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Thu 30th Apr 2020 - Propel Thursday News Briefing

Story of the Day:

Chesterford Group CEO – we re-engineered our business model in a week: James Lipscombe, chief executive of the Chesterford Group, which operates 40 sites under brands including Churchill’s and Bankers Fish & Chips, has told Propel the whole business will be reopened this week. Speaking as part of Propel’s “navigating the coronavirus” series, Lipscombe said within a week of making the decision to close all sites on 24 March, the business model has been re-engineered and by mid-April it had 22 sites reopened. A further 11 sites reopened last week and the remainder are now reopening. He said: “I am proud of my team at the speed of change we had to introduce into our stores. The week leading up to the closures we were only 10% down in terms of sales. We already had a lot of safe distancing measures in place, including marshalls on the doors allowing only a set number of people in at one time, and our teams were managing with it ok, but as soon as the prime minister announced the lock-down we realised we had to close. We then spent the next week closing down the business, but even by the end of it we were talking about how we get up and running again. We called it our phoenix plan, which was focused on looking at how do we reopen the stores in a safe way. We worked with the Health & Safety Executive, which has been fantastic, really supported us and approved our measures. This meant we were able to reopen our first store a week after we closed. We also introduced new technology into the business as well.” Lipscombe said the business was in a fortunate position because it already had a click-and-collect app up and running, and its delivery business had been increasing “quite substantially”. He said: “We do delivery slightly uniquely, as we lease the cars directly and manage the whole end-to-end consumer experience with our own team. On the whole we didn’t use the aggregators, which meant to get that business up and running was far swifter. We have tried to do it in a very measured way because we wanted to focus on getting the training, risk assessments and ways of working right.” He said the group, which operates the Serial Griller virtual brand, was looking to launch another one in the next few weeks. Lipscombe will share more of his thoughts in the video, which will be released on Thursday (30 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.

Industry News:

Sponsored message – K-Box – helping drive delivery sales, quickly with no capital cost: Having established a network of more than 120 “host” kitchens last year, K-Box has been helping restaurants, pubs, hotels and anyone with a commercial kitchen with a one-stop solution to succeeding in the delivery market. K-Box managing director Chris Sargeant said: “Our network of locations has remained open, switching to delivery-only, from day one of this crisis. Our operational and technology expertise, along with our simple to produce range of delivery-only brands, have supported operators throughout this time, and sales are booming! We have helped ‘host’ businesses to stay afloat – helping to transition them for the new way our industry is likely to be shaped.” The K-Box team offers training, technology and supply chain support, along with local demographic analysis and brand matching, all for no capital cost. K-Box is set up to support “host” sites with everything they need to maximise the delivery market place opportunity quickly. With more than 15 world-class, easy to produce brands in its portfolio, locations can host four to eight brands out of a single kitchen, leading to a significant increase in revenues. To become a “host” kitchen or a brand partner and maximise your revenues, please contact If you have information you would like to feature in a sponsored message, email

Breakfast ‘offers operators path to recovery when lock-down eases’: Firm growth in the breakfast channel for Britain’s quick-service restaurants (QSR) prior to the coronavirus outbreak might be an area some foodservice operators can leverage when lock-down restrictions are eased, according to insights firm The NPD Group. It said breakfast QSR visits grew by 4.5% in the year ending December 2019 versus 2018. This was the fastest increase for the past five years and accounted for about 50% of total QSR growth. In comparison, remaining daypart visits in QSR only grew 0.6% and even the total QSR market only managed visit growth of 1.1%. The NPD Group said growing frequency was the biggest driver of the increase in breakfast trips in 2019, driving two-thirds of additional trips in the fourth quarter compared with the previous year. New entrants have also entered the breakfast market with almost one-quarter (23%) of the growth in breakfast trips coming from this source. The NPD Group said there was room to grow breakfast penetration and frequency. The 61% penetration (percentage of British consumers aged 16 to 64 buying in 2019) for QSR breakfast was more than 20% below QSR lunch (84%) and more than 10% below QSR dinner (72%). In addition, the 10.4 frequency (average trips per buyer in the year) for QSR breakfast was only two-thirds of the frequency for QSR lunch (15.2). Dominic Allport, insights director (foodservice) at The NPD Group, said: “We know many foodservice operators are looking ahead to when the business environment changes, and we want to focus their attention on areas we believe could be set for growth. Breakfast is one of those and our data shows, pre-coronavirus, more people were choosing to get their first meal or beverage of the day out-of-home. If this trend re-establishes itself, all operators can potentially benefit from this in the future. For smaller players, think about growing your local offer, and where possible, highlighting what you did during coronavirus to help your staff and local community. Whatever your size, be ready to support visitors with pre-ordering and/or delivery and, of course, be clear on measures like social distancing, cleaning routines and offering hand sanitiser stations in your venues. Now is the time to be planning how your offer will adapt to new times.”
The NPD Group is a Propel BeatTheVirus campaign member

Sector sees sales drop 21.3% in first quarter: The UK hospitality sector saw sales decline 21.3% in the first quarter of 2020, as the country and the industry moved into lock-down, figures from the new UKHospitality Quarterly Tracker reveal. The drop in trading across the nation’s pubs, hotels, restaurants, bars, clubs and attractions in the first three months of the year is concentrated in March as figures show total annualised sales across the hospitality sector at £126.8bn, down 2.7% on the previous 12 months. The total value of the sector to the UK economy at the end of 2019 was £133.5bn. UKHospitality chief executive Kate Nicholls said: “The scale of the fall underlines the severe impact the coronavirus crisis and the lock-down imposed by the government from 23 March has already had on the sector. At the end of December, the industry had seen year-on-year growth running at 3.9% – the turnaround has been dramatic and will only get worse in the coming quarter. A continuation of business support is the only way to avoid a bloodbath of job losses and company failures in the hospitality sector, one of the UK economy’s jewels in the crown.” Data for the new UKHospitality Quarterly Tracker has been compiled by CGA using its own data, combined with hotel data supplied by STR and fast food market data supplied by The NPD Group’s Crest Panel, direct company contributions and complemented with Office for National Statistics data.
UKHospitality is a Propel BeatTheVirus campaign member

Gunewardena lobbies for tronc inclusion in furlough scheme: Des Gunewardena, chairman and chief executive of D&D London, has written to chancellor Rishi Sunak urging for tronc to be included in the UK’s Coronavirus Job Retention Scheme. Under the heading Restaurant staff valued in New York and Paris, sadly not in London, Gunewardena writes his UK employees are receiving “under furlough, even with the addition of universal credit, only some 50% of their normal wages.” He said: “My company D&D London owns and operates restaurants in the UK and overseas in New York and Paris. Our UK restaurants include Quaglino’s, Bluebird and German Gymnasium. We employ some 2,000 staff. When restaurants were shut due to coronavirus all governments stepped up to the mark to support temporarily laid off staff. In France unemployment benefit was already relatively generous, but the government improved the 75% salary offered to be based on a 39-hour not a 35-hour week. So our staff receive 85% of normal earnings. In the US the FED stepped in to add $600 per week to the standard 50% of earnings (including tips) to improve average New York waiters’ earnings to close to 100%. In the UK however in a bizarre move HM Revenue & Customs (HMRC) informed the industry last week the 80% furlough pay would exclude staff earnings from service charge. The service charge is a fixed proportion of customer bills (12.5% in most cases) which typically accounts for 40% to 50% of our UK restaurants front of house wages. These earnings are regular and needed for our staff to pay their bills. Our UK employees are therefore receiving under furlough, even with the addition of universal credit, only some 50% of their normal wages. This is deeply unfair, discriminatory, and sends a clear message to restaurant staff in the UK that they are not valued. I hope you and HMRC will reconsider your decision.”

Government urged to extend furlough scheme or risk huge job losses: The government has been urged to extend its furlough scheme for at least another three months or face large-scale redundancies. The Chartered Institute of Personnel and Development (CIPD) has also called on chancellor Rishi Sunak to allow staff furloughed under the Coronavirus Job Retention Scheme (CJRS) to work reduced hours. The scheme, announced in the initial wave of government measures during the coronavirus pandemic, has already been extended until the end of June. But the CIPD, the trade body for human resources, believes it should run until at least the end of September to prevent many furloughed workers being laid off. It said in a survey of 1,000 companies across the country, seven in ten said up to half of employees could work reduced hours if the scheme allowed them. CIPD chief executive Peter Cheese said an extension of the scheme would help remove the risk to furloughed workers of a "cliff-edge exit" into redundancy. According to the Office for National Statistics, 80% of people working in hospitality are now on furlough. Jonathan Downey, chief executive of London Union, has been calling on the government to take a sector-specific approach and a tapering of the furlough scheme for the hospitality sector, to help it rebuild. He said: “We can’t expect 80% CJRS for six months to the end of the year. So, what would work? Something like this (for hospitality/leisure only) would work for many – 60% July/August, 40% September/October and 20% November/December. That’s three months spread over six. With a lot of the grab-and-go/quick service restaurant guys going back to work, the number on furlough will drop significantly so it may become affordable.”

Sector leaders and chefs call on government not to end restaurant lock-down too soon or risk wave of permanent closures: A group including restaurant group chief executives and high-profile chefs have reportedly been asked to sign an industry-wide letter calling on the government not to end the lock-down on their industry too soon, or risk triggering a wave of permanent closures. Sky News understands restaurateurs including Harvey Smyth, chairman of the ASK and Coco di Mama-owner Azzurri Group; Rooney Anand, chairman of the Las Iguanas and Café Rouge-owner Casual Dining Group; plus chefs Rick Stein and Tom Kerridge, have been asked to sign the letter, which will be sent to business secretary Alok Sharma and cabinet office minister Michael Gove. The letter states: “We are concerned opening the restaurant sector too early could lead to a substantial number of businesses failing, given the discrepancy between the costs they will incur and the revenues they will be able to achieve. The impact on long-term employment in the sector, and wider economic damage this would cause, would be very painful. We strongly believe a removal of the lock-down as soon as it safe to do is crucial for the restaurant sector, but we would point out an early, partial reopening of restaurant businesses as the government starts to lift lock-down restrictions may be counterproductive. Unfortunately, it will not be possible for most restaurants to open in an economical way until we can ensure a critical mass of customer visits. Should we be asked to reopen too early, and pay full staff costs, rent and all of our supply costs, it will be impossible for most restaurants to operate sustainably until we are also able to return to serving customers at our normal capacity.” The letter is also believed to ask the ministers to provide ongoing financial support in the form of furloughing and rent assistance "through any period of restart where a lighter-touch social distancing regime would require a sub-economic opening of our businesses". The letter also reportedly suggested those sectors whose business models enable them to operate sustainably with a smaller footfall, such as cinemas, food-to-go, hotels or holiday parks, should be allowed to open first. 

Hospitality action group forms to fight insurers over business insurance: A new hospitality action group has been launched with the aim of bringing claims against insurers that have failed to pay coronavirus-related business interruption claims. The Hospitality Insurance Group Action (HIGA) is open to businesses such as pubs, restaurants, hotels and nightclubs that have been forced to close because of the lock-down and are facing insurers refusing to pay out on business interruption claims. The claim is being run by law firm Mishcon de Reya, which is also handling a group action against insurer Hiscox on behalf of policyholders that argue the company should honour their business interruption cover. There is no cost to any UK hospitality business to register with HIGA to have their existing business interruption insurance policy reviewed by Mishcon. 

Job of the day: COREcruitment is supporting a quality small pub group that is keen to meet passionate operations managers for an upcoming position. The business operates a collection of properties across London and the south and has a focus on great quality produce, interesting, ever-changing menus and friendly service. It is keen to look at potentially two openings, and to support this expansion feels a hands-on, growth focused operations manager would be an excellent addition to the team. The salary is circa £70,000, plus benefits. Anyone interested, and has extensive multi-site operations experience within the food-led pub sector, can email with their CV or profile. 
COREcruitment is a Propel BeatTheVirus campaign member

Company News:

KFC to have 100 UK restaurants reopen for delivery by Monday, sales up 14% in first quarter: KFC has said it will have 100 of its restaurants open for delivery by Monday (4 May) – and is working to open more. The company said it was reopening “in a responsible way”, with stringent processes and hygiene measures in place. It is serving a limited menu to help the smaller kitchen teams maintain social distancing. KFC said by opening the restaurants it would also be able to increase the number of meals being delivered to NHS and key workers – aiming to deliver 10,000 a week in partnership with Deliveroo. Among the latest restaurants to open are Martineau Place in Birmingham, Honey Wood Retail Park in Dover, Towcester Road in Northampton, Penny Street in Lancaster and St Georges Crescent in Wrexham. The company began reopening sites earlier this month – starting with 11 of its 900-plus restaurants – and has been gradually adding more on a daily basis. It added: “If you’re not near one of the 100 never fear – we’re working hard to reopen more over the coming weeks.” Staff have returned on an opt-in basis, and only those who can travel without the use of public transport have been asked to work. Paula MacKenzie, managing director of KFC UK & Ireland, said: “I’m really proud of the way we, with our franchise partners, have been able to carefully get some of our restaurants up and running over the past two weeks. This next stage allows us to continue to provide wider access to hot food for those who need it most, whether that’s key workers after a long shift or those working from home who need a quick, affordable dinner for the family. I’m hugely appreciative of our team members who have returned to work – it’s a challenging time for everyone, but we’re so glad to play our part in helping to feed the nation.” Meanwhile, parent company Yum! Brands has reported KFC’s system sales in the UK rose 14% for the first quarter ending 31 March 2020, compared with the previous year. The UK accounts for 6% of KFC’s system sales worldwide. Meanwhile, Pizza Hut system sales in Europe, including the UK, were down 5% in the quarter – the continent accounts for 9% of Pizza Hut’s system sales globally. Individual figures for the UK weren’t included in the announcement.

Franco Manca targets 20 reopened sites by June: Franco Manca, the Fulham Shore-owned brand, hopes to have 20 of its sites reopened for delivery only by June, Propel has learned. Last week, the circa 50-strong brand reopened its site in Chiswick from 4pm to 10pm for delivery only through Deliveroo and UberEats. It will soon extend this to its sites in Balham and Belsize Park, before looking to reopen two sites a week going forward. The company said: “We are working hard to safely reopen more pizzerias for delivery and order and collect.” Fulham Shore has also reopened the Real Greek site in Paddington Street, Marylebone, for delivery only.

Murdoch – Burger King to have 350 sites open by end of June: Burger King UK, the Alasdair Murdoch-led business, has said it hopes to open at least 350 out of its circa 550 restaurants by the end of June. The company, which has already reopened 12 sites, plans to have at least one site open in every city by 31 May, as part of a staggered reopening after the lock-down. “We would anticipate by the end of June, we will be getting towards 350 and 400,” Murdoch told the BBC's World At One programme. “We see some of the others will be difficult to open – some are in airports. At this stage none of us really have the visibility on when they might do.” He said a scaled-back menu would allow staff to socially distance while making the food, with the arrangements being put into place for drive-thru restaurants and with trials set to start on how to reopen high-street walk-in locations. Propel understands the brand’s franchisee in Jersey has already reopened one high-street site for delivery only. On Wednesday (29 April) the company reopen restaurants in Aberdeen, Dundee, Merton in south London, Reading, Southampton, and Hillington and Springfield Quay, both in Glasgow. It is offering contactless delivery through Just Eat and Deliveroo.

Sky News – Giraffe owner Boparan in exclusive talks for Carluccio’s: Boparan Restaurant Group, the Giraffe, Ed’s Easy Diner and Slim Chickens operator, has entered into exclusive talks to acquire the rump of the Carluccio’s business, which was placed into administration at the end of last month, reports Sky News. It is thought Boparan has fought off competition from Three Hills Capital, the backer of Byron, for Carluccio’s. However, it is unclear how much of the 71-strong Carluccio’s that Boparan was in talks to acquire. It is thought Boparan and Three Hills were interested in about 30 of Carluccio’s best-performing sites, with Boparan understood to be interested in converting to the Slim Chickens brand, of which it is the UK master franchisee. Bids for Carluccio’s were due on 15 April, although it was thought offers for the entire 71-strong business had not been forthcoming. There had been interest in acquiring a number of sites and the brand. Three Hills held talks over a merger with Carluccio’s before it was placed into administration. Geoff Rowley and Phil Reynolds, partners at FRP Advisory, were appointed joint administrators of Carluccio’s last month. Carluccio’s directors decided to place the company into administration after a sustained period of challenging trading conditions, which have been exacerbated by the pandemic and “broader issues currently facing the UK’s retail and hospitality sector”.

Deliveroo set to make 367 redundancies and furloughs 50 staff: Deliveroo is set to make 367 of its 2,500 global workforce redundant as it struggles with demand during the coronavirus lock-down. A total of 50 employees have also been furloughed as part of the decision. The planned redundancies, which affect employees in several countries, come just over a week after the Competition and Markets Authority (CMA) provisionally approved a $575m (£462m) investment in the business by Amazon. However, coronavirus has made it difficult for food delivery businesses such as Deliveroo to predict how demand will look in the future. The company previously warned the CMA a continued freeze on Amazon's investment in the business could trigger its collapse because of a cash squeeze and lack of access to funding. A Deliveroo spokeswoman said: “The extraordinary global health crisis we are living through has impacted almost all businesses. As a result, like so many others, Deliveroo has had to examine how to overcome the challenges we all face, as well as ensure we are in the strongest position possible following the crisis. This requires us to look at how we operate in order to reduce long-term costs, which sadly means some roles are at risk of redundancy and others will be put on furlough. This has been extremely difficult for everyone at the company, and our absolute priority is to make sure those impacted are fully supported.”

Heavitree cancels tenants’ rent for April and May, directors cut salary by 20%: Heavitree Brewery, the Exeter-based tenanted pub operator, has cancelled rent charges for its tenants for April and May. In order to continue to preserve cash, the directors have also made the decision to take a salary reduction of 20%. Heavitree stated: “The company continues to work with its tenants to assist where possible and to interpret the daily announcements from government.” Heavitree operates more than 65 tenanted pubs across Exeter and south Devon.

Shaftesbury launches digital initiative for Seven Dials, Kerb opens Market Cornershop: Landlord Shaftesbury has introduced a digital initiative to ensure the community and consumers can remain connected to Seven Dials during the lock-down. Called Seven Dials @ Home, the campaign features curated content created in partnership with Seven Dials’ restaurant and retail occupiers for their social media followers. Participating brands including Homeslice and Flesh & Buns, who between them are offering bespoke video tutorials, make-and-enjoy-at-home classes, as well as guides on well-being and health. The launch coincides with the opening of the Seven Dials Market Cornershop by Kerb, operator of Seven Dials Market. A one-stop, digital delivery service modelled on traditional corner shops, the Cornershop is a dedicated website via which customers within the M25 can order small or large vegetable or fruit and vegetable boxes. Also available is a range of wine, soft drinks, cocktail kits and beer as well as links to Seven Dials Market traders providing their own home delivery service. Simon Mitchell, managing director of Kerb and curator of Seven Dials Market, added: “The Cornershop has been created to help the tens of thousands of Londoners that have made Seven Dials Market such a success. Our aim is to make things a little easier for people living in the West End during the lock-down, while at the same time benefitting our traders and suppliers as they too navigate this exceptional time.” Seven Dials @ Home is part of a village-wide programme of initiatives by Shaftesbury to provide support for consumers, residents and operators during coronavirus. Shaftesbury is bringing-to-life virtually Chinatown, Seven Dials and Carnaby with a programme of digital content created by tenants to entertain, educate and inform people while they remain unable to visit the villages in person.

Burger & Lobster reopens second London site: Burger & Lobster has reopened a second London site, Propel has learned. Having reopened its Bond Street restaurant last week for delivery, Burger & Lobster has now done the same at its Threadneedle Street, which also offers takeaway and click-and-collect. The company stated: “This means we are able to reach more of our London customers that we miss so dearly. Throughout our reopening, safety remains of paramount importance, and we have stringent health and safety practices in place.” Both restaurants are offering 50% discount to all NHS, Transport for London, police and fire service employees.

Dalata reports coronavirus hits UK booking revenue by almost a fifth: Irish hotel group Dalata, which has a growing presence in the UK, has reported the coronavirus crisis has hit booking revenue in Britain by almost a fifth. In a statement before its annual general meeting, chairman John Hennessy said in the first three months of the year, the pandemic knocked 24.3% off revenue the group earns from booking its rooms in Dublin, 14% around the rest of Ireland and 18.6% in the UK. Adjusted Ebitda for the first quarter of this year was €17.7m, which included two months of normal trading before the effects of the global pandemic were first felt on the business. Hennessy said given the restrictions on travel and movement by the UK and Irish governments, the outlook for the remainder of the year remained uncertain. Goodbody leisure analyst Paul Ruddy said: “Overall, this is a better start to the year than we have anticipated but the duration of the coronavirus restrictions and shape of the recovery still remain the key questions for this year’s earnings. We continue to consider Dalata a ‘Buy’, owing to its valuable freehold estate, experienced management team, scale advantages in Dublin and its UK growth opportunity.”

Fever-Tree co-founder to step down: Fever-Tree co-founder Charles Rolls is to step down from the company that has helped him make more than £240m. Rolls will leave his non-executive deputy chairman role on 4 June. Rolls launched Fever-Tree with Tim Warrillow in 2004, and the company has benefited from a surge in customers seeking more premium mixers for gins and whiskies. However, it has recently been hit by pubs closing in lock-down. It floated at 134p a share in November 2014, and the shares are now 1,737p. Rolls has made about £241.9m via three stake sales from May 2017 to August 2018. He still has a 7.06% share in the firm, worth £143m. 

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