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Mon 22nd Mar 2021 - Propel Monday News Briefing

Story of the Day:

Stenning – the hospitality sector in 2021 has lost further ground following the Budget: Simon Stenning, leading sector analyst and founder of FutureFoodservice, has said the hospitality sector in 2021 has lost further ground following the Budget, with increases to VAT, offset slightly by the relaxation of restrictions and confidence from the vaccination programme. After the Budget, Stenning has revised the forecasts in his “Rebuilding of Hospitality 2021 to 2025” report, which now show hospitality revenues falling another £3bn to £65.2bn in 2021, and increasing the drop from the £98bn in 2019. The report says the VAT change at the start of October 2021 means a drop in revenues across the market for the fourth quarter as operators are expected to absorb some costs and pass on the balance with price rises. It said the VAT increase in April 2022 was already factored into the forecasts, but this impacts expected revenues and will see further price rises. Stenning said: “The hospitality industry faces enormous challenges at the start of 2021, requiring substantial government support.; there are still significant property debts that are outstanding and business rates are set to be reinstated from June, albeit at a reduced rate. The extension of the reduction in VAT to 5% was a minimum requirement to support the industry, but the increase to 12.5% from October 2021 is a significant factor in further reducing revenue forecasts. There is a concern operators will push menu prices higher in both October and April 2022, which will drive inflation higher, putting pressure on consumers and on the government risking higher interest rates and stifling consumer demand. There is an expectation that some of the estimated £180bn of additional household savings will be spent during the summer of 2021, but not all of this will come through to hospitality and not all in one go; we will see a large splurge immediately and then a gradual drip-feed through but some will be spent on foreign holidays over the next year or so, as well as with staycations this year.” The 100-page report details the positive indicators seen since the start of 2021, including unemployment only forecasted to rise to 6.5% rather than 8% to 10%, as the furlough scheme has been extended, along with the uptick in consumer confidence and a pick-up in the numbers returning to offices and city centres, which help to offset the downwards pressure from the VAT rise. The report is available to purchase, with details at www.FutureFoodservice.com.

Industry News:

Hundreds of new companies on updated Propel multi-site operators database available on 31 March: The updated Propel multi-site operators’ database, which will be available to Premium subscribers on Wednesday, 31 March, has 276 new multi-site companies on it, replacing 205 businesses that have ceased trading during the pandemic. The changes to this list amount to the biggest churn Propel’s multi-site database has even seen. The new companies tend to have a food-led focus and there is a strong showing from the emerging experiential leisure sector. The list, which stands at 1,629 companies, will be available at the end of March and will then be updated on a monthly basis, complete with a report detailing new companies and changes in the list. The list provides company names, the people in charge, how many sites each firm operates, its trading name and its registered name at Companies House if different, and the area of speciality for each business. In a new feature this year, there is a synopsis of what each business does and significant news associated with it. Being a Propel Premium subscriber not only entitles you to the most comprehensive list of businesses in the sector today; those signed up also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out, regular video content, and regular exclusive columns from Mark Wingett. An annual premium subscription costs £395 plus VAT for operators and £495 plus VAT for suppliers. Email anne.steele@propelinfo.com to sign up.

Jackie Burn, HR director at Punch, to feature in “A Focus on HR” video: In a new series of Propel lockdown videos in conjunction with, Harri, the all-in-one workforce management platform built by hospitality, for hospitality, we focus on the role of HR and people directors. We speak to HR and people directors from leading sector businesses about the biggest challenges they faced during the crisis, how each lockdown has impacted their role, keeping teams engaged and thoughts on how recruitment will evolve. In the first video of the series, Mark Wingett talks to Jackie Burn, HR director at national pub company Punch. The video will be released at 9am on Monday 22 March.
 
Covid hits hospitality for £89bn: The hospitality industry has lost just over £89bn in revenue since the industry was first instructed to close a year ago, according to S4labour, the online labour-scheduling management system from Catton Hospitality. This is equivalent to 68.9% of annual revenue, representing an average decline of £500,000 per site across the UK. The data showed while there were huge declines for both wet and dry-led sites, it was drink-led sites that were particularly hard hit, slipping 78.6% in like-for-like revenue, compared with food-led venues where the decline was 62.1%. There was a less marked difference between London and non-London sites. However, it was noticeable wet-led venues in the capital suffered an 84.4% decline in sales, with little opportunity to offer takeaway or delivery during almost all variation of restrictions. Scotland fared worse than England, with a 77% loss in revenue, and wet-led pubs in Scotland were the most affected category with an 88% decline in like-for-like revenue. S4labour chief customer officer Sam Wignell said: “During the past year, hospitality has had its ups but the downs have been significant and scarring for most operators. The figures are starkly clear, we cannot expect the industry to simply emerge on the other side of that loss still afloat and recover, even with pent-up demand.”
S4labour is a Propel BeatTheVirus campaign member
 
Nicholls – Staffing situation is a hidden problem for industry: UKHospitality chief executive Kate Nicholls has said staffing is a “hidden problem” for the industry, and one created by Brexit, which has been pushed to the margins by covid. Talking on the Propel Friday Wrap video series, Nicholls said: “Brexit will come back as we unwind this crisis and we realise what labour shortages we’ve got. We have never had a skills shortage but, I think this time we will, because you have a lot of workers who were on furlough, who are not coming back to the industry and have found other jobs. You have also got workers who were EU citizens or foreign nationals who went home during the crisis and do not intend to come back, and it is going to take a while before we unwind that and understand what the skills gap is and the labour gap is. Clearly, you’ve got 1.5 million young people who are going to be unemployed in the next year and a domestic workforce you can mop up but you will need to come back to the immigration part to do with Brexit. But I think it’s that domestic workforce and a return to the issue that preoccupied people beforehand, which is how do you make hospitality an attractive career and how do we promote career prospects, career progression? We need to make sure we are match-fit when we come out of this, the government talks about “Build Back Better”, we should do the same and assess any of our practices that don’t fit in the modern world and allow us to move forward.”

Mayor to invest £6m in campaign to get people back into central London: Mayor of London Sadiq Khan has launched a £6m campaign to get workers and tourists back into central London. The new initiative will see City Hall encourage domestic and international tourists to come back to the capital by putting on events that “that showcase central London’s public spaces and cultural riches”. The mayor has announced in his budget, a new investment of £5m to support the eventual reopening of central London, including a new campaign to attract visitors and tourists back into the capital later this year. Through his London Economic Action Partnership, a further £1m will now be spent on attracting people from across the UK to visit the capital post-lockdown, “vital for the recovery of our hard-hit retail, hospitality and cultural venues”. The campaign has been launched after a new report by the London School of Economics found the capital’s economy could be £36bn smaller in 2031 than pre-covid projections. The report’s best-case scenario said office visits in central London will not be back to 2019 levels until 2031 and that tourism would not be back to 2019 levels until 2026. Under this scenario, London’s economy would be £1bn smaller in 2031 than it would have been if no pandemic had happened. The report presented a worst-case scenario where office working only ever returns to two fifths of pre-pandemic levels and tourism does not recover to its 2019 levels until 2031. This situation would put 86,000 jobs at risk, mostly from the retail and hospitality sectors, and would leave London’s economy £36bn smaller in 2031 than it would have been if no pandemic had happened. Kate Nicholls, chief executive of UKHospitality, said: “London’s hospitality businesses rely, in large part, on footfall from commuters and international tourists. The shift towards home working and the almost total absence of international tourists during the pandemic has meant city centre businesses have taken a huge hit. If we want these businesses to survive then we need to tempt people back into London and a plan to ensure people have a reason to continue visiting regularly.”

Prince Charles praises ‘resilient’ hospitality sector: Prince Charles has praised the UK’s hospitality industry and paid tribute to its “resilience”. In a video message, Prince Charles said a lot of people took pubs and restaurants for granted before the pandemic, despite the fact they are at the “heart of our communities”. He recorded the speech for the Master Innholders’ online Hoteliers – Battered But Not Beaten event. He said: “The British hospitality industry is one of this country’s greatest success stories, and one which, I fear, we may have taken somewhat for granted. As often seems to happen, it is when something we treasure is endangered that we appreciate it most. This is why I believe that, over the past months of the pandemic, we have all come to appreciate the invaluable service provided by your profession – the job you all do is essential to the enjoyment of life. Prince Charles conceded the industry was facing “much greater challenges than you have probably ever faced before” but also acknowledged the pandemic would pass, and it is in pubs and restaurants people would look to celebrate. He said: “The continuing restrictions to control the virus pandemic have, I know, hit the hospitality sector harder than most and you can have no idea how much I feel for all under such impossible circumstances. I can only marvel at your resourcefulness and your resilience. I would expect nothing less from your dedicated and open-hearted profession. Knowing many of the incredible characters and personalities within the hospitality world, it is impossible not to be impressed with their creativity, their passion and their inspirational, entrepreneurial skills. The point is that we need you all – so I can only send my warmest possible greetings to each and every one of you.”
 
Nick Mackenzie – past year has taught us how important pubs are to communities: The past year has taught us how important pubs are to communities, Nick Mackenzie, chief executive of brewer and retailer Greene King has said. A year on from the company being first forced to shut its pubs, he said: “Looking back, we had no idea of the challenges we would face, including three national lockdowns, tiered and regional reopening strategies, a myriad of different trading restrictions as well as the financial impact on the business. While many of our 40,000 team members have been furloughed and struggled with the uncertainty, I have been continually amazed by their positivity, resilience and sense of community. The stories of how they have pulled together throughout the crisis, in particular supporting their local communities and volunteering for good causes have been inspiring. The past year has taught us how important pubs are to communities and I know our customers are keen to reconnect with their friends and family over a pint or a meal, so it is imperative we are able to operate without restrictions from 21 June so we can all enjoy the summer. While there will still be challenges in the months ahead, we stand ready to open our doors and welcome people back to the British pub experience they know and love.”
 
Welsh government hints at potential sector reopening on 22 April: The Welsh government has hinted hospitality sites could begin to reopen from 22 April. In its Coronavirus Control Plan, which sets out how and when people and businesses will be able to resume activities in the safest possible way, it said outdoor hospitality, weddings, gyms, leisure and facilities and organised activities (30 people outdoors and 15 indoors) were some of the areas being considered for reopening on 22 April, if the health scenario remains positive and vaccinations continue at pace. First Minister Mark Drakeford said: “We are now entering a critical phase in the pandemic. We can see light at the end of the tunnel as we approach the end of a long and hard second wave, thanks to the amazing efforts of scientists and researchers across the world to develop effective vaccines. The pandemic is not over – spring and summer give us hope of more freedom, as rates of infection fall and more people are vaccinated. But we need to be careful – we can’t rush the process of relaxing restrictions and risk a resurgence of the virus.”

NTIA urges government to step in as six out of ten door staff positions will not be filled on reopening: The Night Time Industries Association (NTIA) has urged the government to intervene after the UK Door Security Association (UKDSA) said six out of every ten door staff positions in hospitality will not be filled when allowed to reopen. Although more than 14,000 applications and renewals are being submitted each month to the Security Industry Authority (SIA), new door supervisor licence applications in the past 12 months are significantly down on previous years. The UKDSA also found many door supervisor licence renewals have actually been used in alternative roles, such as static security guard jobs, because security staff have had to seek other work during the pandemic don’t want to work short hours, with increased risk to health, at low rates of pay. The UKSDA also wants the SIA to postpone plans to increase the cost of training for new licensed door supervisors – which is due to start in April 2021 – until April 2022, and reduce those costs. NTIA chief executive Michael Kill said: “With the additional responsibility of public health within these unprecedented times, it is even more important that we remove barriers to ensure that we are able to fulfil the resource requirement. This will need a government intervention to ensure the industry has the ability to provide enough staff.” A UKSDA spokesman added: ‘The UKDSA fully supports all the additional elements included within the new SIA door supervisor licence qualification. However, our members are deeply concerned about the timing of these changes and the impact on front-line staffing levels. Our members’ research shows a loss of around 40% of their front-line door supervisors. Brexit may also have had an impact with members reporting a number of European staff have returned to their home countries.”

SBPA appoints Hawthorn COO Monfries as president: The Scottish Beer & Pub Association (SBPA) has appointed Edith Monfries, the chief operating officer of NewRiver’s community pub arm Hawthorn Leisure, as its new president. Monfries replaces Brian Davidson, who steps down after four years in the role. She said: “Pubs are a crucial part of Scotland’s social fabric and I’m looking forward to working alongside the many talented and hard-working members of the SBPA to protect and promote the beer and pub sectors in Scotland. We now have a reopening plan to work towards and pubs and breweries across Scotland will be pleased that, at last, we are getting some clarity but we still face huge challenges, not least with the Tied Pubs (Scotland) bill currently progressing through parliament. If passed, it will have a devastating impact on tied pubs across Scotland and at a time when pubs need parliament’s support more than ever.” SBPA chief executive Emma McClarkin added: “It has never been a more pivotal time for breweries and pubs in Scotland as they face the huge task of rebuilding. So with Edith’s experience overseeing more than 100 pubs across Scotland, her guidance will be invaluable as we navigate going forward.”

Company News:

Tim Martin – we’ve taken £51.7m CLBILS as a ‘precautionary measure’, hopes business will be profitable again in June: JD Wetherspoon chairman Tim Martin has told Propel the company has secured a further £51.7m from the Coronavirus Large Business Interruption Loan Scheme (CLBILS) as a “precautionary measure”. Speaking after the company’s interim results where it reported a 53.9% decline in like-for-like sales in the 26 weeks to 24 January 2021, with revenue down by 53.8% to £431.1m, Martin said he hoped the business would be profitable again in June. He said: “Any business now will build in some sleeve, if they can, for unforeseen events. At Wetherspoon, we say ‘everything depends on the virus’ – but also on government action. If we are open by June without restrictions we, and the industry, will be profitable from that point. The vaccine looks promising, so touch wood. We’re trying to get through the point about transmission – as are many others in the trade – to Sage and the government, but they’ve got cloth ears, unfortunately.” Martin said the company was starting to look at some property opportunities that had arisen from the pandemic but added: “Like others, we’re nervous about government action, which is holding back putting projects on-site.” Martin also felt the circa 870-strong estate was geographically well positioned and would not be adversely affected by changes in consumer behaviour as a result of covid-19. He added: “We’ve sold quite a few pubs in the past five years. If we were to sell any more it would only be a handful.” Issuing a “Reduce” note on the shares with a target price of 1,150p, Peel Hunt leisure analyst Douglas Jack said: “The interim results are in line, but we are now forecasting lower losses in 2021E to reflect the Budget and reopening programme. However, we are not going to assume much benefit from the extended VAT cut, nor do we expect any price increases. If the chancellor decides to make these VAT reductions permanent, the company intends to retain these lower prices indefinitely. The shares, on a 2023 EV/Ebitda multiple of 10.8 times versus an eight times historical average (all IAS 17) are overvalued, in our view.”
 
Chipotle to open in Chiswick: Chipotle is to further add to its UK presence, with an opening in Chiswick, as it looks to target further sites in the capital’s “villages”. The company, which operates more than 2,600 sites across the globe, is set to open on the former Byron site in 227-229 Chiswick High Road, later this summer. Jacob Sumner, Chipotle’s European operations director, told local website chiswickw4.com: “We are excited to bring Chipotle’s real food to the Chiswick community with our new restaurant opening on Chiswick High Road this summer. As the first Chipotle restaurant located outside of central London, it will offer an amazing, open-fronted dining room as well as a convenient walk-up window for guests picking up digital orders.” Earlier this month, Propel revealed the brand had secured the former Gourmet Burger Kitchen (GBK) in Northcote Road for an opening this summer. Chipotle, which operates seven sites in central London, plus a delivery kitchen unit in Colindale, is also thought to be in talks on a site in East Dulwich. In February, Brian Niccol, chairman and chief executive of the US brand, said the company was ready to move forward with its UK business. The company, which is led in Europe by ex-Costa Coffee managing director Jim Slater, made its debut in the UK in London Wall in 2015.

KFC business sold to fellow franchisee: KFC UK & Ireland franchisee, the Castlebarn group of companies, comprising 13 restaurants in south east London and the Kent area, has been sold to fellow KFC franchisee, the Caskade Group, for an undisclosed sum. David Catterall and Anton Jebaharan, who have worked with KFC for more than 35 years, acquired Castlebarn in 2007 through a management buyout. The pair also ran Taco Bell restaurants that, like KFC, are part of Yum! Brands, but sold these several years ago in the first step to retirement from their restaurant interests. The buyer, Caskade Group, now operates 47 KFC and 21 Taco Bell restaurants, having joined the KFC family in 1996. Catterall said: “We’re delighted to have completed the transaction despite the covid-19 pandemic, and to have sold to a fellow KFC franchisee.” Smith Cooper acted on the deal. Legal advice was provided to the sellers by Flint Bishop.
 
Cooplands manages to recover ‘bulk’ of like-for-like sales: South Yorkshire-based bakery and cafe chain Cooplands has reported it has managed to recover “the bulk” of its like-for-like sales in its current financial year. The BGF-backed business said the various government initiatives along with its “loyal customer base” allowed it to exit the first phase of the crisis “in a comfortable position”. During the pandemic, the vast majority of its circa 165 stores have remained open, although its 12 cafes were forced to close between March and June 2020. The company stated: “Going forward, we are not immune from the uncertainties, which are affecting every part of the economy. We continue to monitor the covid situation closely and will ensure we serve our customers in a safe and friendly environment. The introduction of the government’s furlough scheme enabled the company to retain all staff who were temporarily unable to work due to unit closures. The retention of these staff allowed us to resume suspended activities at the appropriate time and recover the bulk of our like-for-like sales.” The company reported turnover increased 6% to £53.4m for the year ending 31 March 2020, compared with £50.2m the previous year. Ebitda grew 3.2% to £3.26m from £3.16m the year before. This was despite trading in the final quarter being affected by two named storms in quick succession followed by the national lockdown in the final week of the financial year.
 
Kenny Tutt to launch two new Sussex projects: MasterChef winner Kenny Tutt is launching two new projects on the Sussex coast this summer. Tutt, who opened his debut restaurant, Pitch, in Worthing in 2019, is launching Bayside Social in a new luxury development on the town’s seafront. He will also be opening his first Brighton venture, Ox Block, as part of the recently refurbished Shelter Hall – the debut venture by Sessions Market, the ethically driven and immersive food hall concept backed by Imbiba and led by former Deliveroo managing director Dan Warne. Inspired by modern beach clubs and the art deco scene on Miami’s South Beach, Bayside Social will have 180-degree beach views from the glass-fronted building and terrace, as well as offering indoor seating for 40 diners. Opening in July, it will provide all-day casual dining options as well as classic dishes given a twist by Tutt, who won MasterChef in 2018. As part of Shelter Hall, Ox Block will operate in the 15,000 square foot space. Tutt’s new concept is a smoking robata grill kitchen showcasing seasonal meats. It will be open for outdoor dining on Monday, 26 April, and for indoor dining on Monday, 17 May. Tutt said: “My favourite thing about food and cooking is the way that it brings people together, so opening up two new spaces that allow people to do that in different ways is extremely exciting. The past year has been a challenge of course, but it’s also given me time to dedicate to these projects and really decide on next steps following on from the huge success of Pitch.”
 
Coaching Inn Group invests in mental health training for staff: All general managers, head chefs and senior managers at coaching inn and hotel operator The Coaching Inn Group have received certified mental health training. With help from Hospitality Action, CIC and Mind, more than 40 members of The Coaching Inn Group management team at the company’s 18 sites have received training, including increasing the number of mental health first aiders. A further 120 team members from across the estate also attended mental health workshops in March promoting well-being during the lockdown. Chris Moores, Coaching Inn Group head of HR, said: “The lockdown has been really tough for everyone, not least those in the hospitality sector who have faced extreme uncertainty. We put our people at the heart of our core business principles, and making sure that we have mental health support available at each of our inns reaffirms our commitment to support our people.” The company is set to reopen all 18 of its sites on Monday, 17 May, with team members already completing return to work training and preparing the venues to open.
 
Franco Manca to open in High Holborn: Franco Manca, the Fulham Shore-owned pizza brand, is to further increase its presence in London, with an opening in High Holborn. Propel understands the company has secured the ex-Byron site opposite High Holborn tube station for an opening later this summer. Fulham Shore, which operates 53 Franco Manca sites and 19 The Real Greek venues, is continuing to build its new openings pipeline for both brands. The David Page-chaired business is understood to have lined up the former Giraffe site in Norwich’s Chapelfield Plain for a The Real Greek opening. Fulham Shore is understood to be in talks on further sites for the Mediterranean brand, in Manchester and at the Cribbs Causeway shopping centre near Bristol. It is also in talks on sites for pizza concept, Franco Manca, in Basingstoke, Horsham and Tunbridge Wells.

Gazette Brasserie secures fourth London site: Gazette Brasserie, the London-based restaurant concept, has secured its fourth site in the capital, in Holborn. The concept has secured the former Vanilla Black site at 17-18 Took’s Court for an opening later this summer. The group already operates sites in Tooting, Putney and Battersea. Vanilla Black, one of the capital’s long-standing vegetarian restaurants, closed last year after 16 years in operation, because its owners said it could not operate in a financially viable way in the aftermath of covid-19. CDG Leisure acted on the Holborn deal.

Tim Hortons to open drive-thru restaurant in Sheffield: Canadian quick service restaurant brand Tim Hortons is to open its first drive-thru restaurant in Yorkshire, in Sheffield. Located at the Crystal Peaks Village Retail Park, the new venue, which is set to open in the summer, will offer dine-in seating for up to 118 guests and drive-thru services. Delivery options will also be made available to those in the local area. The new restaurant, which will create more than 50 jobs, forms part of the brand’s plan to create more than 2,000 jobs across the country, bringing Tim Hortons restaurants to every major town and city by 2022. Tim Hortons operates circa 25 sites in the UK. Professional ice hockey player Tim Horton founded the brand in 1964 to create a space where “everyone feels at home”. Kevin Hydes, chief commercial officer of the Tim Hortons franchise in the UK, said: “As we continue our expansion across the UK, we knew it was only a matter of time before we found the perfect location to bring our first Tim Hortons drive-thru to Yorkshire. We’ve had huge demand to bring the brand to Sheffield and it really excites us to be launching in a city famed for its ice hockey and presence within the Elite League.”

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