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Mon 4th May 2020 - Propel Monday News Briefing

Story of the Day:

Azzurri CEO – we will need to re-educate customers that restaurants and pubs are safe: Steve Holmes, chief executive of the Azzurri Group, the ASK Italian, Zizzi and Coco di Mama operator, has said the government and the sector will need to re-educate customers to give them reassurance it is safe to visit restaurants once again. Speaking as part of Propel’s “navigating the coronavirus” series, Holmes said: “Clearly as a business, as an industry, we probably want to get open quickly, but I echo the view if we try to open too quickly with heavily restrictive guidelines it is going to be counter-productive. Also, irrespective of social distancing guidelines, we don’t know the mood of the customer. Even if we open with no restrictions we don’t know if we are going to be trading at minus 50% anyway. So, I think it is really important for the government to reassure customers it is safe to go to restaurants. I read an article that showed the UK has the lowest percentage of the population that is comfortable to have the lock-down restrictions lifted. The government has done such a good job of locking down the country and protecting the NHS it now has to unwind from that. I think we have a couple of challenges – there is the operational side of the social distancing guidelines and how do we have something not too restrictive, and re-educating the customer to give them the reassurance it is safe to visit restaurants once again.” Holmes said Azzurri had done some modelling and taken a typical restaurant and created two metres space between everything. He said: “I think I share the view of a lot of my colleagues out there that having extremely restrictive social distancing guidelines is going to be, forget the financial impact, operationally impossible. I’m not sure how you clear a table, how you deliver the food, how customers go to the toilet. There is going to be some real challenges.” Propel reported on Sunday (3 May) Azzurri has appointed KPMG as it looks to navigate its way through the lock-down and out the other side. Holmes will share more of his thoughts in the video, which will be released on Monday (4 May). 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:

Propel and Bums on Seats to host free webinar on maximising pre-booked sales: Propel and Bums on Seats are to host a free 30-minute webinar showing how businesses can still be profitable even with fewer people coming through their doors. Amber Staynings, founder of Bums on Seats, will talk through her views on how coronavirus might impact the sector and consumer behaviour, highlighting an adaptable plan of action to ensure the continued success and vital cog that is pre-booked sales remains integral to business operation once people are able to frequent bars, restaurants and pubs again, and how fewer “bums on seats” can still be profitable for your business. To register, email and a link to view the webinar will be sent at noon on Thursday (7 May).
Bums on Seats is a Propel BeatTheVirus campaign member

Ireland provides precise dates for reopening of pubs, nightclubs, hotels and restaurants: Irish taoiseach Leo Varadkar has announced a five-phase plan for Ireland to reboot its economy, with cafes and restaurants due to reopen on 29 June and pubs and nightclubs scheduled to open last on 10 August – social distancing rules will need to be applied. The 10 August date will be when large social gatherings can also begin again. But he warned the country will only get to that phase if coronavirus is kept at bay and doesn't start to surge through the community again. However, pubs could open sooner than 10 August if the spread of coronavirus is controlled, business minister Heather Humphreys claimed. She said: "If we can keep the virus under control there is now a pathway for the hospitality sector so restaurants can be back by the end of June, hotels by mid-July and pubs by 10 August. Many of them had concerns they wouldn't be able to open at all this year so I actually think the sector can take a lot of heart from the roadmap.”

Pesto founder writes to MPs setting out two options for opening sector: Pesto founder Neil Gatt has written to MPs for the constituencies within which his 11 restaurants are based setting out two options for reopening the sector. Gatt’s first suggestion is pubs and restaurants remain closed until it is safe for them to reopen without social distancing measures with the government continuing to offer financial support. These measures including extending the furlough scheme “until such time pubs and restaurants can trade normally and become self-sufficient again” and introduce other support to help with ongoing fixed costs in the meantime, principally rent. He said the grant scheme should be extended to include pubs and restaurants with a rateable value above the current 51,000 threshold. His second, and preferred option, is pubs and restaurants reopen with social distancing measures in place, but while those measures continue to be necessary financial support is given to operators to help mitigate losses incurred while operating well under normal capacity. Gatt said the government would continue to pay 80% of wages of employees, while the employer pays the extra 20% to bring the pay up to normal levels. He said: “That way operating expenses are kept to a minimum; employees get back to work with full pay and job losses will be avoided. I believe our industry is in a unique situation and that calls for a unique approach to this matter. The government has spent billions of pounds of taxpayers’ money, and rightly so, in an attempt to keep people in employment. If the go-ahead is given to restaurants and pubs to open with strict social distancing measures in place, but no ongoing financial support, companies like mine will be forced to make people redundant, completely defeating the object of the furlough scheme in the first place.”

BRC and BPF proposes Furloughed Space Grant Scheme to ease rent issue: The British Retail Consortium (BRC) and the British Property Federation (BPF) has put forward its solution to the rent issue for tenants and landlords – the Furlough Space Grant Scheme (FSGS). The scheme, which the BRC and BPF proposed in a letter to chancellor Rishi Sunak last week, involves the government paying a proportion of the fixed property costs of businesses affected by coronavirus, similar to schemes that have been implemented in parts of Europe, such as Denmark. The proposal is limited to businesses in the retail, leisure and hospitality industries. The fixed property costs covered by the government would be determined on a tapered basis depending upon the proportion of revenue lost by the tenant. The proposal recommends the government would pay 100% of fixed property costs where a business is not trading; 80% of fixed property costs where turnover has dropped by 80% to 100%; 50% of fixed property costs where turnover has decreased by 60% to 80%; or 25% of fixed property costs where turnover has fallen by 40% to 60%. It states applications for relief would require either a self-certified or audited forecast of the actual and expected drop in turnover during the lock-down period. The government would also have the ability to claw back any overpayment once the relevant period ends and the true impact on turnover is known.

More than half of small hospitality businesses ‘will struggle to survive beyond June’: More than half (51%) of small hospitality businesses believe they will struggle to survive beyond June, according to new research. The findings by Hitachi Capital Business Finance showed the figure has jumped from 2% in the first quarter of the year. This time last year 30% of small hospitality firms predicted growth and 55% predicted no change to the business, but a year on and only 11% of all UK small hospitality companies are confident to predict no change to business this quarter. Almost three quarters (73%) of small hospitality businesses have temporarily closed. The proportion of overall UK small businesses predicting growth has plummeted from 39% to just 14% in the past three months – with 31% of business owners scaling back their businesses and 30% saying they will struggle to survive between now and the end of June. Reflecting on their current trading status since the outbreak of coronavirus in the UK, 32% of small businesses have temporarily closed, with just 1% so far shutting permanently.

Conservative MPs call for greater support for tourism and hospitality sectors: A group of 85 Conservative MPs has written to chancellor Rishi Sunak calling for a new support package for the tourism and hospitality sectors in wake of the coronavirus pandemic. While the government has already introduced measures to help keep businesses afloat, including the furlough scheme and business loans, these MPs argue more specific support is needed. The letter, organised by Anthony Mangnall, the new MP for Totnes, calls for an increase in the business rates relief threshold for these sectors, an extension of the furlough scheme and for a VAT rebate. It follows the launch of an inquiry by the All-Party Parliamentary Group for Hospitality and Tourism on how to help businesses in these sectors weather the crisis, while a recent survey found just one-quarter of eligible businesses had received a hospitality grant. Meanwhile, Robin Hutson, chairman and chief executive of Home Grown Hotels and the LimeWood Group, has written a letter to prime minister Boris Johnson asking for further support for hospitality businesses based in rural areas The letter calls for backdated furlough to include all employees up until 19 March, not just those real time information registered; extended furlough and the introduction of a flexible, phased and part-time scheme until the end of the first quarter of 2021; extending the business rates holiday until the end of the second quarter of 2021; rent assistance, including a 12-month rent-free period to be added to end of leases, and for the government to set up a landlord fund; the reduction of VAT for hospitality businesses during 2020-21; and more time for repayment of deferred VAT/PAYE, allowing for normal trading to fund these payments. The letter has been supported by industry figures including Rick Stein and Jill Stein of the Seafood Restaurant Group; and Paul and Emma Ainsworth, owners of the Michelin-starred Paul Ainsworth at No 6 in Padstow, Cornwall.

Job of the day: COREcruitment’s executive search team is looking to speak to experienced chairmen or non-executives. It is seeking individuals from both quick service restaurant fresh food concepts as well as the convenience and grocery sector. Ideally individuals will have extensive experience in one of these areas and be in a position to take on one to four days’ responsibility a month alongside their full-time position. These opportunities would suite someone who is keen to guide and mentor up-and-coming senior leaders. In return there will be a competitive non-executive fee for each month. Anyone interested can email 
COREcruitment is a Propel BeatTheVirus campaign member

Company News:

McDonald's seeks rent cut from landlords: McDonald's is in talks with some of its landlords in the UK about cutting rent payments. Businesses face their next quarterly rent bill on 24 June when they are due to pay for the next three months. McDonald's told BBC News it has paid in full for the current quarter. However, it said “given the unprecedented situation”, it was in talks with landlords about how they could “offer support” on rent. A McDonald’s spokesman said: “We have opened dialogue with some of our landlords to discuss how they might offer support on rent and service charges for a short period due to our restaurants not trading.” McDonald’s is to reopen 15 of its UK restaurants on Wednesday, 13 May for delivery only having been running tests behind closed doors.

Gordon Ramsay expects to make ‘substantial’ restaurant losses but optimistic about future: Gordon Ramsay has said he expects to make “substantial” losses from his restaurants as a result of coronavirus. Speaking on the Frank Warren Heavyweight Podcast, Ramsay said running a business in the restaurant industry is “very hard” at the moment and “there's no margin for error”. He added despite the financial woes the industry is currently facing, he was “optimistic” about the future and once his restaurants resume trading he would “treat this as a new opening and something better than we were doing before”. He said: “Running a business is very hard and the margins now – not just in the produce and the labour and running costs – are pretty tiny, so there's no margin for error.” Ramsay said the “good news” was interest rates were down, adding he hopes landlords will offer more rent-free periods. On his plans for what will happen once customers return, he said: “We are going to open up, we are going to be back strong and treat this as a new opening and something better than we were doing before we closed.” However, he added: “There will be substantial losses next year – there's no two ways about that.” Ramsay has a number of restaurants in the UK including Gordon Ramsay Bar & Grill in Mayfair, London. He also owns restaurants around the world in countries including the US, France and Dubai. Ramsay also said he was worried about the effects the coronavirus pandemic is having on young people. He said: “Having three daughters and two sons, the mental health aspect of being confined to barracks and having this cabin fever, being locked in for this length of time, we have to be very careful of the long-term effects in terms of knocking the confidence out of youngsters today.”
Landlords put pressure on Travelodge to pay rent: Landlords are putting pressure on Travelodge to pay its rent, with claims the budget hotel operator is “taking advantage” of the coronavirus crisis to cut bills it can afford to pay. According to The Financial Times, a group of 82 landlords wrote to Travelodge rejecting the company’s request to cut its rent bill by 50% until the end of next year. In the letter seen by the Financial Times, landlords have said such a move would cost them £175m. Travelodge requested the reduction be 80% this year and 50% next year if hotels are not able to open before 1 July. Landlords have offered to allow the company a deferment of its April to June quarterly payment and said rent for the rest of the year could be paid monthly, however. The group estimated these proposals would give the budget hotel chain £53m in immediate cash relief. Viv Watts, who owns and manages a number of Travelodge properties and is representing the landlords, told The Financial Times: “We are not its first call for a capital injection. It’s a very strong business with a very liquid shareholder. It is playing on the fact its portfolio is made up of individual investors.” Travelodge has 135 landlords, the majority of which own one or two sites. 
Soho House supports front line workers, sets up employee hardship fund: Soho House has been supporting NHS staff in the UK as part of efforts from its teams around the world to help communities during the coronavirus crisis. A team of chefs at White City House in London is preparing 1,000 meals a day for front line workers at local hospitals. Meanwhile, 300 meals are being delivered daily from Soho Farmhouse to the John Radcliffe Hospital in Oxford, and 20 rooms at its Mollie’s Motel are being made available to NHS staff. Soho House’s Cowshed subsidiary has sent more than 90,000 products to 50 hospitals and charities, with amenity kits including miniature face cream, lip balm, full size hand cream and shower gel. Soho Home has sent 160 pallets of crockery, glassware, bedding and linen to charity Giving World for NHS workers and families in need. Similar projects are being undertaken by Soho House teams in North America, Europe and Hong Kong. The Soho Impact Support Fund has been set up using salary donations from the senior team, to help staff who have had their hours and wages reduced as a result of coronavirus. Most employees are enrolled in government support schemes with the aim of getting people back to their usual positions as soon as possible. In a country where there isn’t a scheme, or it’s limited in timescale, staff are being supported until reopening. For anyone still in need, money from the support fund is being distributed as charitable grants.

Costa reopens further 29 sites across the UK: Costa Coffee, which is owned by Coca-Cola, has reopened another 29 sites across the UK for delivery and drive-thru. The company reopened four sites in Manchester, Bristol and Mansfield – two delivery only, two drive-through – last week, a month after the lock-down began. Over the weekend the business reopened a further 29 sites, comprising 12 delivery only – through UberEats– and 17 drive-thru outlets. Costa chief executive Jill McDonald said: “We have been really pleased with how well our store teams have been able to adapt to our new ways of working, allowing us to serve great coffee, as safely as possible. We have also received some great feedback from our customers and key workers.” The delivery-only sites that have reopened are Birmingham Navigation Street, Edinburgh South Bridge, Leeds Crown Point, Leicester St Georges Retail Park, Newcastle Gallowgate, Peckham, Peterborough Brotherhood Retail Park, Plymouth New George, Richmond, Romford Pavilion Retail Park, Tooley Street and Whitechapel. The reopened drive-thru sites are in Bodelwyddan, Croydon, Edinburgh Sharpdale, Enterprise Swansea, Faringdon, Glasgow Braehead, Harwich, Ipswich, Norwich, Poole, Sittingbourne, St Ives, Stowmarket, Toddington North, Toddington South, Wakefield Snowhill and Watford Arches Retail Park.

Manorview secures £3.25m loan to support business through coronavirus crisis: Scottish-based boutique hotel and leisure group Manorview, which is providing its rooms free to front line NHS staff during the coronavirus pandemic, has landed a major funding deal to support it through the crisis. The company has secured a £3.25m, five-year loan from Barclays. The finance is in addition to a £2.85m loan it was advanced by the bank earlier this year to refurbish the Redhurst Hotel in Giffnock. Manorview suspended trading at all its venues on 18 March, several days before the government-imposed lock-down, and said then it would be making no redundancies as a result of the crisis. At that stage the company, which employs more than 550 people, said all staff, including directors, would receive 50% of their average weekly earnings until further notice. A proportion of the team have since moved on to furlough under the Coronavirus Job Retention Scheme. Managing director David Tracey said: “As is the case with many businesses, covid-19 hit our industry hard. To safeguard our company and the jobs of our team, we had to move fast. We are grateful for the quick engagement and support of Barclays that expedited our decision making and has enabled us to plan for the future.” Manorview’s Bowfield Hotel & Country Club in Howwood, Busby Hotel in Clarkston, Torrance Hotel in East Kilbride and Lynnhurst Hotel in Johnstone are accommodating NHS workers and acute service teams on the front line at no cost.

Chilango reopens more of its estate: Mexican restaurant brand Chilango has reopened a further two sites, Propel has learned. The company, which initially reopened its Islington and London Bridge outlets to offer delivery via Deliveroo, has now reopened its sites in Soho and Manchester. It has also added a collection option across all four reopened sites. Propel understands Chilango will look to open further locations should demand present itself and the sites can operate safely. The restaurants have been reorganised and set up to ensure social distancing, extensive cleaning and strict hygiene guidelines are in place. Personal protective equipment and hand sanitiser is provided for staff and delivery drivers; while a contactless system has also been set up for drivers collecting orders from each location. Staff have also been given a travel budget, so they can avoid using public transport. Chilango is working with Deliveroo to help feed NHS and key workers in areas local to each location, by offering 150 free meals weekly from each site. 

Tonkotsu reopens Haggerston site for delivery and collection: Ramen restaurant group Tonkotsu has reopened its Haggerston restaurant for deliveries and click-and-collect. The menu at the Haggerston site will include signature ramen, gyoza, wings and chicken karaage, as well as the introduction of katsu curry. The company said only team members living close by and feel happy and comfortable to work will do so, with set team rotations and social distancing in place. Tonkotsu said it was working to increase operating hours and reopen more of its 12 restaurants for delivery over the coming weeks. Co-founder Emma Reynolds said: “We’re excited to trial delivery from Haggerston with a small team who are incredibly happy to be back at work. We’ll be taking it slowly with a slightly reduced menu and new operational measures to keep the team, drivers and click-and-collect customers safe. If it works here, we’ll look to open a few more.”

The Breakfast Club reopens Hackney Wick site for delivery only: All-day concept The Breakfast Club has reopened its Hackney Wick site for delivery only, Propel has learned. The 12-strong company reopened the site over the weekend for orders through Deliveroo. It is though if successful the company, which is chaired by Draft House founder Charlie McVeigh, will look at expanding the service to more of its sites in the capital.

MeatLiquor to reopen Battersea and Islington sites: MeatLiquor, the Scott Collins-led concept, is set to reopen two more of its sites in London for delivery and takeaway. The company, which last week reopened its East Dulwich site for takeaway and delivery, will shortly reopen its sites in Battersea and Islington for the same service. The company said: “Rest assured that we are observing all recent government and police guidelines regarding social distancing and staff safety is paramount to us.” The East Dulwich site has reopened for five days a week operating at reduced hours with food available for click-and-collect and takeaway as well as through UberEats. It serves a reduced menu of MeatLiquor’s key dishes, including its Dead Hippie burger, plus beer and wine.

The Coconut Tree reopens Bristol site for delivery and takeaway: Sri Lankan street food operator The Coconut Tree has reopened one of its Bristol sites for takeaway and delivery. The outlet in Gloucester Road is offering a menu of smaller tapas-style dishes cooked fresh to order. As part of the new service, The Coconut Tree is also offering a range of handmade ice cream. Customers are able to order for delivery from UberEats or Deliveroo from Wednesday to Sunday. The option to order directly through The Coconut Tree website will be introduced shortly. Brand director Anna Garrod said: “The Coconut Tree has always been about bringing people on a journey through Sri Lankan street food, and putting smiles on people’s faces. Even if we can’t welcome people into our restaurants at the moment, we’re delighted to be able to feed people again in Bristol. We will look to roll out this soft reopening strategy at each of our other sites if we can make it work, but this is a very challenging situation for us so it will depend on a number of factors, along with getting the timing right.” The company operates two sites in Bristol and one each in Bournemouth, Cheltenham, Cardiff and Oxford.

East London Liquor Company acquires Longflint Drinks: East London Liquor Company has acquired fellow east-end business Longflint Drinks, bringing ready-to-drink (RTD) opportunities into its portfolio. Longflint Drinks co-founder James Law has joined the East London Liquor Company team to continue his work on product development and building up the channel. He also joins East London Liquor Company’s board as director of RTD and sales. Longflint Drinks has products in more than 500 venues across the UK along with 240 Sainsbury’s locations, giving East London Liquor Company “significant opportunity within the growing RTD category”. East London Liquor Company founder Alex Wolpert said: “We are excited to bring Longflint’s innovation and knowledge within the category to our business. James and Mark O’Reilly have built a fantastic company, whose ethos and exceptional products fit perfectly into our own. We’re thrilled they’re joining us!” Law added: “Mark and I pulled up trees to make this business work and we couldn’t be happier, or prouder, we now become a part of the East London Liquor Company family. In our minds it represents the pinnacle of quality, attitude and style, and display a fierce ambition to shake up the spirits landscape in the UK and beyond.” As part of the RTD expansion, East London Liquor Company is launching four cocktails in a can from mid-May that Law has created. The grapefruit gin ‘n’ tonic comes as a low-alcohol and 5% ABV version while the other flavours are rum and ginger, and vodka and rhubarb (both 4.6% ABV).

Cote ‘at home’ delivery service now nationwide: Cote, the 96-strong French brasserie chain, has extended its “at home” delivery option nationwide. The Alex Scrimgeour-led group launched the online shop last month, offering consumers the chance to order main meals, sides, desserts, wine and items from its butchery, to consumers inside the M25. It initially extended the service’s reach to Buckinghamshire, Bedfordshire, Berkshire, East Sussex, Essex, Hertfordshire, Kent, Surrey and West Sussex. Cote at Home requires a £40 minimum order. There is a £4.95 delivery charge for all orders but free delivery with purchases of more than £80. Deliveries are made Monday to Saturday only, between 7am and 6pm.

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