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Fri 19th Dec 2014 - Friday Opinion |
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Subjects: A look back at 2014, what does 2015 hold for alcohol policy? The best marketing initiatives of the past year
Authors: Martyn Cornell, Paul Chase, Ann Elliott
World buffet, crowdfunding and micropubs – a look back at 2014 by Martyn Cornell
Of all the lessons we will be taking away from 2014, one of the toughest is that highly unlikely events can and will still happen, sometimes, somewhere. The chances that one of your outlets will be caught up in a hostage siege involving religious fanatics are vanishingly small. But it has, of course, just happened to the Lindt Chocolate Cafe chain in Australia, where the manager of one of the chain's eight outlets and one of its customers are now dead, along with the hostage taker. Chief operating officers everywhere will be looking at their crisis management plans, and discussing the need for training for staff on how to cope should such a hugely remote event happen in one of their venues ("don't try to be a hero" being the most important message to give to employees). Alas, despite the tragic ending to the Martin Place Cafe siege, the very fact it took place makes another similar attack somewhere more likely: there are always copycatters.
All the same, fortunately, combating terrorism is unlikely to be a major theme for the UK hospitality industry in 2015. There are plenty of other themes that have been played during 2014 that will continue over the next 12 months, however. The "world buffet" movement, for one, is increasing in size, as Britons lose their fear that places offering half a dozen or more different cuisines can only offer variety, not quality as well. Strangely, while Britain has failed to grow a national chain of "ethnic" restaurants, despite several attempts, it seems quite probable within the next few years we will see a "multi-ethnic" national chain, with several potential "world buffet" contenders making good showings in 2014, including Cosmo, which, as we reported earlier this week is due to grow to 18 outlets early next year, the Jimmy's chain, now up to ten venues, the Risk Capital-owned Red Hot World Buffet at seven and Cook and Indi’s World Buffet on six, all in Scotland. Is one of these four going to be the PizzaExpress of world buffet?
One constant theme through 2014 has been crowdfunding, from the fledgling better burger concept Artisan Burger Co looking to raise £240,000 in return for 15% of its equity through the crowd-funding website Crowdcube in February to Pizza Rossa, the artisanal pizza by-the-square-slice operator, chasing another £150,000 from the public, also on Crowdcube, in December, having already raised £440,000 in just 17 days from 119 people earlier. Propel noted a dozen different crowdfunding efforts in the hospitality sector during the year, though while some were wildly successful, such as Chilangro's "burrito bond", which passed its £1m target with 42 days to go, others struggled: Samba Swirl, the first self-serve frozen yogurt chain in the UK, barely raised 40% of the money it wanted in a Crowdcube drive in November. Still, we can expect to se plenty more entrepreneurs seeking to tap the wisdom, and the wallets, of crowds: as Luke Johnson said in October, "as an alternative to the traditional forms of finance for cash-strapped ventures, [crowdfunding] represents a real breakthrough."
Another theme this year has been technology: the word "revolution" is often abused, but payment technology is undergoing a genuine revolution, which, coupled with remote ordering, will have reverberations across the hospitality sector. As we reported in September, restaurant companies in the United States will be among the first retailers to integrate Apple Pay, the phone payment platform. But the most exciting developments are in combining mobile payment with mobile ordering. Starbucks, as we reported in November, is rolling out Mobile Order & Pay in the United Stats from next March. In the UK, we reported in August, Orderella, which allows its customers to order and pay for drinks and food directly on their phone without the need to queue at a bar, is continuing to gather in money to fund its expansion. We also reported on Harris & Hoole's remote ordering and payment app, which puts a picture of the customer on the till in front of the barista when the order arrives. When – and it seems certain it WILL be "when", not "if" – remote ordering and paying takes off, we really should see a revolution in crowded pubs on Friday and Saturday nights. It will certainly increase the importance of wi-fi in the hospitality environment: customers' growing wi-fi demands have already forced Marston's to roll out a wi-fi traffic manager across 1,700 pubs to handle customers who want to watch iPlayer in the bar, as we reported in July.
For the big pub operators, much of 2014 was taken up with trying to fight off attempts to bring the "market rent only" (MRO) option for pub tenants onto the statute book. Unfortunately for the pubcos, it is too easy to find pub tenants with tales of alleged exploitation to present to MPs, and too easy to present companies that own thousands of pubs, some of which need to be closed down for the good of the rest, as heartless capitalist bastards intent on turning every corner hostelry into a Tesco Metro. The big pub companies' own problems, with Punch Taverns having to arrange a restructuring of its £2.4bn of debt that left existing shareholders with only a 15% stake in the company, did not help: it is hard to persuade someone that your pub closure policy is based on the viability or otherwise of every outlet when that person knows you owe more than half a million pounds per pub. Unsurprisingly, in hindsight, the Lib Dem MP Greg Mulholland and his forces defeated the government itself, and pushed the MRO option into the Small Business, Enterprise and Employment Bill. This is another event in 2014 that is going to have unforeseen, and currently largely unknowable consequences. I'll make one prediction, however: we will see Enterprise, certainly, and Punch, quite probably, increase the number of top-end managed houses they run, rather than let tenants take the profits of the very best pubs.
The year saw the return of IPOs. Just Eat, the online takeaway food service, made its successful float in April. Patisserie Valerie made a successful float on AIM in May. SSP Group, the international operator of branded food and beverage outlets, announced a planned initial public offering to raise £500m in June. However, rather than floating to raise cash, companies in the sector are taking ever greater advantage of tax-efficient Enterprise Investment Schemes. Back in January we said that Enterprise Investment Scheme investments in the sector had increased by 61% over the previous year, with companies raising £114m from individual investors. Among those we reported were using EISs this year were Philip Turner of Chestnut Inns, restaurant veterans Tom Harris and Jon Rotheram, looking to raise EIS funding to open a gastropub, and the City Pub Company team, Clive Watson, David Bruce and John Roberts, seeking to raise £100m through the EIS to buy pubs, while this month David Bruce announced another EIS scheme to raise £4m for another of his investments, the West Berkshire Brewery.
Meanwhile there has been plenty of activity down as the minnow end of the market. Propel has marked the arrival of 20 new micropubs in England during the past 12 months, one every two and a half weeks. If the micropub movement were a company, it would be the fastest expanding operator in the country. What this means in the long term – or even in the medium term – remains unclear, but it does suggest that there may be a market for the kind of plain, simple beerhouse that disappeared back when the jukebox arrived on British shores.
Among the departures during the year, in January Paul Kilpatrick, co-founder of the Manchester-based Mexican food chain Barburrito, left the company to pursue other interests, while Robin Young resigned as operations director at Mitchells & Butlers. In March the property market veteran Colin Wellstead stepped down as chairman of AG&G after six years in the role. The following month Steve Richards took over as chief executive of the Cafe Rouge operator Tragus, where John Darkach had departed after less than two years in the post. The change of leadership came after the acquisition of Tragus by Apollo. At Las Iguanas the former chief executive of Wagamama, Steve Hill, who had joined as chief executive on 6 January, departed on 1 May, with founder Eren Ali resuming leadership of the business. Hannah Bass, who had worked in senior roles at ETM Group and Hakkasan, left Richard’s Caring’s Grillshack and Jackson and Rye concepts to become director of restaurants at Selfridges. In August Graham Turner stepped down as the executive chairman of London bar and restaurant operator Novus, A month later, the Stonegate Pub Company's chief executive, Toby Smith, quit to be replaced by Simon Longbottom, who previously headed Greene King’s tenanted division, while the industry veteran Tim Lowther stepped down from his role as senior director of business development at Steak ’n’ Shake. In November Christian Rose quit as chief executive of the eight-outlet Chicago Leisure chain in the wake of its acquisition by the nightclub company Luminar.
Martyn Cornell is managing editor of Propel Info
What does 2015 hold for alcohol policy? By Paul ChaseI re-read an article I wrote on this at the beginning of 2013 and I am struck by how little the issues have changed two years on. Back then I was concerned about EMROs and the Late Night Levy; "health" as a licensing objective and minimum unit pricing (MUP). These are still the issues, although the extent to which they have proceeded or receded as a threat varies considerably. In addition to national policy there is what happens at local level, where police and crime commissioners and local councillors get involved in "reducing the strength" policies and imposing cumulative impact zones.
So what does 2015 hold for the ongoing development of licensing policy, and how will the sector be impacted? Firstly, it seems to me very likely that we will see "protecting and improving public health" added to the licensing objectives in England and Wales – the so-called fifth licensing objective. This is already a licensing objective in Scotland (actually the fourth), and as one leading industry lobbyist put it to me the other day, a "health objective" is now seen by all the main parties at Westminster as being like "motherhood and apple pie" – unarguably justified.
If the battle against a health objective is truly lost, then we need as a sector to argue for a sixth licensing objective – "promoting economic growth and supporting business". This possibility has been trailed in the proposals contained in "Open for Business – Rewiring Licensing", recently published by the Local Government Association (LGA). Whilst the LGA is wholly supportive of a health objective they also say this:
“However we believe that the licensing objectives must be expanded to reflect the full range of council responsibilities. This would enable councillors to reach licensing decisions that balance the existing licensing objectives and goal of economic growth with an objective reflecting councils’ public health responsibilities.”
While I do not think the LGA’s proposals for root and branch reform of licensing will be taken forward any time soon – it’s just too big – what is interesting is its acknowledgement of the need to balance public health concerns with the need to promote economic growth. That is precisely the balance that the health lobby does not want to be struck. It believes that public health is an objective that should trump everything else. In the various battles to resist the imposition of EMROs, one of the strongest arguments the trade has mounted has been the impact that such restrictions would have on local businesses and local employment, so there is no doubt that local councillors are highly receptive to this line of argument and hopefully the government will be too.
On EMROs and the Late Night Levy, we know that we have had mixed results. The EMRO, as a measure, has been effectively killed off by industry opposition. Not so the Late Night Levy, where several have been introduced and where the procedure does not provide for the same level of scrutiny. Meanwhile cumulative impact and "reduce the strength" policies continue to proliferate.
What of the much-heralded minimum unit pricing (MUP)? In Wales they are considering the introduction of this and a recent iteration of the Sheffield Report prepared for the Welsh Assembly government claims that £900m could be saved over 20 years if a MUP of 50p was introduced. You have to wonder at the naivety of politicians who think that a prediction of savings that might be made over 20 years, if a whole range of assumptions are correct, and if nothing happens in 20 years that might confound those assumptions even if they are correct, can possibly be regarded as evidence of anything – let alone reliable evidence.
Leaving aside the inconvenient truth that the Welsh Assembly does not have the same powers as the Scottish Parliament to introduce such a measure, what is looming is a decision from the European Court of Justice (ECJ) on Scotland’s proposal for MUP. In considering its position the ECJ has asked EU member states, trade bodies and the Scottish government, as well as the European Commission, to make written submissions, and this process should be completed by early 2015. It is anticipated that the ECJ will give its decision at the end of 2015 or early 2016. My own view is that the ECJ will reject the legality of MUP and that, hopefully, will put an end to the political posturing on this issue. The irony is that rejection of MUP probably makes the imposition of a health objective more likely.
The general election to be held on 7 May next year makes any predictions about alcohol policy even more difficult, but there is some optimism that those currently in government really are beginning to "get it" in respect of our sector’s contribution to jobs and growth. Dare we hope for a reduction in alcohol duty for the third year running?
Paul Chase is a director of CPL Training and a leading commentator on on-trade health and alcohol policy
The best marketing initiatives of 2014: from golden girls to World Cup beers via melting pizza deliverymen, by Ann ElliottThis year has absolutely flown by, but its rapid pace has not stopped me from noticing a series of excellent marketing campaigns delivered by both operators and suppliers. I love writing this article every year. It is a great excuse to go back and look at the fantastic initiatives that captured the public imagination during the year. Here are my favourites:
McDonald’s 40 years celebration campaign
I love the campaign McDonald’s has been running lately to celebrate its 40th birthday, particularly the adverts that link McDonald’s special place in its customers’ rites of passage, like their first drive-through. I guess it has confirmed just how ingrained the brand is in our culture. McDonald’s also ran a campaign to uncover customers’ own special moments, inviting members of the public to reveal their memorable experiences online. In the space of week, it received 10,000 entries.
The McDonald's team ensured that the anniversary theme worked right across all channels and platforms, including the McDonald’s app, giving away a free item to anyone who downloaded it. I have not seen the numbers, but I bet this has encouraged millions of downloads to ensure the app is on as many phones as possible.
World Cup Winners
The World Cup dominated the summer, and nowhere more so than on the TV in our office. Lots of pubs tried various initiatives to make the most out of the World Cup, lots linked up with the MatchPint app to drive footfall, some tried Brazilian food or Brazilian drinks, but my absolute favourite initiatives came from the brewers. Many of them launched beers themed to appeal to patriotic punters. Fuller Smith & Turner's Two Halves, Bateman’s England Expects and Hook Norton’s Lion were clever ways to capture the imagination through a beer. It is just a shame the national team did not show as much passion for their end product.
The Iceman Cometh
This went mad! Domino’s ran a competition to win free pizza for a year in one of the most original social initiatives I have seen. Long story short, Domino’s put an ice statue of a delivery driver near a heater. The statue, which was holding a pizza box, slowly began to melt. When it eventually dropped the box, the last person to have tweeted the competition’s hashtag (#DominosMeltdown) won the prize. It had everything – it drove traffic to the company's YouTube page, it trended worldwide on Twitter (2,000 tweets a minute), more than 12,000 people took part. It was just brilliant.
Doughy Essex
I am not really a The Only Way is Essex fan, but lots of people out there are, as evidenced by some staggering ratings. PizzaExpress teamed up with the show’s Joey Essex on a campaign to celebrate the 45th birthday of the chain’s doughballs. Together they ran a competition for two customers to win a golden doughball worth £5,000. More impressively, they painted Joey gold, to generate eye-catching images to run in supporting ads which were, of course, promptly picked up by newspapers and social media. It was a great example of making the most out of a relatively simple competition and a striking case study of how to PR a product exceptionally well.
Nando’s second date
This one is a great example of social media driving PR. Nando’s was on the ball (pun very much intended) when it emerged that Manchester United’s latest starlet, Adnan Januzaj, had taken a girl on a first date to one of its restaurants.
The news, which nimble Nando’s very quickly recognised had potential, prompted a tweet from the chain offering the player a £50 gift card for his next date. Appreciating the value of visual content, the Nando’s team accompanied the tweet with a photograph of the gift card, making the whole thing much more shareable. The tweet was shared more than 20,000 times, and underscored Nando’s status as the place to be among precisely the right demographic. All for £50. Nice to see the chain's social team delivering the same great value offered on its menu.
VAT Parity Day
Is there anything better than lots of pubs clubbing together and poking their tongue out at the government? We have all heard of VAT Parity Day – 15,000 pubs (including JW Wetherspoon outlets) joined the initiative, cutting prices to represent what the sector could offer customers should the government see fit to change its strategy on VAT. It was a great initiative. Not only did participating pubs see increased custom, they sent a very clear message to the government that the sector was united in wanting VAT parity.
The Heineken ‘Where Next’ campaign
An app-based campaign that I really liked: Heineken showed its "passion for nightlife" by creating a new app for its customers. The app will scour conversations on Twitter, Instagram and Foursquare to let customers know where parties are happening near them.
To make it more usable, Heineken also introduced a new Twitter page, @wherenext, where users can tweet their location and the page will tweet back where it would be good to go. Very clever. It is a great example of a brand using an app to convey messaging without ramming it home. It also has a practical purpose: customers like that.
Ann Elliott is chief executive of the leading sector agency Elliotts, www.elliottsagency.com
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