Propel Morning Briefing Mast Head CPL Learning Link Paul's Twitter Link Hobgoblin Banner
Morning Briefing Strap Line
Fri 15th Jan 2021 - Friday Opinion
Subjects: The importance of London restaurants to the world, it’s not just reopening that needs planning, rent negotiations 
Authors: Glynn Davis, Ann Elliott, Cameron Gunn
 

The importance of London restaurants to the world by Glynn Davis

It was about noon one day in, probably 1990, when trying to enter Le Gavroche in Mayfair’s smart Upper Brook Street for my first visit to the celebrated basement restaurant that I found the door firmly locked. When finally allowed inside, it transpired strict security codes were being enforced for the visit that lunchtime of John Gummer, secretary of state for agriculture, fisheries and food. 
 
Such was the pull of Le Gavroche that the country’s most important figure in food at the time used it for his business lunches. He was far from an exception and its attraction has remained undimmed since opening its doors in 1967. On my visit, a more memorable experience than seeing Mr Gummer was a first introduction to Beaujolais Nouveau, which I have sought out every third Thursday of November ever since. 
 
This was consumed in the bar area alongside the dining room. But such was the growing popularity of Le Gavroche – helped by the introduction of its pioneering set-price, three-course lunch offer including a half bottle of wine for around £25 I seem to recall – that it converted this space into more tables and covers. It became ever more difficult to bag a table regardless of the larger dining space.
 
Arguably, the attraction of the restaurant to diners over the years has been nothing compared to the appeal to chefs of spending some time working in its hallowed kitchens. For many years this would have been alongside co-founder Albert Roux and for a shorter period his late brother Michel who also set up the Waterside Inn. Without question the pair changed the face of dining out in the UK. 
 
Although the death of Michel in 2020 and Albert in early January 2021 marks the end of an era – the legacy they leave behind for anybody interested in food is remarkable. Marco Pierre White, Gordon Ramsay, Marcus Wareing and Pierre Koffmann among many others came through the tough Gavroche kitchen.
 
Back in 1990, Marco Pierre White saluted the impact of Albert in his influential book White Heat: “I was inspired by the honesty, the attention to detail, the controlled extravagance that I found at Gavroche. Albert taught me the proper use of extravagance, and he was one of the few people who could control me. He’s been like a father figure to me.”
 
These cooking greats have themselves brought on numerous other chefs who, together, form a serious part of the infrastructure of the UK restaurant industry today. The Roux Foundation, formed in 1984, further compounded the brothers’ impact by nurturing much talent over the years including the late Andrew Fairlie, Sat Bains, Simon Hulstone and Luke Selby. 
 
The Roux brothers set in place a path for overseas chefs to move to the UK – traced early on by the legend Raymond Blanc and much more recently by the likes of Anne Sophie Pic from France with La Dame de Pic, US chef Daniel Humm with Davies and Brook, and Mexico-born Santiago Lastra with much anticipated Kol Restaurant.
 
This scenario continues to shape the food landscape of the UK – typically beginning in London and then spreading out. There is no doubt chefs around the world have regarded the UK capital as a staging post within which to make a mark. This has invariably added to the richness and variety of the food scene across the whole of the country. 
 
It is hoped that at this incredibly tough period for the foodservice industry, covid-19, Brexit and any other unforeseen circumstances will not lessen London’s importance in the food world and dim the flame Albert and his brother Michel lit when they ventured across the Channel back in the 1960s. 
 
Thankfully, the early signs are good. Michelin-starred French chef Cyril Lignac has just revealed plans to open his first UK site in the spring with Bar de Pres, with the words: “I have always adored London, its culture, its energy and lifestyle… I want to integrate myself in the community, discover a new way of working, a different sensitivity, and a new type of creativity.” Albert would not only have agreed but he might also have recognised his contribution to making it all possible.
Glynn Davis is a leading commentator on retail trends
 

It’s not just reopening that needs planning by Ann Elliott

The most optimistic people I speak to in the sector are working on the basis of a March opening (maybe in time for Mother’s Day – 14 March), the least optimistic on a May opening, so missing Easter. Actually, the least optimistic are thinking this could last another year but that’s a different scenario entirely and one I just can’t bear even thinking about it.
 
That’s a difference between optimistic and pessimistic of about six to seven weeks and makes a huge difference to the project planning timetable of businesses in our sector. Is it easier to plan earlier and put back, or plan for later and pull forward? Personally, I would rather under-promise and over-deliver rather than the other way around so would go for the latter. 
 
Even so, that means businesses opening again in either nine weeks or 16 weeks (if we avoid the 12-month doomsday scenario outlined in The Telegraph this week). That’s quite a long time away in either case. Should businesses be doing anything now to get ready for then, leave it to nearer the time or indeed leave it until they are open? Are some too busy with delivery, click and collect and community projects now to really give much time to planning for something that is so far away?
 
Those that are planning now think it’s an ideal time to do so. Many teams are on part furlough so have some time to think about both the strategic and tactical challenges facing their businesses. Subjects on their mind for the future, beyond survival for the next 16 weeks and the big issue of rent, include:
 
Reopening
Are customers going to rush out to eat again as they did in July and August after the first lockdown or will there be a more muted response as there was after the second lockdown? It’s unlikely we will be in receipt of another Eat Out To Help Out gift. What should they plan for? A 100% return to trade or a more likely 60% to 70%?
 
Out of restaurant/pub sales 
Delivery is not a substitute for eating in a restaurant. A retail purchase is not an alternative to going out to the pub. Dining in is not battling dining out. Brands are battling for dining in share whether those dine in sales come from delivery, click and collect, online meal kits or retail. Operators are now planning how to increase their total out-of-restaurant/pub sales and believe now is a great time to do the thinking behind this if not actually make the strategy happen. These sales are not dependent on physically opening a site front of house.
 
Pricing and affordability 
Will customers have more money and want to spend it or hold on to it? Or will they have less money and be far more cautious and worried about the future? There are groups of people who work for the public sector or have been furloughed and are still earning money. There are huge numbers of people though who are self-employed or have been made redundant. There is a real chance that sales per head will fall and operators are planning for this.
 
Menu size and cost
There is no doubt reducing menu size has helped operators in so many ways – higher margins, reduced wastage and increased operational efficiency. Operators are baking smaller menus into their forecasts. Food costs are now (perhaps surprisingly with Brexit in the background) incredibly competitive. There is no better time to talk to suppliers and specialist consultants to remove costs all along the supply chain. 
 
Outside versus inside
There is no doubt those with outside spaces have done better than those without during the past year. Operators are now taking time to think about their strategy on outside spaces – verandas, gardens, bubbles – and how they make it happen.
 
Location strategy
This is a huge strategic question. What will happen to town centres? Will neighbourhoods and the suburbs continue to grow? What role is there for shopping centres and retail parks? North v south? This isn’t just about where to buy/rent but also about where to refurbish. And, potentially, where to sell sites that were still OK post-lockdowns one and two but might not survive the third lockdown? Considering that all these decisions require much-needed capital, planning is going on now to secure both the short and long-term health of businesses.
 
Whatever the picture, March, May or some time in 2022, most operators I know are taking stock now. They are thinking through a (broad) number of potential financial scenarios and are considering the strategies they need to deploy to make the most of their reopening plans. That seems the sensible thing to do.
Ann Elliott is a hospitality strategist, connector and adviser
 

Rent negotiations by Cameron Gunn

Many of us were looking forward to Christmas as an opportunity to relax after a strange and stressful year. But for small and medium-sized business owners, 25 December brought something much more foreboding than Christmas dinner and the Queen’s speech – it also happened to be when December’s quarterly rent payment on commercial premises was due.
 
Businesses that have been struggling with lockdown-induced closures and the resulting revenue squeeze have been supported by the UK government’s moratorium on commercial evictions, which was introduced in March and has prevented landlords from repossessing commercial premises if businesses are unable to pay their rent as a result of the covid-19 pandemic. This has meant many businesses that have not been able to keep up rent payments have still been able to occupy their premises. The moratorium was initially scheduled to end on 31 December but, on 9 December, housing secretary Robert Jenrick announced this would be extended to 31 March 2021. On that date, any outstanding or late rent payments will fall due.
 
This is going to be a big problem – especially in the hospitality and retail sectors. In September 2020, the trade body UKHospitality estimated the level of unsettled rent in the UK hospitality sector stood at around £1.06bn. The retail sector, meanwhile, is reeling from the collapses of Arcadia and Debenhams, with more than 25,000 jobs now at risk between the two companies.

Most frustrating of all is that many of the businesses that are unable to pay commercial rent and may be facing eviction are otherwise viable businesses, which are simply tightly cash-constrained due to the almost total elimination of business during the second quarter of 2020 due to the UK-wide lockdown as well as tier restrictions and further lockdowns.
 
So what will happen on 31 March and what are the options for these troubled but, fundamentally, viable businesses?
 
The worst-case scenario is we see a mass of evictions in the second quarter of 2021, coupled with a stream of otherwise excellent businesses going into administration, with the employment and suffering that would cause. I am vehemently certain it does not need to come to this, though. Many landlords and other creditors will be willing to show forbearance on late rent and other debt payments, if business owners are proactive in negotiating with them, restructuring debt and working out new payment terms. ReSolve has successfully negotiated with creditors and landlords on behalf of a number of hospitality and retail businesses, which have subsequently been able to keep trading. Indeed, many landlords whom I’ve spoken to believe forbearance and co-operation are the best options. With few businesses looking to take up new commercial premises in the current economic climate, landlords would rather work with existing tenants than have properties standing empty.
 
But this means business owners need to start having the difficult conversations now; they should not wait until next March. Robert Jenrick put it best in his announcement of the rent moratorium extension when he said: “It is critical landlords and tenants across the country use the coming months to reach agreements on rent wherever possible and enable viable businesses to continue to operate.”
 
The other option is the government steps in to extend the moratorium further. There have already been calls from some quarters to extend it until June 2021. I would contend, however, that kicking the can further down the road does not make the can’s contents any more appetising. The moratorium will have to come to an end at some point as landlords themselves become cash-constrained. I would be surprised if many landlords could realistically tolerate it extending beyond March. If businesses have not taken steps to negotiate with their landlords and work out new payment terms by then, they will find themselves in a very ugly situation.
 
At ReSolve, we are great believers in the power of communication. In advising cash-constrained and troubled businesses, we have found time and again that an honest conversation with creditors, backed by a tightly worked-out payment plan proposal, results in constructive negotiations of new terms that will allow our client the breathing space to trade their way back to a better cash position. With the covid-19 vaccine now in place, I am certain the hospitality sector can roar back stronger than ever in 2021, as long as landlords, creditors and companies are all on the same page. We urge companies to start having those conversations as soon as possible. 
Cameron Gunn is senior partner at ReSolve, a restructuring and investment practice

Return to Archive Click Here to Return to the Archive Listing
 
Punch Taverns Link
Return to Archive Click Here to Return to the Archive Listing
Propel Premium
 
Jameson Banner
 
Fentimans Banner
 
Trail Banner
 
Transition Banner
 
Knorr Banner
 
Propel Banner
 
Jacuna Banner
 
Molson Coors Banner
 
Transition Banner
 
Amstel Banner
 
Zonal Banner
 
Toggle Banner
 
Bizimply Banner
 
Zonal Banner
 
Heineken Banner
 
Taylors of Harrogate Banner
 
Sky Banner
 
Hello Beer Banner
 
John Gaunt Banner
 
COREcruitment Banner
 
KAM Media Banner
 
Access Banner
 
Startle Banner
 
Veneers Banner
 
Just Eat Banner
 
Yapster Banner
 
Punch Taverns Link Punch Taverns Link
Pepper Banner