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Morning Briefing Strap Line
Fri 12th Feb 2021 - Friday Opinion
Subjects: Alliance to bring insurance duo to task, tense times as we await roadmap to reopening, the need to market our sector, the drive for delivery and adapting to the challenge
Authors: Jeremy Roberts, Kate Nicholls, Ann Elliott, Douglas Day
 

Alliance to bring insurance duo to task by Jeremy Roberts

Last month’s Supreme Court ruling on thousands of hospitality businesses’ claims for business interruption due to covid-19 closures seemed to herald a much-needed life line to bars and restaurants that had to close their doors in March last year. But two insurance companies Allianz and Zurich, possibly accounting for 60% of policies taken out by the hospitality market, are still refusing to accept the ruling.
 
It was a kick in the gut back in April last year when it quickly became evident all the insurance companies had decided to act together in a shameful cartel by refusing to accept that policies covering specific diseases did not cover a pandemic that was not listed as a notifiable disease at that time. Businesses were morally right to think if a policy covered the plague or cholera, it was reasonable to believe that for a similar manifestly less deadly disease such as covid-19, which could hardly be listed since it did not exist, would be covered. After all, we insure our businesses for things that we don’t expect to happen to us – that is the whole point of insurance, isn’t it? The Supreme Court ultimately ruled in favour of the insurance companies on that black and white point. Personally, I can’t say I agree with that. Surely, the legions of actuaries employed by insurance companies must have factored in somewhere along the line that a pandemic was going to happen sometime soon. After all, the World Health Organisation thought so as did countless other organisations that governments the world over decided to ignore. It was their error to ignore that probability too, which now their customers, not them, are paying for.
 
Although that was hard enough to bear, many companies, sensibly, made sure they were covered for events outside their control that caused closure or damage to their business through policy extensions for business interruption. Incidents such as a forced closure due to an unknown virus perhaps? Well, you would think so. Allianz and Zurich, along with countless other insurers, decided again to behave in a monopolistic manner and refuse such claims. You would think that having made successful claims for business interruption due to the closure of the Manchester arena following the attack during an Ariana Grande concert, it was reasonable to expect being forced by government to close due to people dying of an unknown disease would produce a successful claim. Wrong. This was the insurance industry pulling up the drawbridge, corralling the stagecoaches and abandoning its raison d’etre along with its customers. A morally bankrupt decision that has resulted in real bankruptcy for thousands of businesses.
 
The Financial Services Authority commendably sided with brokers and clients, and decided to swiftly take the insurance industry to task with a test case that sought to cover as many policies as possible – understandably, without taking action against every insurance company and every form of wording.

After the Supreme Court decision, most insurers have fallen on their swords and accepted the ruling. Even if they were not themselves taken to task specifically. They have rightly concluded the court’s decision represented the end of the road for their position and that they needed to make the right decision to accept the principle of the ruling, and to stop wriggling, in the interest of their customers and one assumes their long-term reputations.
 
Not the Swiss and German owners of Zurich and Allianz, respectively. Their argument, as I understand it, is that although innocent people were dying in every town and city in the UK, and the government took the decision to force us to close to preserve lives, we need to evidence a precise case, at a precise location at a precise time. This is a morale and professional disgrace. And, so far, they are getting away with it. Meanwhile, thousands of businesses with their survival and future recovery resting on the chancellor’s decisions in March’s Budget are left shaking their heads in disbelief that even the High Court initially and eventually the Supreme Court rulings were not enough to bring these companies to the table, allowing this shameful situation to continue.
 
Companies are left having to consider individual or class legal actions to specifically challenge Allianz and Zurich. These giants of the industry are simply hoping that a large section of the hospitality industry will either not get their act together or that so many of them will go bust that the problem just dies with them allowing them to walk away and, no doubt, brazenly try to win business in the future, having betrayed the whole industry. Either way, it is morally heinous and I would contend, potentially, an act of criminal intent to avoid paying out on these policy extensions.
 
If these companies cannot be shamed into doing the right thing, and so far they are demonstrating that shame is not an emotion they feel, the industry must take them to task in the courts. Yes it will cost some money, yes it will take even more time, and yes it will be too late for many. But there is little to lose and lots to gain in having our voice heard. The more of us that step up now, the more chance there will be of a settlement out of court that will not be cost prohibitive. If you were insured by Allianz or Zurich, register your interest in joining the Business Interruption Trading Alliance (BITA) by contacting me and I will co-ordinate contact with legal representation.
Jeremy Roberts is the co-founder and chairman of Living Ventures. His email is: jeremyroberts@livingventures.com
 

Tense times as we await roadmap to reopening by Kate Nicholls

These are tense times for all of us in the hospitality sector. In ten days, the prime minister will reveal to the country his long-awaited roadmap to reopening following the latest lockdown and, following that, on 3 March, the chancellor will announce his Budget.

The roadmap announcement is a huge moment and, of course, we urge him to set a clear path out of lockdown for all of our hospitality, leisure and tourism businesses. It’s important any restrictions upon reopening deliver the right level of health protections for minimum economic harm. Our businesses have suffered terribly as a result of some of the previous ill-thought-out policies. That’s why we are pleased ministers are revisiting the disastrous curfew and substantial table meal rules. Critically, the PM must outline how any restrictions will be phased out, as the vaccination rollout progresses and case numbers fall.

The Budget on 3 March is, if anything, an even more pivotal moment for operators. The sector is clinging on; the support the chancellor offers from his red box can give a glimmer of hope and will determine how many businesses will survive, how many jobs we can protect and then create, how fast we can recover and how prosperous the industry will be in the longer term.

We have two clear headline asks for this budget:

1. Extend the VAT cut to 5% for a further 12 months and ensure it applies across the broad hospitality sector, including on-premises alcohol, to stimulate economic activity. 

2. Enact a further business rates holiday for hospitality for 2021-22 to protect communities and repair businesses. 

There is no doubt the cut in VAT last summer was vital for the sector – nearly a third of respondents to a recent joint survey between UKHospitality, Cut Tourism VAT, the Tourism Alliance and the Association of Leading Visitor Attractions (ALVA), said their businesses would have faced closure without it. Reverting back to the 20% VAT rate in April, therefore, would be catastrophic – we estimate a rise could result in the loss of 310,000 jobs across both hospitality and tourism sectors. And this is without the livelihoods lost in the supply chain that supports us.

Conversely, if the VAT cut was not just extended, but also expanded, to include those parts of the industry currently excluded, such as wedding venues, bowling alleys and alcoholic drinks, many more jobs could be created and the benefits would be even more significant.

The business rates holiday, meanwhile, has been vital for businesses trying to make it through the pandemic thus far, and it is crucial this continues for another year to allow businesses to repair their balance sheets and rebuild. A further rates holiday could also contribute towards the resolution of the rent debt mountain that has developed since forced closure last March.

As well as these two critical revival measures, on which the whole industry is united, we are calling for a reformed Job Retention Bonus to allow continued investment in our workforce; an extension of the repayment period for all government-backed loans to ten years; further deferral of tax payments to December 2021; an extension of the Job Rentetion Scheme until at least the end of June, with flexible furlough to reflect the pace of recovery; and robust assistance for our supply chain partners so they can help support the sector’s long-term recovery. 

We know hospitality can drive impressive growth in a relatively short period of time. Following the last financial crisis, hospitality underpinned the “jobs miracle” by boosting our workforce by 500,000 in a decade and, last summer, we went from lockdown at the start of July to doubling GDP growth in August. For us to be able to achieve this again however, we need the right conditions to allow us to rebuild.

If we are given those by government, in the shape of a clear roadmap to reopening followed by support measures in the Budget, hospitality has a fighting chance and will begin to recover this spring. We will then be in a position to turbocharge an economic, employment, social and community revival in every corner of the UK. 

This week, The Sun got on board to support the VAT campaign with some great coverage and celebrity endorsement through Tom Kerridge, which is always helpful when trying to capture MPs’ attention and focus their minds. But you can help ramp up the pressure by using our simple template on the UKHospitality website to write to your local MP. I’d encourage you to share it with your teams and more widely on your social channels to help create as much noise as possible. Together, we can persuade those in government of what the sector needs to rebuild.
Kate Nicholls is chief executive of UKHospitality. The link to the template to write to your MP is: https://www.ukhospitality.org.uk/page/WritetoyourMP

The need to market our sector by Ann Elliott

I have a sense people are consciously leaving hospitality and finding employment in other sectors. Perhaps, the pandemic has made them reconsider their future prospects and prompted them to move to sectors that have more certainty. I suspect this exodus is happening across all roles and will have a significant impact on our ability to recruit talented people post-pandemic.
 
This topic came up earlier this week on a Zoom call with people from a range of hospitality businesses – everyone on the call was extremely concerned about future recruitment in the sector, particularly in back-of-house and front-of-house teams.
 
This led to a debate about sector awareness, perception and image with those entering the jobs market. Most of us who have worked in hospitality for a while know how brilliant and rewarding it can be. Seeing customers enjoy themselves and walk away happy after a meal, or a night in the pub or an “experiential” evening is a joy and that’s what we live for and work for. And that’s why the pandemic has had such a devastating impact – that joy has been taken away from us.
 
Hospitality is also a real meritocracy with a huge range of roles and opportunities. It’s not about the school you went to, which degree you have, or particularly about who you know. If you work hard, have the right attitude, get on with people and want to succeed, you can.
 
It’s very likely though the image of hospitality as a great employer is at an all-time low. Sites are closing and being boarded up, businesses (operators and suppliers) are going into administration, hundreds and thousands of jobs are being lost, the sector is being blamed by many for the spread of covid, there is an anti-alcohol lobby with the ear of the government and the messages coming out from our sector are, deliberately and justifiably, doom filled. And, while diversity and inclusion has moved up the agenda in our sector, there is still a lot of work to do in this area alone.
 
So why, if I were a parent, would I want my children to even contemplate going into this sector?
 
If immigration into the UK is an issue (before the pandemic, 85% of London’s chefs were born abroad, and 25% came from the EU), if employees are indeed leaving the sector and if the sector bounces back (all big “ifs”, I know) then, potentially, this is a disaster waiting to happen in both the short and long term.
 
We have some brilliant trade associations and bodies including UKHospitality; Arena; Springboard; Women in Hospitality, Travel and Leisure; and The Institute of Hospitality among others. People 1st, our sector skills council, still exists too, having gone into administration a few years ago. They all have slightly different agendas though and no one body appears to have the responsibility of marketing our sector to potential employees – of making it aspirational and worthy of consideration as a career.
 
And by our sector, I really mean hospitality. Including the travel industry in its definition, to me, somewhat dilutes our message. The proposal to launch a London College of Food seems a move very much in the right direction. It argues the capital suffers from long-standing weaknesses in culinary education, has struggled to develop new talent, has poor working conditions for chefs and needs a “new model for culinary training that can rise to the challenges it faces on workforce shortages, inclusion, social mobility and sustainability”.
 
This is really great but the sector needs to do more than just act on the supply of chefs. When hospitality reopens, we need to dramatically and drastically reinvigorate and re-ignite it in the minds of potential employees. We need to be dynamic, inspiring, motivating and passionate about the fantastic opportunities we have for those who want to get on. It is the most brilliant industry to be in – we just need to get the message out there.
Ann Elliott is a hospitality strategist, connector and adviser
 

The drive for delivery and adapting to the challenge by Douglas Day

For observers of the restaurant industry, it is hardly news that a shift towards food delivery has provided a lifeline for many restaurants during the covid-19 pandemic. Delivery has been critical for businesses forced to find new revenue streams and there’s been a surge in operators now offering delivery when they had previously only offered a dine-in experience. Yet, while the demand for delivery has ultimately helped many businesses stay afloat, it’s important to remember that with delivery comes a new test and a different set of customer expectations.
 
The appetite for delivery looks set to stay, so it’s critical for restaurants to seriously consider the challenges and opportunities this presents. How can you ensure your business is up to the job? 
 
Speed
We are moving towards a time when anyone will be able to order whenever and whatever they want at the push of a button. Customers are increasingly looking for convenience and choice, and speed of service remains a key lever for success. However, as a result of the current climate, the need for your employees to follow extra safety measures or to limit kitchen staff numbers can make it more challenging to keep up with demand. If you’re just starting out, it can be difficult to assess the volume of orders you’ll be able to manage so it’s better to start small and grow from there. It’s easier to build the volume of orders over time and make sure you get service right first than to start out too ambitious. Invest time in building a strong relationship with couriers – the handover and understanding you have with them is also crucial for speed. 
 
Communication
Customers want clear, accurate and timely updates along the restaurant and delivery journey. It’s worth investing in tools that allow you to consistently keep your customers updated. If you’re listed on a platform such as Just Eat, they have the means to provide real time updates on an order from kitchen to doorstep, which helps your customers feel in control. 
 
Marketing
The digital high street is crowded so it’s important to be distinctive. Be aware of the competition and establish what might give you an edge, such as branding, website design and social media presence. Now is the time to invest in marketing tools that will help you take advantage of the current climate. Use every avenue possible, from aggregators like Just Eat to developing your own website and social media platforms. It’s a great time to build a much larger customer base while everyone is at home – and then, when they can, these customers are also more likely to want to visit your restaurant in person. Offers are a great way to gain new customers, and with more people getting midweek takeaways, boosting offers for different days of the week is one way to entice new customers.
 
Presentation
Customers expect restaurant-standard quality and presentation – even though they’re eating at home, standards should still be high. The food or drink should arrive as the customer would wish for it to be served. Given the food has a 10 or 15-minute journey to the customer, rather than a matter of seconds between the kitchen and their table in the restaurant, how you deliver the food is critical. Adapting packaging is really important to ensure food travels well and reaches customers in optimum condition. Spending a bit more time or money on the right sort of packaging, for example, double bagging and sealing, can make the world of difference. Consider your menu and which of your dishes are suitable for delivery – it’s better to have a shorter menu of dishes that travel well than to try to replicate your entire eat-in menu. For example, a hot chocolate souffle is likely to arrive somewhat deflated.
 
Hygiene
Particularly for restaurants that haven’t offered delivery before, customers want transparency and clarity on hygiene and food safety, and we’ve seen customers are increasingly choosing restaurants with high ratings when browsing on our platform. Look at options for food safety support to make sure you’re getting it right. Running a small, independent business is not without its challenges, and food hygiene and safety is a vital area that restaurants need to get right. We know restaurants that put a focus on this have benefited significantly. For example, 80% of restaurants that have gone through our support scheme with food safety experts NSF have an improved rating, which is particularly important for attracting new customers.
 
Delivery certainly presents new areas to think about, particularly when there are a number of other factors at play such as limited staff numbers and restricted operating capacity. But, as more restaurants turn to delivery, it is the ones that really nail their delivery offer that will not only survive but also open doors to a future of possibilities as we look ahead to the return of some semblance of normality. Now is the time to seize the opportunity that delivery brings. 
Douglas Day is head of restaurant acquisition at Just Eat

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