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Thu 14th May 2020 - Propel Thursday News Briefing

Story of the Day: 

Greene King launches delivery and takeaway offer: Brewer and retailer Greene King is to launch a delivery and takeaway service through its Metropolitan Pub Company division in London, Propel has learned. From next Friday (22 May), 29 of the company’s pubs will offer delivery via Deliveroo, ten of which will also provide a click-and-collect takeaway service. The pubs will offer a tailored menu, suitable for transportation, which will include “some of the nation’s favourite gastro-pub dishes and even a range of roasts available Sundays”. The company said after extensive consultation, strict guidelines are being introduced so the health and safety of team members, customers and delivery riders are protected at all times. In addition to following government guidance on social distancing and provision of personal protective equipment, further hygiene and safety rules for those working in and entering the pubs for collection of orders are being implemented. This includes separate entrances for delivery drivers, a one-way system for customers to collect orders, online payment, social distancing floor guidance and hand sanitiser at entrances. Chief executive Nick Mackenzie said: “We have been bringing the pub into people’s homes virtually through our online pub The Lock Inn and via the Greene King Shop beer delivery service throughout this period of closure and are delighted we are now able to bring British pub dishes to our customers too. We have selected pubs carefully for this initial roll-out based on suitable layout as we ensure we not only adhere to all government guidance but further precautions we are choosing to implement too. It’s important for us our team feel safe in the workplace so we have consulted them every step of the way, giving the option to return to work for those who work in these selected pubs if their personal circumstances allow.” NHS and emergency service workers can receive 50% off food and drink at the ten pubs offering collection. Propel revealed last November the company had begun a trial of a delivery offer with Deliveroo out of some of its London pubs.

Industry News:

Wireless Social CEO – crisis places renewed emphasis on value of data: Julian Ross, chief executive of Wi-Fi solutions provider Wireless Social, has said the coronavirus crisis will place a renewed emphasis on the value of data. Ross told Propel: “The crisis has put a microscope on data and the value of that data. Most businesses I would imagine are clambering over click-and-collect and order and pay, and taking the opportunity to enhance their CRM solutions. If they are not, they absolutely should be. If we are working with a company, we can know who their loyal customers are, so we can highlight the top 20% of their customers, knowing if we funnel those 20%, and look after them on the other side, then you are taking care of 60% to 70% of your revenue, while making sure you are endearing those people who are closest to your brand. That must be priceless right now and there will be people out there on the other side thinking ‘I have no idea who my loyal customers are’. If that is the case, this needs to be a lesson.” Ross will be speaking to Propel insights director Mark Wingett as part of Propel’s new The Supplier Perspective video series. The video will be released on Thursday (14 May) at 3pm. 
Wireless Social is a Propel BeatTheVirus campaign member

Operators call for temperature checking equipment in hospitality venues in same way as airports to avoid need for social distancing: Operators have suggested pubs and restaurants could introduce temperature checking equipment to avoid having to implement social distancing measures when they are allowed to reopen. Gary Downham, founder of Essex-based pub operator Pie & Pint Inns, told Propel if it can “work for millions of people getting into airports and boarding planes it must work for us”. Another operator said it would “make the pubs safer than the packed tube train pictures we are seeing every day”. This would be on top of other measures including staff wearing masks and gloves, and sanitising stations at key points such as waiting areas. Venues would only offer table service “as they do in Sweden where it all works fine”, with bars used as a dispense point only. Downham said with social distancing being “unworkable” in most venues due to space and awkward layouts, temperature checking equipment at the entrance could prove the answer. He said: “We know some people are pushing for screens for example but along with the cost involved, the bottom line is no one wants them. Having temperature checks before entering the building would give management the comfort their guests were okay to enter and also to fellow diners the business was undertaking these checks to put them at ease. Nobody wants to see a pub or restaurant so disrupted that people just won’t come back and it would create a more obvious fear factor highlighting the virus issues. If we want to try and give customers the helping hand of confidence to start venturing out again we need a discreet answer and that could be the solution without too much cost involved. Everyone’s fear is opening up on say 50% occupancy, but with so many rules that aren’t workable in reality and with loans to repay and fixed costs it just won’t stack up. Our businesses are geared to be busy.”

GDP figures ‘highlight hospitality’s need for support’: GDP estimates by the Office for National Statistics highlights how hospitality is taking an unprecedented and hugely disproportionate hit, and must remain a special case for government support, UKHospitality has said. The figures show the UK economy took a 2% drop in the first quarter of 2020. By comparison, the UKHospitality Quarterly Tracker, published last week, showed a first-quarter decline in sales of 21.3%. UKHospitality chief executive Kate Nicholls said: “The declines we are seeing in other sectors, alarming though they may be, are incidental compared to the truly alarming hit that ours is taking. The economy’s 5.8% decline in March alone will have been similarly dwarfed by hospitality’s misfortune, as lock-down and forced closures came into force, stopping trade for most venues altogether. This shines a light on the dire and unique position in which our sector has been placed. Hospitality needs additional support to ensure that swathes of businesses do no fail altogether and to avoid millions of jobs being lost. We need continued and flexible support on furlough, rents and insurance, so businesses can plan ahead, save livelihoods and help to drive economic recovery.”
UKHospitality is a Propel BeatTheVirus campaign member

Douglas Jack – social distancing difficult for restaurants to reopen profitably but pubs should be able to adapt: Peel Hunt leisure analyst Douglas Jack has said social distancing measures mean it will be difficult for restaurants to reopen profitably, pubs should be able to adapt while bowling companies and low-cost gyms should return to profit. Jack said: “The quoted operators are pleased with the chancellor's announcement. It provides greater certainty by continuing the Coronavirus Job Retention Scheme (CJRS) under the current format until the end of July, and allowing furloughed workers to work part-time with employers being asked to pay towards their salaries between August and October. This is an initial template for how companies will reduce costs operating under social distancing restrictions. It is a model that allows companies to keep on all their staff, but incentivises them to cut each worker's hours as much as possible. To the government, this cost is minor relative to ongoing closure. The benefit is greatest for restaurants and food-led pubs where labour is the largest cost (typically 28% of sales in food-led pubs, and 35% in restaurants). Operators will need to reduce labour costs to reflect lower capacity under social distancing, with the government contributing to the balance. Restaurants and food-led pubs should shorten food menus, reduce the number of cooks and waiters, and adopt and promote takeaway and the use of order and pay apps. Pubs should put their beer gardens to full use, utilising gazebos when necessary. Full CJRS terms should emerge in late May; we assume the companies will pay 20% of the 80% cost of furlough from August. Not all sites will reopen; it is now a function of capacity, margins and ability to operate with less staff. Reopening sites, the CJRS extension and the best year ever for staycations should underpin revised cash burn/flow expectations in 2020, and support a phased return to work. The light at the end of the tunnel just got closer. We expect it to be difficult for restaurants to reopen profitably, pubs should be able to adapt while bowling companies and low-cost gyms should return to profit.”

Government sets up ministerial-led taskforce for pubs and restaurants: The government has set up a ministerial-led taskforce for pubs and restaurants to develop plans for how and when the sector can reopen. Led by the Department for Business, Energy and industrial Strategy, it is one of five taskforces set up as part of the government’s roadmap to rebuild Britain. Each taskforce will lead on developing new covid-19 secure guidelines for the reopening of public places and businesses, where and when it is safe to do. The British Beer & Pub Association (BBPA) and UKHospitality are among those that will work with the government on the guidelines for pubs and restaurants. UKHospitality chief executive Kate Nicholls said: “A great deal of lateral thinking and planning will be required to help businesses open, hence our efforts to draw up protocols and work co-creatively with stakeholders to inform hospitality sub-sectors on how best to prepare venues for safe reopenings. This is for the safety of staff, customers and visitors, and for hospitality to help drive economic recovery.” BBPA chief executive Emma McClarkin added: “We believe pubs should only open when safe to do so, but without additional support now – particularly for those who won’t be able to reopen sooner – many more of our nation’s pubs and the brewers that supply them with beer will struggle to survive closure and beyond. We’ll therefore continue to press the government for the ongoing support our sector needs.”

Trade bodies challenge insurers to meet obligations to sector over business interruption claims: Sector trade associations have issued a joint call to insurers to work with them to provide further support for businesses hit by the coronavirus lock-down. The British Beer & Pub Association, British Institute of Innkeeping, Society of Independent Brewers and UKHospitality have signed a joint letter to the Association of British Insurers following research that indicates as few as 4% of businesses in the sector have been able to make successful insurance claims. Part of the letter states: “We have come together in a concerted effort to mitigate the most damaging aspects of the lock-down for our businesses and have presented a unified voice to government in calling for a comprehensive package of measures to sustain our sector, protect jobs and livelihoods. Within this context of a national, collaborative effort across our entire supply chain there has been one notable omission – insurance companies. We had hoped insurers would work with us at this critical time. With one or two exceptions, the collective failure of insurers to step up and meet their obligations has been deeply disappointing. We are aware of legal actions pending but in advance of these cases proceeding we would urge the insurance companies’ senior executives to agree to meet with us to discuss and lead a constructive way forward.” Meanwhile, a crowdfunding campaign launched to challenge insurance companies that are refusing to honour business interruption policies specifically for the hospitality sector has surpassed its initial £20,000 target. The campaign is being headed by Rob Atkinson, an in-house hospitality lawyer from Black and White Hospitality which operates the Marco Pierre White portfolio of restaurants. The latest contribution from UKHospitality means the next stage of the campaign can get underway and will see a review of policies and insurers’ reasons for declining claims. This will then be followed by the preparation of advice on coverage under each category of policy in advance of possible legal action. 

Government to support businesses through trade credit insurance guarantee: Businesses with supply chains that rely on trade credit insurance and are experiencing difficulties maintaining cover due to coronavirus will get support from the government. Trade credit insurance insures suppliers selling goods against the company they are selling to defaulting on payment, giving businesses the confidence to trade with one another. But due to coronavirus and businesses struggling to pay bills, they risk having credit insurance withdrawn, or premiums increasing to unaffordable levels. To prevent this from happening, the government will temporarily guarantee business-to-business transactions supported by trade credit insurance. UKHospitality chief executive Kate Nicholls said: “We now need this to be backdated to ensure policies that withdrew cover from businesses supplying hospitality after 28 February, and companies who were denied policies that cover trade credit, issued since 28 February, fall under the government’s scheme.”

Independent festival sector ‘at risk of collapsing’ without government support: The British independent festival sector is “at risk of collapsing”, with many cancelled events falling through the cracks of government support measures for businesses suffering as a result of the coronavirus crisis. The Association of Independent Festivals (AIF), which represents 65 festivals in the UK, reported 92% of its members face costs that could ruin their businesses as a result of cancelled events, with the vast majority (98.5%) not covered by insurance for cancellation related to covid-19. Costs include potential refunds of up to £800m for events that were due to take place this summer, and average non-recoupable costs of £375,000 per festival for overheads such as marketing, staffing and advertising. A member survey revealed the sector could be facing redundancies of 59% on average and will lose more than half of its workforce between September 2020 and February 2021 without support. The AIF has lobbied the government for measures that could save the sector including clarity on eligibility for grants and loans, and rolling premises license fees over to 2021 for events that do not take place this year. AIF’s members generate an estimated £386m for the UK economy each year, with almost 10% of that spend going to businesses based around each festival’s site. According to UK Music, 4.9 million people attended a UK festival in 2018 and the live sector employed 30,529 people.

Group for sector in-house recruiters launches video series: The Hospitality’s Internal Recruitment Exchange (HIRE) – a group for sector in-house recruiters to exchange new ideas – has launched a video series called “HIREside talks”, spending some virtual one-on-one time with people from hospitality. They will share their story, their purpose, and their most memorable moments. All of HIRE’s event ticket sales and campaign fund-raisers so far have supported Only A Pavement Away, the industry charity that supports the homeless, ex-offenders and veterans with jobs in hospitality. HIRE was formed six months ago by Oli Cavaliero, head of talent management at Honest Burgers; along with Natasha Nagra, head of talent at Kew Green Hotels; and Chad Smith, head of recruitment at Boparan Restaurant Group. 

Company News:

Gunewardena – use this time to rethink your business: D&D London chairman and chief executive Des Gunewardena has said the covid-19 lockdown is a one-off opportunity for operators to rethink their businesses. Speaking as part of Propel’s “navigating the coronavirus” series, Gunewardena said: “It is an old saying but never waste a good crisis. This is your one-off opportunity to look at every one of your restaurants – use this time to really rethink your business. In our business we have got 43 restaurants, some are successful and some are not so successful, so now we have this time to rethink and change all those things that didn’t work, which during normal times might have been a bit of an evolution and taken some time. If there are restaurants where the existing concept cannot pay the rent, look to get that reduced or say to the landlord you will have to take the lease back.” Gunewardena said the company was trying to create “our post-covid ideal restaurant” and the detail in whether people had to stay two metres or one-metre apart would be crucial. At two metres Gunewardena said capacity would be down to as much as 35% to 40%, which “is very hard to make the numbers work even if you don’t pay any rent”, whereas at one metre, it would by a more manageable capacity reduction to 60% or 70%. He added: “We are not from the school who say it won’t be worth opening until social distancing is over. The economy can’t afford for people to take that view, and we can’t keep people unemployed financially and mentally until a vaccine appears. We are very pragmatic and we will figure out how to open, even with the two-metre rule.” Gunewardena also said the sector should look at what is happing in Lithuania’s capital, Vilnius, where plans have been set out to turn the city into a vast open-air cafe by giving over much of its public space to hard-hit bar and restaurant owners so they can put their tables outdoors and still observe physical distancing rules. Gunewardena will share more of his thoughts in the video, which will be released on Thursday (14 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.

McDonald’s moving out of ‘crisis’ phase as it prepares to reopen US dine-in areas: McDonald’s has said it is moving out of the “crisis” phase of the coronavirus pandemic as it starts to reopen dine-in areas in its US restaurants. US vice-president of communications David Tovar told Business Insider the company was now thinking about its recovery phase, though the virus may once again "rear its ugly head" as some areas face outbreaks and experts warn of a potential second wave. McDonald's is setting national minimum standards on measures such as social distancing and other safety procedures. If franchisees meet these standards and local regulations allow, they can decided if it is safe to reopen dine-in areas. Changes in these locations include new seating layouts, making sure staff have sufficient masks and gloves, and closing self-serve drink stations. But the company is continuing to push its drive-thru business first and foremost. “The sort of mantra we've been using internally is that we're going to move slowly and judiciously, because we certainly don't want to move too fast and then put either our employees or any customers at any additional risk,” Tovar said.

Restaurant Brands International boss – ‘never been a better time to embrace a business model that serves tens of millions of people a day with speed and limited contact’: José Cil, chief executive of Restaurant Brands International, has said there has “never been a better time to embrace a business model that serves tens of millions of people a day with speed and limited contact”. It comes as the company, parent to the Burger King, Popeyes Louisiana Kitchen and Tim Hortons brands, enhances operational procedures as it reopens more than 1,000 dine-in areas in North America. The three brands have also expanded digital capabilities, including adding hundreds of sites into delivery apps, improving the drive-thru experience, introducing mobile order and pay and offering kerbside pick-up. To create the new operations guidelines, Cil said 30 of the company’s most senior restaurant leaders from around the world have participated in daily morning calls for the past two months. In an open letter, Cil said: “We benefit from a business model inside our restaurants that has minimal contact with anyone other than your friends and family who you are sitting with. The operational changes were designed to establish confidence in the dine-in experience. I believe we have the right balance between implementing essential procedures for the here and now. We have fully embraced the notion that parts of our restaurants need to change – certainly, for the foreseeable future and possibly forever.” Self-serve drinks machines have been turned off and extra condiments and trays are being provided from the behind the front counter. Tables and chairs are being cleaned after each use and hand sanitiser is being made available in dining areas.

The Chesterford Group considers mixed trading model for new Eastbourne site: The Chesterford Group (TCG), which operates 40 sites under brands including Churchill’s and Bankers Fish & Chips, has secured a site in Eastbourne, which is said it may consider for a “mixed-brand, quick service, click-and-collect, delivery model”, complete with its new virtual brand Chicken Punk, Propel has learned. The company has completed on a 1,800 square foot unit at the Langney Centre following on from the shopping centre’s redevelopment earlier this year and will join Coca-Cola owned Costa Coffee and Home Bargains. TCG chief executive James Lipscombe said it had been negotiating on the unit for more than two years. He added: “As we now get used to a new normal, we are considering the most profitable business format to operate in the unit. We already have one virtual kitchen brand, Serial Griller, running in a number of stores that has proved very successful and we have been working over the past couple of weeks on our new virtual kitchen brand: Chicken Punk – which brings the best wings, chicken burgers, tenders and boneless chicken to our customer’s homes. We are considering our options to ensure the new unit is as profitable as possible and that may well be through a light-kitchen, mixed-brand, quick service, click-and-collect, delivery model using Serial Griller, Churchill’s fish and chips, and Chicken Punk to offer customers even greater choice. We are in no rush to open the site, we are going to take our time to get the model right.”

The Sea, The Sea set to expedite expansion plans with retail revenue now outgrowing deficit from suspension of dine-in trade: Alex Hunter, founder of Chelsea fishmonger and seafood bar The Sea, The Sea, has said its retail revenue has now outgrown the deficit from the suspension of dine-in trade, which previously accounted for 65% of the company’s revenue. Hunter said as a result the company had attracted “a new audience” and was set to expedite its growth plans off the back of the pandemic. As well as daily fresh wet fish and shellfish, The Sea, The Sea also sells a range of “ready to eat” and “oven ready” dishes inspired by its seafood bar evening menus from executive chef Leo Carreira, with the offer set to grow further. Hunter said: “Prior to covid-19 we were known as a seafood bar with an auxiliary fishmonger but the pandemic has brought our retail offering to the forefront. We’ve got a new audience that is enjoying our produce at home.” Hunter said the home menu and own-brand product range were a prelude to growth plans that will take shape later this year. He added: “These plans were actually in place before covid-19 hit but the pandemic and the changes it has brought to the way we eat have made it even more current, so we’re expediting our growth to fulfil demand.” Hunter, who also co-owns Bonnie Gull Seafood Shack in Fitzrovia and is set to open Claro with Carreira in Soho, said one permanent effect of covid-19 will be an increase in cooking at home as customers have access to better local and seasonal produce and a wealth of recipes and demos online. He added: “The aftermath of this crisis will give us the opportunity to rethink the supply chain, challenge rents and business rates and find better ways to manage the staffing shortage in the sector. We must use this to find ways to operate more efficiently, create a better working environment for staff and a better dining experience for guests.”

Moto to reopen 27 Burger King sites for takeaway as it brings catering brands back into operation: Moto, the UK’s largest motorway service area operator, is to reopen 27 of its Burger King restaurants for takeaway only. Eight sites will open on Thursday (14 May), initially just for HGV drivers, to give Moto an opportunity to ensure safe working practices for restaurant teams and customers. A further 17 restaurants are planned to open to all customers on Thursday, 21 May. Moto chief executive Ken McMeikan said: “This is another significant step forward to reopening our catering brands and we look forward to opening more in the coming weeks.” 

M&S to open 49 cafes for takeaway hot drinks: Marks & Spencer is reopening 49 of its cafes for takeaway hot drinks only from Thursday (14 May). The stores that will open their cafes which may be branded Marketplace or Coffee to Go, are located next to Foodhalls. It follows a trial at five of the locations, including High Street Kensington Coffee to Go and Maybrook Canterbury. The M&S cafes will reopen with strict safety measures in place, including Perspex screens at tills, extensive hygiene rules and clear signage to help customers social distance. One colleague only will also work behind counters and contactless payment is encouraged.

Cosmo reopens Derby site for delivery and takeaway: Buffet concept Cosmo, which closed its entire 18-strong estate in March, has reopened its site in Derby for delivery and takeaway. The company said it had devised a safe collection scheme that included two metre-markings on the steps outside and minimal contact with customers and delivery drivers, and is offering three set menus. A spokesman told The Derby Telegraph: “We have simplified the menu, but our customers can order a selection of our most popular dishes. This is a first for the group and we hope customers are as excited as we are.”

Luckin Coffee fires CEO and COO amid fraud allegations: Chinese coffee company Luckin Coffee has fired its chief executive Jenny Zhiya Qian and chief operating officer Jian Liu in the midst of a fraud investigation against the company and has removed them from the executive board. Jinyi Guo, a director to the board and a senior vice president of the company, has been appointed acting chief executive. The board also announced the appointment of senior vice-president Wenbao Cao and vice-president Gang Wu as board directors to replace the ousted executives. Luckin also stated six other employees “who were involved in or had the knowledge of the fabricated transactions” have been placed on suspension or leave. Luckin, which competes with Starbucks and is listed on the Nasdaq, previously said its investigation had found fabricated sales from the second quarter of last year to the fourth quarter amounted to about 2.2bn yuan (£250m). That equates to about 40% of its estimated annual sales. 

Las Iguanas and Open House London provide meals for front line workers: Las Iguanas, part of Casual Dining Group, has joined the Feed Our Frontline campaign and will be providing 1,800 hot meals a week for NHS workers at the Birmingham Heartlands and Queen Elizabeth hospitals. The initiative, which will operate out of the company’s Temple Street branch in Birmingham, will see meals delivered three days a week and incorporate a range of its dishes. Feed Our Frontline brings together a coalition of well-known restaurants and food providers to provide free meals for front line NHS workers. Meanwhile, Open House London, the group behind The Lighterman and Percy & Founders, has so far donated more than 7,700 meals to local NHS hospitals in partnership with Hospitality for Heroes. The team is currently making 2,700 meals per week from The Lighterman kitchen in King’s Cross. And Millie’s Cookies has donated almost 100,000 cookies to NHS workers in London and the south east thanks to a partnership between transport hub foodservice specialist SSP UK, Delice de France, Electrolux Professional and London-based events caterer Food Show. 
Coal Exchange hotel becomes latest Signature Living site to fall into administration: Administrators have been appointed to the Coal Exchange hotel in Cardiff, the latest of aparthotel operator and developer Signature Living’s properties to do so. Kelly Burton and Lisa Hogg, of Wilson Field, have been appointed joint administrators and will be issuing proposals within eight weeks that will provide further details for creditors. The 200-bedroom Exchange hotel opened in 2017, following a £42m investment into the Welsh capital's former Coal Exchange building. Administrators have already been appointed to five other parts of Signature Living’s business although its trading operations are unaffected.

Deliveroo works with restaurants to offer Iftar meals for Ramadan: Deliveroo is working with more than 200 restaurants across the UK to offer special Iftar bundles to Muslim households during Ramadan this year. Operators including German Doner Kebab and dessert parlour operator Creams are offering family dining bundles. All deliveries will be contact-free to ensure safety. Customers will be able to search for these bundles under the tag “Ramadan Bundles” and will be available in 42 towns and cities across the UK. Patty & Bun, the better burger concept led by Joe Grossman, has also rolled out a new halal menu in time for Ramadan, available to order on Deliveroo from its sites in London Fields, London Bridge, Notting Hill and Brighton. 

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