March to approach their previous employer to be re-employed and furloughed, reports suggest often these requests are being refused. During a Treasury Select Committee session last week, UKHospitality chief executive Kate Nicholls revealed between 350,000 and 500,000 people in the hospitality industry may not be eligible for the scheme. Many hospitality workers who are eligible will only receive half of their wages due to service charge, cash tips and commission being excluded from the scheme.

Backman – sector leaders feeling ‘liberated’ and ‘engendering a spirit of innovation and getting things done’: Industry analyst Peter Backman has argued many sector leaders are now feeling liberated, “engendering a spirit of innovation and getting things done”. He said given executives are no longer constrained by the need to hit “this month’s numbers” or “having to explain their current like-for-like performance”, many are “exhilarated” and “really enjoying the challenges”. Backman said: “Several themes have emerged over the past week from my many conversations with executives across the foodservice sector and its supply chain, not only in the UK but around the world. Perhaps one of the most powerful of those is the feeling of liberation. After paying due attention to the harrowing need to furlough staff (a process that is now behind most companies) but acknowledging the continuing need, nevertheless, to support those affected, many of the people who are now left to run their businesses tell me they are overworked but also ‘exhilarated’ and ‘really enjoying the challenges’. At the same time, they are able to tap into shared concerns that everyone is in this together, there are people who are struggling on our behalf, and many people are worse off. All of this is engendering a spirit of innovation and getting things done.” And Backman said there may be a silver lining amidst the gloom. He added: “When we look back in five, ten or 20 years’ time and review the businesses that have become successful, we will see many of them owed their birth to a burst of creativity that is perversely being allowed to take hold in the extraordinary circumstances that we are living through right now.”

Last chance to book for haysmacintyre live webinar supporting finance teams: This is the last chance to book for sector accountancy specialist haysmacintyre’s 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 with an excellent reputation 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 of taking a UK business abroad to either the Middle East, Europe or Asia would be great, but US experience would be an added bonus. It is essential to 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 email with their profile or CV.
COREcruitment is a Propel BeatTheVirus campaign member

Company News:

Krispy Kreme UK reopens drive-thrus, begins return to supermarkets: Krispy Kreme UK has reopened all its drive-thrus and begun a gradual return to supermarkets across the country with a limited-range of its doughnuts. The company reopened its first drive-thru, in Manchester, on 16 April, serving NHS, police and fire workers, who are eligible to receive complimentary hot drinks and one of its three-packs of original glazed doughnuts. It has now reopened all nine drive-thrus. Chief executive Richard Cheshire said: “I wanted to update you on our ongoing mission to serve half a million ‘smiles’, in the form of our original glazed doughnuts, via contactless drops, to hospitals, charities, food banks, police stations, carers and other critical key worker groups. We have already served more than 350,000 smiles to our critical services, thanks to the tremendous effort from our Krispy Kreme staff. Our retail and food delivery partners are enthusiastic about Krispy Kreme returning to their stores and apps, so we are gradually returning to supermarkets throughout the country with a more limited pre-packaged range of doughnuts. This will enable us to significantly reduce our manufacturing footprint during this crisis. I want to reassure you the safety and well-being of our staff will always be our number one priority.” Some of the key actions the company has taken include a signed employee declaration that social distancing has been practiced inside and outside the workplace, and the introduction of a new senior role – a covid-19 supervisor on each shift whose sole responsibility is to ensure adherence to the standards.

Nando’s reopens sites for public orders as part of ‘controlled experiment’: Nando’s has made delivery at the seven sites it reopened last week to help feed NHS workers open to the public. Orders through Deliveroo are now available through Nando’s in London – Clink Street, Camberwell, Canary Jubilee and Gloucester Road; Manchester – Fallowfield and Printworks; and Dublin – St Andrews Street. The company said: “This trial will be treated like a controlled experiment as part of our plan to reopen more restaurants as soon as it is safe to do so.” The reopened sites are offering a limited menu including dishes such as its chicken burgers, butterfly chicken and the beanie burger. The Deliveroo page for the Peckham site reads: “We are working hard to return to our normal menu with all your favourites but please bear with us in the meantime. Our teams in our reopened delivery only restaurants are prepping your order in line with government advice on social distancing.” Last week the company reopened the seven kitchens exclusively for NHS staff and local charities. The restaurants each aim to cook up to 250 meals a shift before delivering them. The business said it would provide up to 1,700 free meals each day for NHS staff, key workers at local hospitals and charities. 

16 Hospitality falls into administration: 16 Hospitality, the Edward Barlow-founded business, which owns and operates four pubs across Cheshire and Anglesey, has fallen into administration. Sarah O'Toole and Jason Bell, of the Manchester office of Grant Thornton UK, have been appointed joint administrators to the business. The group's portfolio features two sites in Cheshire – the Partridge in Stretton and the Old Hall hotel in Frodsham – and two on Anglesey – the White Eagle in Rhoscolyn and the Oyster Catcher in Rhosneigr. It also previously operated The Swan in Tarporley. The pubs are closed due to coronavirus restrictions and the majority of the workforce has been furloughed. O'Toole said: “We are hopeful we can find a buyer for the businesses despite the current challenges facing the pub and hospitality sector.”
Shake Shack to reopen two London sites for takeaway and delivery: Shake Shack is to reopen two of its London sites for takeaway and delivery. The company will reopen its Tottenham Court Road outlet on Tuesday (28 April) and its Canary Wharf venue on Thursday (30 April). The sites will be open daily from 11.30am to 10pm for takeaway or order for home delivery through Deliveroo. Both outlets will have strict social distancing measures in place, including face masks for all team members, floor markers, contactless pick-up and delivery, and allocated pick-up zones for delivery riders. Shake Shack is committing to delivering 1,000 free meals to NHS hospitals through Deliveroo and is also bringing back its emergency services offer, including for all social and community care workers. Any front line worker that orders a burger will receive another free. The offer is available for takeaway after providing ID or an employer letter.

Mizon – ‘high levels of estate reinvestment and freehold focus will hopefully stand us in good stead to come out the other side’: Heydon Mizon, joint managing director of Hertfordshire brewer and retailer McMullen, has told Propel he hopes the company’s high levels of reinvestment in its estate and freehold focus “will stand us in good stead to come out the other side”. Mizon said McMullen has seen revenue in its current financial year up 5.5% until pubs were forced to close in mid-March, with growth “equally strong” for drink and food sales. Mizon said: “We were looking forward to a new-build pub sited on a marina in Milton Keynes, two London sites in Whitehall and Fitzrovia and major investments in pubs in London’s Fleet Street, Cambridge and Marlow. Some of that seems a long way away now, although Marlow, Fitzrovia and Cambridge are almost finished. We are in the same position as every other managed house operator. We have a large fixed cost base that has now been stripped of its income cover. We hold long-established conservative business values and have taken 193 years to build a stable business, eschewing faster paths to riches and instead choosing to grow organically with high levels of reinvestment and a freehold focus. It will be seen whether this stands us in good stead.” In its tenanted estate, McMullen is not charging commercial rent for closed pubs and having collected all beer stock it is returning any excise saving/credits to tenants “as soon as we know what the amounts are”. It is also helping them access government support and Mizon said: “Being an operator ourselves certainly helps with the empathy. We have some very large commercial leases, with businesses whose enterprise values is into the billions, these have unilaterally ceased paying rent looking to support their employees at the cost of ours. We continue to pay our small number of landlords, mainly local authorities, accepting they have people to protect as well and objectively there is worth in every job.” Mizon said it also aimed to pay all suppliers by the end of May. Although the brewery usually only brews for the company’s pubs, it is selling beer direct to customers on “a small scale”. Meanwhile, volunteers have opened ten contactless essential food shops, supplying fresh products to NHS and key workers, at cost. The vast majority of the team is furloughed, with all salaried staff currently having their pay topped up. In terms of further support, Mizon said: “We have forecast sales profiles, based on their guest demographic, by site and we expect significant declines on the prior year. Phased opening support will be beneficial, allowing a small percentage of team to remain on a reduced furlough scheme in the opening eight weeks, and would help business ascertain their sales levels without forcing any drastic decisions to be made on staffing numbers too early.” Mizon spoke after McMullen reported turnover increased to £93.1m for the year ending 28 September 2019, compared with £87.0m the previous year. Underlying pre-tax profit was up to £15.1m, compared with £14.1m the year before.

Everards cancels rent payments for April and May as ‘too early to charge’, furloughs 70% of staff on full pay: Brewer and retailer Everards has cancelled rent payments for all tenants in April and May as it looks to ensure the business is “strong, fit, remains innovative and well prepared to compete in the future”. The company has furloughed 70% of employees on full pay, which will be reviewed at the end of May, and the business said the government’s portal to process payments “has worked very well”. Directors salaries have been cut by an average of 30% and the full-year dividend payment to shareholders cancelled. Meanwhile, construction of the company’s new brewery, beer hall and offices at Everards Meadows continues with additional social distancing measures in place. These changes will cause some delay but the building is expected to be completed by November. Everards has decided to delay the fit-out of the beer hall and offices until early 2021 with a plan now to open in spring 2021. Manging director Stephen Gould said: “We are aware the provision of government grants for some business owners was put in place to contribute to business expenses including rent. However, wage support payments are only being processed in the next few days – so cash for wages have had to be provided by business owners to date – and about 30% of grants are yet to be paid so it is viewed to be too early to consider charging a proportion of grants received to rent. This position will be reviewed again at the end of May.” The Everards Family Foundation has donated £50,000 to Age UK Leicester Shire & Rutland, which will be used to support older people in the local community. Gould welcomed the government support in place so far, but said he hoped to see further plans laid out to support sector jobs – not just for the length of pub closures but also once they are open again as increased social distancing measures would continue to impact business owner’s income. He added: “The plan to come out of lock-down needs really careful thought. A rushed approach makes no sense for anyone and we support the British Beer & Pub Association’s call for a minimum of three, ideally four, weeks’ notice.” 

Franco Manca reopens Chiswick site for delivery only: Franco Manca, the Fulham Shore-owned brand, has reopened its site in Chiswick, west London, for delivery only, Propel has learned. The circa 50-strong brand shuttered all sites last month. Consumers can now order sourdough pizza delivered to their door via Deliveroo from 4pm to 10pm. The company said: “We are working hard to safely reopen more pizzerias for delivery and order and collect.” The company previously had an exclusive delivery arrangement with UberEats.

Joule’s to continue offering rent concessions when pubs reopen: Shropshire brewer and retailer Joule’s, which is headed by Steve Nuttall, has said once its pubs are allowed to reopen it will not ask for rent payments in full. Over the next few weeks, Joule’s will be preparing its reopening plan with its 42 franchisees – and said that would include a promised period of rent concession, which would be flexible “until the new landscape is fully understood”. Operating director John Auld said: “As locations and opportunities are all varied, our plans will be pub by pub. We have to start our planning by recognising we will be reopening in a different world – so we will have to respond to that. Each plan will be flexible and will be adjusted as we gain insight into how trade materialises. We intend to go step by step and be highly responsive. Our franchisees are very engaged; we have solid relationships and trust, making us highly adaptable as a business.” The company has already suspended all rent for the “foreseeable future” and would honour all beer returns if stock went out of date. Joule’s estate stretches across Shropshire, Staffordshire, Cheshire and Wales.

Pure to reopen Moorgate site for delivery only: Healthy food-to-go group Pure is to reopen one of its 21-strong, London-based sites for delivery from Wednesday (29 April). The company, in which Whitbread has a 51% stake, is reopening its outlet in Moorgate and said it conducted a survey of its customers and team to find out their concerns about the business reopening for delivery. The company’s employees expressed concern about getting on public transport, so only people who can walk or cycle to its kitchens will be making food. The company said: “For our customers, it was about the safety of the food preparation and the delivery itself. We have designed a menu based on what our customers said they wanted for delivery, including groceries.” The business will also carry out daily health checks for all its team when starting work; all team members will wear face-masks and there will be social distancing measures in place in kitchens, including clear floor markings. The company said: “We are confident in the health and safety procedures in place. When it is safe to do so, we will reopen our stores for takeaway too.” The delivery offer will also include groceries, with the company also now selling milk and bread.

Chopstix to reopen six sites this week: Chopstix, the pan-Asian quick service restaurant concept, is set to reopen up to six sites this week, for delivery only, Propel has learned. Among the sites expected to reopen under its eponymous brand are Manchester Piccadilly, Cardiff and Aberdeen. The group is also understood to be reopening its Yangtze-branded site in Donegal, Belfast. Roadside retailer Applegreen has already reopened two of its franchise sites under the Chopstix brand in Northern Ireland. It is thought Chopstix will assess the first batch of reopenings before considering doing the same at further sites. 

Shepherd Neame reopens online shop and pledges NHS donation: Kent brewer and retailer Shepherd Neame has reopened its online shop and will be making a donation to the NHS for every item ordered until the end of May. The company, based in Faversham, continues to produce beer but its brewery shop, along with its pubs and hotels, have been closed since 20 March in line with government advice. The online shop has reopened selling a limited range of beer, wine and cider. There is a minimum requirement of two items per order, and delivery is free to any mainland UK address. Shepherd Neame will make a £1 donation to the Kent NHS Community Heroes charity for every case of beer, wine or cider ordered until the end of May. Chief executive Jonathan Neame said: “We have received lots of enquiries from customers keen to buy their favourite products from us, and are pleased to be able to relaunch our online shop again. It was also important to us to do something to show our NHS workers just how much we appreciate their selfless, dedicated efforts to keep us safe at this difficult time.”

Team behind Bao to launch new delivery service: The team behind Taiwanese steamed buns concept Bao is to launch a delivery service called Rice Error out of three of its London-based restaurants. The company said Rice Error would “specialise in rice boxes using award-winning Chi Shang rice from Taiwan”. The company will launch the service later this week at its Borough outlet, followed by its Fitzrovia and King’s Cross sites.

Wadworth supplies beer for hand sanitiser: Devizes-based brewer and retailer Wadworth has put its beer, which was scheduled for pubs, to use by converting it to hand sanitiser. Three tankers of beer was shipped to Chase Distillery so the gin and vodka producer could convert it to liquid hand sanitiser. Its brand HR1 contains 80% alcohol and is made to a World Health Organisation-approved formula. Wadworth chief executive Chris Welham said: “When our pubs closed we had a large amount of beer that couldn’t be used and so working with Chase we were able to support its initiative and supply the beer for hand sanitiser. It was a perfect solution and helped towards providing 30,000 units to front line professionals and key workers.” The alcohol is stripped from the beer and used for the hand sanitiser. James Chase, global brand ambassador for Chase Distillery, added: “It is great to have the support of businesses such as Wadworth supplying excess alcohol products so we can produce more of this vital product.”

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