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Morning Briefing Strap Line
Fri 19th Aug 2022 - Friday Opinion
Subjects: Plenty of positives during tough times for the sector, why apprenticeships work at any age, now is the time for pubs to add rooms, Pubs Code has become cumbersome and costly
Authors: Ann Elliott, Jill Whittaker, Glynn Davis, Lawson Mountstevens

Plenty of positives during tough times for the sector by Ann Elliott

Loui Blake is an entrepreneur, angel investor and public speaker in the plant-based space. Earlier this week, he commented: “I think we’re in a really positive place, it’s just grown so quickly over the last five years...I think the trajectory will continue. Although the current recession may slow things down slightly, in the long term, my belief in this space has never been stronger.”



Amid the real concern amongst operators about the impact of the cost-of-living increases on their customers’ propensity to eat (and drink) out, the interview with Loui gave me real grounds for optimism. There are others too.



Tourists are back in significant numbers – just walking around London demonstrates that. Visit England says flight bookings are running at around two thirds of 2019 levels. It said: “Recent data, at time of writing, suggests that the bookings picture has stabilised. By year end, we are forecasting inbound visits to be around 69% of 2019 levels, and inbound spending around 78%. We expect spend per visit to remain higher than the pre-pandemic norm, due to longer average length of stay as well as inflation.”



Wealthy tourists in particular are helping upmarket hotels reach occupancy and room rate levels not seen before. An article yesterday morning in EP said: “Hoteliers have been pleasantly surprised by the room rates which have been achieved in recent times.”

 

Domestic staycations are here to stay as well. TUI commented that it has sold so many holidays that it can’t guarantee its traditional last minute offers this summer. This could encourage UK consumers to seek other options – booking a holiday out of peak season, or making the UK their big holiday destination for 2022 and beyond, for instance.
 
VisitBritain found that 61% of adults surveyed in March 2022 said they would take a staycation at some point before February 2023, compared with 44% planning to take an overseas trip in the same period. Pubs with accommodation of any sort (rooms, glamping or just plain camping) should really be able to benefit from this consumer demand.



Increasingly, pubs, restaurants and accommodation providers are having to think about customers with dogs. Those who provide facilities for dogs are simply going to be more popular with these customers than those who don’t. Vintage Inns and Oakman do it superbly well in my own experience. Holiday cottages claims that bookings with dogs have increased by over 60% versus two years ago. It might seem a bit random, but I think it’s a relatively unexploited market opportunity

.

While (mostly) everyone will be impacted by increases in inflation and the cost of living, this will not necessarily always translate into reduced spending on going out for all. There is a whole cadre of young professionals who don’t cook – they go out, order delivery or pick up food on their way home to reheat in a microwave. There are massive opportunities for hospitality brands to continue to deliver awesome experiences for this group of people.



If my own experience is anything to go by, then new pub, restaurant and experiential venues are absolutely storming. They create a huge sense of excitement, give customers a positive reason to go out and help everyone in the area raise their game. The rate of new openings may slow down over the next few months, but canny operators are positively looking for new opportunities to secure now for opening in 2023.



Adversity creates innovation. I now hear so many new ideas on how to drive footfall, how to retain team members, how to save costs and how to maximise tech which are truly original and inspiring. This is not a sector which sits on its bottom waiting for help (and it’s unlikely much will come) – it goes out and implements change to ensure survival, and then growth.



And lastly, our teams give me hope and optimism for the future. Anyone who has stuck with hospitality over the last few years really loves it. Anyone who joins it has made a positive choice and wants to make it work. Our sector gives people the chance to shine and realise their potential. That should provide us with real hope for the future.
Ann Elliott is a hospitality consultant

Why apprenticeships work at any age by Jill Whittaker

With more and more people retiring later these days, the over-50s make up a large proportion of the workforce. And, with the recruitment crisis currently facing our industry, offering retraining or upskilling opportunities for this age group is an effective way to foster a diverse and skilled team.

Luckily, the hospitality industry has a proud history of being non-ageist. You’re just as likely to see a senior manager in their mid-20s as you are one in their mid-50s, and there are opportunities for people of all working ages to embrace. In my view, there’s no role an 18-year-old could take on in this sector that a 50-year-old couldn’t do without the right training.

Valuable experience
We’ve seen a much bigger focus on promoting a diverse workforce over recent years, but one of the facets that doesn’t get talked about so often is age. As an industry, we should be embracing the many benefits that older employees can bring.

Not only can they share valuable life experience with their co-workers, but it’s likely that some of the skills they’ve gained in their previous roles can often be harnessed in hospitality. For example, any job with a customer service element can build skills that are much needed in our field – it’s just about unlocking that within the hospitality context.

Plus, a lot of work in our sector is client-facing, and customers will be drawn to spend time in environments where they see people like themselves. It’s ideal to recruit a mixture of age groups, especially if you want to appeal to a broad customer base.

Lifelong learning
Regardless of age, apprenticeships are an ideal way for people to reskill, or to build on the skills they already have – whether they’re new to hospitality or want to progress further. For years, they’ve mostly been seen as an option for school leavers, but there’s no age limit on apprenticeships. In fact, our research found that less than half of businesses (46.3%) offer apprenticeships to staff at all career levels.

This is a common misconception among employees too. Only one quarter of employees (25.9%) see apprenticeships as a viable training option for anyone at any stage of their career. However, here at HIT Training, we’re keen to ensure employees and employers recognise the benefits of training at any age, especially as our working lives are getting longer.

What’s more, our research found that almost two-thirds (62.5%) of hospitality businesses say they’ve struggled to retain staff over the past two years. Yet, while almost 90% of hospitality firms believe further training investment would help with recruitment and retention, 62.5% are put off by the risk that an employee would leave after completing their training.

It’s understandable that our research also found that three-quarters of all hospitality managers surveyed are concerned about the time it takes to upskill new members of staff, at junior level in particular. This was due to factors such as the impact this would have on customer service and extra pressure on other members of the team.

With this in mind, it is significant to note that over-50s tend to have a higher success rate in their apprenticeships than any other age group. HIT Training apprentices in the over-50s bracket have seen a 15% higher pass rate than the 16 to 18-year-olds and have the lowest dropout rate of all age groups. They are also less likely to take a break in their learning.

For employees, the benefits of training hold true at any age. There are studies showing that if you keep your brain active, it gives you a happier life, and learning new skills is a big part of that. For employers, investing in training is a key part of building and retaining a loyal workforce, and more and more businesses are realising that age shouldn’t be a limiting factor in this.

In fact, over the past five years, 12% of HIT apprentices have been over 50 years of age, compared to just 8% under 19. And when it comes to over-50s, those useful skills they’re likely to have picked up throughout their working lives could lead to shorter apprenticeships, and therefore reduced costs for their employers.

There are huge opportunities in hospitality for anyone who’s hard working and willing to learn – and apprenticeships are an ideal way to help them reach that potential. Working with an experienced training provider will help hospitality businesses get to know what an individual of any age can learn and benefit from the most.
Jill Whittaker is managing director at HIT Training
 

Now is the time for pubs to add rooms by Glynn Davis

When staying in York recently for a leisurely weekend away with my mother, we very much hit the sweet spot when dining at the lovely Bow Room restaurant near the city’s imposing Minster, because it sits within the charming confines of the Grays Court Hotel.
 
Because of the sheer convenience and invariably attractive ambience of restaurants with rooms, they have long been our ideal scenario for a short break. Our Yorkshire foray followed stays at various venues around the UK including L’Enclume in Cartmel, Read’s in Faversham and Gravetye Manor down in Sussex.
 
Such a model can work extremely well, because if the food is of a sufficiently decent standard and people are prepared to travel to dine, then the rooms can be a great additional revenue generator. It’s a captive audience to some extent, and the return on investment can be incredibly powerful. This was long ago recognised by Tom Kerridge when I visited him in the early days of the Hand & Flowers in Marlow, when he was adding his first couple of rooms. The fact he now has 15 spread across various properties in the town says it all.
 
Supporting this view is Martin Wignall, who recently stated that it is the rooms at Michelin-starred The Angel in Hetton, Yorkshire, where “the money really is”. He can now reflect on the fact that, having properly invested in them, it has proven to be absolutely the right thing to do. The 15 rooms are enjoying high occupancy rates all year round from people dining in the 50-cover restaurant. The accommodation is such an attractive proposition to the overall business that an additional five rooms are being added in a site over the road that was originally destined to be a sister restaurant, Cove.
 
Since covid-19, there has been a surge in people booking for multiple nights away, and Wignall now creates bespoke menus for such guests in order that they do not have to eat the same meal on consecutive days. The buoyant scenario at The Angel reflects a buzzing situation in the general accommodation sector, with strong demand driven by people on staycations. Average daily room rates have climbed to £122.86 in the second quarter of this year, representing a 70% increase on the first quarter, and revenue per available room (REVPAR) has jumped to an all-time high of £98, according to BNP Paribas Real Estate. 
 
With the post-covid-19 staycation boom looking like it will hold up for many businesses, this has given sufficient confidence to a growing number of people to commit to adding rooms to their restaurants and gastropubs. In recent weeks, we have seen Oliver Brown, founder of Duck Goose restaurant in London, open Updown, in Kent, as a restaurant with seven rooms to great acclaim. First Restaurant Group is also continuing its expansion of the gastropub with rooms concept with the opening of Oak & Poppy (formerly The Rosslyn Arms), which joins FRG’s three other food-led pubs with accommodation in the capital, while newcomer Vices in York consists of three high-end suites designed with a wine narrative that sits alongside the Allium restaurant. 
 
The growing interest in the dining-with-rooms model bodes well for the owners of one of London’s finest gastropubs, The Bull & Last in Kentish Town, which has finally completed, after pandemic-related delays, a massive overhaul of the pub’s infrastructure, which now includes six extremely smart letting rooms located above the pub space.
 
Admittedly, much of this activity is based around highly acclaimed dining rooms – whether in restaurants or pubs – but the action is not exclusive to this end of the market. The rapacious ongoing expansion of The Coaching Inn Group by owners RedCat Pub Company highlights a broad demand for the dining and kipping combo. It recently purchased the famous The Jamaica Inn in Cornwall, taking the business to 32 sites, which represents a doubling of its footprint of pubs with rooms in the past 12 months, and it shows no signs of stopping. 
 
Martin Harley, of London Village Inns, is also currently kitting out 12 letting rooms above his new acquisition, The Black Lion in London’s Kilburn area, having enjoyed the financial upside of offering boutique rooms at two of his other pubs. With demand for domestic accommodation looking to be on an upward trend, now could be the time for pubs and restaurants of all varieties to at least investigate the potential of adding rooms to their mix. It could be just the boost their underlying businesses so desperately need in order to juice margins in what looks set to be a tough ongoing environment.
Glynn Davis is a leading commentator on retail trends

Pubs Code has become cumbersome and costly by Lawson Mountstevens

This week, the government closed its call for evidence on the Pubs Code, the second statutory review since the legislation came into force. The Pubs Code applies to pubs owned by the six largest leased & tenanted pub companies – Stonegate, Greene King, Star Pubs & Bars, Punch Pubs, Marstons and Admiral. It ensures that tied licensees are no worse off than if they were free-of-tie. The Business, Energy, and Industrial Strategy (BEIS) Committee has also been reviewing the Pubs Code to ascertain if it is doing its job.

The Pubs Code has undoubtedly had a positive effect – fairer and more transparent relationships, the requirement for robust recruitment and grievance reporting processes, and formalised records of meetings and discussions with licensees. However, what was originally conceived as light touch legislation to bring an industry into line has proved to be cumbersome. It is taking up vast swathes of time across businesses and costs have spiralled.

This is impacting the pub companies to the detriment of the very people the Pubs Code is seeking to support, at a time when funds and focus should be on building back businesses from the pandemic. It’s time to get back to the light touch and streamlined processes originally envisaged by the government.

Leased and tenanted pub companies are by no means perfect – but nor are they the pantomime villains they were once portrayed as. The industry has evolved beyond recognition since the Pubs Code was first proposed back in 2013. When the Pubs Code is reviewed, it should be viewed through the prism of where we are now, not an outdated perspective from the past.

Heineken entered the pub sector at the start of the culture change in the industry and today operates Star Pubs & Bars, with some 2,400 pubs. Looking back before 2013, some pub companies took a short-term outlook, with pubs viewed by those company heads as cash cows, for which they were much criticised by parliament at the time. We are in a very different place today. Handing keys to tenants pursuing a lifestyle dream of running a pub who had never run a pub, or didn’t have the funds to do so, is a thing of the past.

The much-touted description of a leased and tenanted model as a partnership is now widely recognised, as witnessed by the extensive support companies like us gave to leased and tenanted pubs throughout the pandemic. We alone invested £62m in reducing licensees’ rent in 2020 and 2021, with the total investment and support for pub companies reported as £360m. Pub companies in 2022 are driven by a long-term view of the sector – they want to see their pubs grow alongside their own businesses. The reality is the two are inextricably linked.

That means offering good deals to attract and retain the best operators and investing in pubs to ensure they meet licensees needs and consumers’ changing habits. This ensures pubs are sustainable in the long term. The whole industry has professionalised and, as well as transparency over past financial trading accounts, the Code requires those who pass the application process to undergo training before they take on a pub. The types of agreements pre-2013 were also limited. Now there are a huge range of agreements, offering licensees flexibility and choice. And, not to be forgotten, those who don’t want a supply agreement have the option to run a free trade pub.

Back in the day, some pub company behaviours were more exploitative, and the relationship between an area manager and their tenant was parochial. There was little or no documentation of conversations and meetings, and not surprisingly, therefore, a source of much tension. Today, these are professional meetings driven by agendas and formal call cycles. Area managers have morphed into business development managers (or BDMs), and not just in name.

Their focus is on offering advice and support to help pubs grow their businesses. An independent survey of thousands of leased and tenanted licensees by KAM Media backs this up. Feedback on BDM meetings shows that half of licensees in the industry give scores of either nine or ten out of ten for professionalism, quality and fairness and transparency of the support given. 

The back office in pub companies is similar – it is no longer just about selling beer. Specialists in marketing, food and wine and spirits and support services functions whose sole reason is to help licensees get the best deals and category insight. We know that inflationary pressures are at the top of licensees’ minds at the moment, and one of the benefits of being a Star Pubs & Bars licensee is our Buying Club – particularly with the costs of utilities. We use our purchasing power to secure competitive rates on products and services that would not be available to individual licensees. We gain no financial benefit from this. 

As for a licensee’s perspective on the support they receive from pub companies, the KAM Media survey showed that 72% of those said their interaction had improved, and seven out of ten believed the financial support they received from their pub company during the pandemic was fair. Pub companies have not been great at shouting about the benefits of the leased and tenanted model, but we’re getting better. Indeed, the pandemic certainly brought the benefits into sharp relief.

At a time when the pub industry has challenges like recruitment, supply and the cost-of-living crisis to contend with, we ask the government to look again at the administrative burdens pubs face as a result of the Code. The processes involved with market rent only requests could be standardised. This will shorten the time involved, reduce unnecessary expense and allow much needed additional investment in pubs at the heart of local communities.
Lawson Mountstevens is the managing director of Star Pubs & Bars

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