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Morning Briefing for pub, restaurant and food wervice operators

Fri 18th Nov 2016 - Friday Opinion
Subjects: Public health utopianism and ‘health’ as a licensing objective, the age of dining on demand, breakfast is for everyone, and decentralisation and diversification 
Authors: Paul Chase, Glynn Davis, Ann Elliott and Simon Hall

Public health utopianism and ‘health’ as a licensing objective by Paul Chase

I welcome the fact the government has not, for now, decided to add a “health” licensing objective, such as the one in Scotland that requires licensing authorities and licensees to engage in “protecting and improving public health”. But local authorities have now been given responsibility for “health and wellbeing” and there is no doubt they are disappointed that health hasn’t been made a licensing objective.

It is also apparent this is a major area of concern for the all-party House of Lords committee that is currently looking into how the Licensing Act 2003 is working in practice. Giving evidence to that committee Alison Hernandez, police and crime commissioner (PCC) for Devon and Cornwall, suggested there was a “responsibility on licensees” to make people aware of the health dangers of booze – or be denied a licence. She went on to say publicans should make a greater effort to publish the health risks associated with alcohol. She said: “Just like we have on cigarette packets that show exactly what happens if you choose to smoke, it should say what happens if you choose to drink – and if you choose to drink a certain amount, what impact that might have.” And then this: “It might be calories. It might be ‘this is the amount of calories you are taking in’.”

It is hard to know where to start when dealing with this level of confusion, stupidity and ignorance. But while a PPC isn’t a public health practitioner, it is clear this particular PCC thinks publicans should be! And that inevitably happens if “public health” becomes a licensing objective. Not only licensing authorities but individual licence-holders would have to promote public health.

But the bigger agenda here is that a public health objective would give public health practitioners more influence on premises licence application decisions. Now that public health authorities are “responsible authorities” under the Licensing Act, and therefore must be informed of any new premises licence application, then in the absence of a public health licensing objective they usually seek to smuggle in a health objection thinly disguised as an objection based on concerns about public safety, or even crime and disorder, which are existing licensing objectives under the Licensing Act. In a sense it is understandable from their point of view that they want their own licensing objective to hang their hat on. Their difficulty is that while they can, and often do, quote national or local alcohol-related health statistics, it is almost impossible to relate these to a particular licence application, which must be judged on its own merits.

But if the starting point for “public health” is it’s the availability of alcohol that makes people drink it, and that increasing availability inevitably leads to more drinking and more alcohol-related health problems, it is hard to see why they would not object to any and all applications for new premises licences. If new licence applications were increasingly likely to be rejected on the basis of the “availability” argument, this would have serious consequences for the development of the licensed retail sector. If a kind of “new localism” were to develop in such a way as to create a de facto “one out, one in” licensing policy, such as the one in Northern Ireland, this would be a recipe for a stagnating licensed retail sector.

It is proving hugely difficult to persuade “public health” of some basic economic concepts, such as consumption drives availability, not the other way round. If all brewers and distillers had to do to grow sales of their products was to open more licensed premises, wouldn’t life be simple! In fact, the size of the retail distribution system expands or contracts as the demand for beverage alcohol expands or contracts.

The context in which the debate about a health licensing objective is taking place has been influenced by the publication of new, “low-risk” drinking guidelines. This has been coupled with the statement “there is no safe level of consumption” and the declaration by English chief medical officer of health Dame Sally Davies that “every time I reach for a glass of wine I think of the cancer risk”. It is absolutely clear from this that their “end-game” for alcohol is the same as for tobacco – the creation of an alcohol-free world, or as close to it as they can get. The government has a legitimate concern about alcohol and health. Seeking to solve this problem by creating a public health licensing objective to suppress the mass market for beverage alcohol, because the social and economic factors that drive alcohol abuse are too difficult to solve, is not the way forward.

It is easy to caricature the licensed retail sector as “Big Alcohol”, comprised of one-dimensional, wicked booze-purveyors who lack any ethical sense or concern about the potential harm of their products. It’s also easy to caricature public health activists as woolly-minded idealists who believe the ethos of “public health” must trump everything else, while being heedless of the need for economic growth and employment. But it is difficult not to conclude that the drift of current alcohol policy is being driven by a kind of public health utopianism that is ideologically opposed to beverage alcohol, and wants its production and sale consigned to the status of a sunset industry.
Paul Chase is a director of CPL Training and a leading commentator on on-trade health and alcohol policy

The age of dining on demand by Glynn Davis

Fast food has always been something of an oxymoron to me. I’ve long been in the camp that favours taking time to eat and savour food and find those people in the food-is-fuel camp a slightly odd and puzzling bunch.

I was also brought up to avoid eating food between meals. Some readers will remember advertisements suggesting Milky Way was a chocolate bar you could eat between meals without spoiling your appetite. Not in my parents’ house you couldn’t and so this surely fatally flawed proposition was never actually put to the test.

It has therefore been interesting to follow the trend of snacking and the increasingly shortened time-frames in which people now eat their meals. Snacking occasions make up a hefty 27% of the total British quick-service restaurant (QSR) traffic, according to NPD Group, and the total snacking occasion generates more than £3.7bn per year.

As a nation we are no longer sticking to the breakfast, lunch and dinner routine. The preference is to eat throughout the day. This is especially the case among millennials, who are leading the charge away from formal dining times. Compass Group research found 86% of this group eat between meals during the working day, compared with 60% of baby boomers.

They have contributed to an ever-shorter lunch break in the UK, which now comes in at an average of 34 minutes, compared with the European average of 37 minutes. There is no doubt this trend is fuelled by the increasingly short attention spans of younger people.

Much of the gradual decline (or present unfashionability) of what is classed as fine dining is placed at the door of the trend towards less formality. But I’d argue there is a significant part being played by the unwillingness of younger people to commit time to the process.

One of the great luxuries of eating out is to lose track of time and be engrossed fully in the experience. Yes, this is not really do-able in the working week but at dinner and at weekends, what is the problem in taking time to fully savour the meal at great leisure.

It certainly looks like more pressure is going to be put on restaurateurs who focus on the finer end of dining, where there is an expectation that people will not assign sufficient time to the exercise (if we are to believe some recent surveys).

The growing impatience of people has resulted in Barclaycard finding 59% of consumers believe slow service is the most frustrating part of the dining experience and become annoyed at having to wait for their food to arrive. Almost half (49%) of the people surveyed also became impatient when left to wait too long to pay at the end of their meal.

Such is the increasing need for speed, customers are now prioritising quick service (37%) over menu choice (33%) and value (21%). And they want increasing amounts of technology to help deliver this speed.

Apparently the era we are entering is dubbed “dining-on-demand” and involves apps that enable pre-ordering and paying for meals in advance, and splitting the bill without any intervention by restaurant staff. There is even talk of replacing waiters with robots.

My experience of dining-on-demand came when my children were babies and were fed when they demanded it. But, as they become older, I’m hoping they will adopt a less impatient approach to eating out and will come to experience the same enjoyment I have when taking things at a slower pace and at least digesting a meal before dashing off.

Perhaps I’m expecting too much and the digital natives are changing things for good (or worse) with their snacking and fast food mentality. It is certainly noticeable in London there has been a profusion of (typically small) faster-dining establishments cropping up where even exceptionally high-quality food is expected to be eaten at a decent clip. This makes it difficult to hog a table for too long and it is clear there is a need for the restaurant to turn tables for the business model to stack up.

This is why for my annual pre-Christmas lunch with my mother in the capital we shall return to the very old-school Goring Hotel dining room, where we know, when we sit down at 1pm, we will have all the time in the world. We’ll leave others to consume their snacks with a dollop of impatience.
Glynn Davis is a leading commentator on retail trends

Breakfast is for everyone by Ann Elliott

There was a brilliant article in yesterday’s Times about the growth in the eating-out breakfast segment, in which it claimed 2016 has been the “year of the breakfast”. The article went on to state: “While traditional breakfast has been rapidly dying, there has been a phenomenal growth in ‘event’ breakfasts – statement meals shared with friends and invariably involving an avocado, a poached egg and some chia seeds. It’s all about the protein.”

They made some other interesting points

• The growth in breakfasts started with the launch of The Breakfast Club in 2005 (or thereabouts)
• Bill Grainger built on this with his avocado-on-toast craze (love it!)
• The Breakfast Club has a “creative manager”. Something for us all to consider
• Teens now drink 50% less alcohol, do 50% less drugs, and smoke fewer cigarettes than their 2003 counterparts
• Millennials are enamoured with breakfast because it’s cheaper
• They can’t afford property so they spend their money on breakfasts
• The rise of breakfasts is inextricably linked with the rise in social media
• On Instagram, there are 51 million pictures tagged #breakfast versus 1.3 million tagged #supper
• It’s seen as less of a time commitment than dinner – “meeting for lunch cuts your day in half”
• It’s very relevant for people who want to socialise without alcohol

On top of that I would argue:

• You can pretend you have only had one meal when you have really had two (or even three)
• You can save the calories you would have had at breakfast and really pig out
• You believe you are eating healthily, which means you can have Nutella in large dollops on your porridge
• Alcohol at breakfast doesn’t count as real alcohol – it’s basically orange juice anyway
• It’s great for entertaining. You can make breakfast look like you have cooked, when you have just collated

This news about breakfast just happened to coincide with a visit I made to Jack and Alice in Gerrard’s Cross last week – a place which screams “you must have breakfast here”. Who could resist a breakfast menu that offers layered almond chia pudding, coconut and quinoa porridge, waffles with smoked ham, free-range poached eggs, and a stack of toast with Nutella (see what I mean?). More than the menu, however, the place has a relaxed, cosy, warm and welcoming atmosphere that is perfect for a long, leisurely sober breakfast. I loved it and can’t wait to see what Mark and Vanessa Hall do next with this brand.

I also went to The Breakfast Club (the real one) the other week and adored every minute (good company too, though). It feels genuine, busy, mad, informal, easy-going, noisy, chaotic (in an organised way), American/English, Instagrammable, Ed’s-like (in places), colourful, just brilliant. 

This is supported by an enviable culture: “Here at The Breakfast Club we absolutely love a ‘feel-good’ movie – we make our staff watch Four Weddings And A Funeral at least once a week for the term of their employment. Don’t even get us started on music – we all sing Walking On Sunshine before each shift. That’s just who we are.

“So, it won’t surprise you that we have a team of people called Good Day Productions, brought together to deal with world poverty and save the world’s rainforests. However, it turns out our dual role as London cafe and saviours of the world are incompatible. With a heavy heart, we have turned our attentions closer to home.”

I think this is a brand that has it absolutely right.

This week I had breakfast in The Folly in Gracechurch Street. I didn’t even consult the menu, I simply asked for something with avocado and a green juice. Perfect. Place was packed too. I didn’t eat so much, though, that I couldn’t enjoy lunch at Neil Rankin’s new restaurant, Temper, which was interesting. Not perfect, but it has potential.

Oh, and the day before I had breakfast in Costa at Hexham station. Don’t even go there. Why does Whitbread allow its brand to be so debased? Dreadful.

Breakfast isn’t new news these days but it is good news for those brands that get it right. And it’s not just for millennials or those who can’t afford to have a house or baby yet – it’s for everyone.
Ann Elliott is chief executive of leading PR and marketing company Elliotts – www.elliottsagency.com

Decentralisation and diversification by Simon Hall

In search of growth, operators are becoming more creative by diversifying their offer and broadening their target areas. However, prime locations and quality remain the key.

Following trends seen in London, the high rental levels and steep competition in many northern cities is encouraging operators to develop new concepts and seek out the best locations in smaller towns.

In central Leeds, headline rents have exceeded £30 per square foot and new operators seem to open every few months, putting increasing pressure on established bars and restaurants to maintain their target levels of return.

Following the development of the successful Trinity retail and leisure development, Leeds has seen a flood of new openings, including Banyan, Gusto, Alchemist, Pieminister, Head of Steam, Revolución de Cuba, Lost & Found, Ricci’s Tapas & Cicchetti, and 53 Degrees North. The yet to be completed Victoria Gate development will add more A3/A4 units to the market in late 2016/early 2017 (including Searcys and Tattu) adding more competition – and potentially moving the circuit again.

Given this relentless activity you would be forgiven for thinking many are repeating the mistakes made in the original boom of the high-street circuit in the early to mid-1990s. Then, many new operators would break budget in the first year or two only to find new competition opening and stealing the trade to leave a loss-making unit by year three. There is a growing feeling this is happening again, led by the rapid expansion of the fast-casual market, leading to the failure of secondary concepts and secondary locations in the big city centres.

In an attempt to avoid the rapid fluctuations of a highly competitive city centre, operators are seeking more sustainable growth by developing in smaller towns, where there are lower overheads and less competition. They are also creating more specialised concepts that will have less chance of directly comparable competition opening nearby.

Equally, the “pitch” shifting is less likely or problematic in small towns. Given the old adage “turnover is vanity and profits sanity”, we explore the type of market-leading transactions that are taking place.

This can be seen by the recent resurgence of activity in Huddersfield, which has, until recently, been ignored by the major players. In the past year, however, we have seen Turtle Bay take a lease in the former Cotton Factory at about £10 per square foot overall, offering its unique blend of Caribbean food and drink. The Jones Bar Group has developed its Roxy Lanes concept in the former Picture House, paying about £10 per square foot overall, involving a table tennis and bar concept.

This deal in particular not only shows the increasing trend of decentralisation but the increasing demand for diversification. More and more units are evolving niche brands. Jones Bar Group leads with table tennis entertainment as well as a cool and trendy bar. Banyan heavily promotes cocktails, Potting Shed and Headrow House love the roof terrace. Gin bars, cider bars, American craft ale, cask ale with vegetarian Indian tapas – the variation and specialisation is endless.

In Huddersfield, the former Sin/Che/Livingstone’s nightclub, empty for four years, has also just been let at a rent equating to only £5 per square foot overall, and will be developed as a high-quality bar and club operation.

Other operators such as Burning Night Group have found opportunity to acquire reasonably priced freeholds with limited competition attractive enough to develop its Potting Shed brand in towns such as Beverley and Bingley. The group’s Beverley site was previously a Hodgsons pub and Downing, a London-based investment management firm, invested £3m in January via its pub EIS scheme. An £800,000 refurbishment included adding an enclosed roof terrace, a new dining bar area, and five brightly-coloured sheds on the patio. Operations director Nick Merrick has been quoted as saying he is looking to expand the concept across Yorkshire in the next 12 months.

This trend is set to continue, with increased activity seen in locations such as Sunderland and Wakefield, suggesting a resurgence in these often overlooked towns might be on the horizon.

In 2017, Hull will be celebrated as the UK’s City of Culture, bringing multimillion-pound investment and redevelopment, transforming the historical port into a vibrant and prime city. Savvy operators are seeking sites in Hull to capitalise. For example, an empty unit in Hull’s rejuvenated Fruit Market is set to receive casual dining concept Butler Whites. Founded by four Hull chefs, Butler Whites will offer hearty, bistro-style dishes.

Possibly the best example of operations seeking prime sites in second-tier towns is Loungers – “informal, neighbourhood, food-led cafe/bars”. Founded in 2002 by Jake Bishop, Dave Reid and Alex Reilley, the company’s first acquisition was an empty opticians in North Street, Bristol, which opened on 29 August 2002. Loungers now operates 72 sites across the UK – some in prime cities, while others will have you reaching for Google Maps. Some of the secondary locations include Urmston, Keynsham, Woodley, Lichfield and Heswall. This aggressive expansion, paired with three sites set to open shortly (in Oldham, Telford and Mumbles) displays Loungers’ successful acquisition plan and indicates prime cities are not the only way to make prime profits. If you want it in figures, as reported by Propel in 2015, Loungers announced a 50.2% rise in Ebitda to £10.8m in the year to 26 April 2015, having opened 18 sites during this period and invested £12.7m. Backed by Piper Private Equity, the company’s turnover increased 42.3% to £48m, with company Ebitda (before exceptional and pre-opening costs) increasing to £6.6m from £4.4m. Like-for-like sales for the period grew by 3.9%, with like-for-like site Ebitda increasing by 11.7%.

However, a word of caution. Being the first into a developing circuit is not enough on its own. History has shown that secondary units and poorly crafted concepts can quickly reach their best-before date. But get it right, and the rewards can be considerable and often longer lived than in many neighbouring city centres.
Simon Hall is director and head of agency at Fleurets

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