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Morning Briefing Strap Line
Fri 14th Jul 2017 - Friday Opinion
Subjects: The rise of the shipping container in hospitality, using benchmarking as a weapon for change and illiberal anniversaries 
Authors: Glynn Davis, Kate Nicholls and Paul Chase

The rise of the shipping container in hospitality by Glynn Davis

When in April 1956 US businessman Malcolm McLean converted an oil tanker to carry fixed-sized metal boxes containing an array of goods, which would then be carried to their final destinations on a fleet of trucks, he unleashed upon the world the now ubiquitous shipping container that would open the doors to global trading.
 
What he didn’t know then was some 60 years later he would also be having an increasing impact on the hospitality and leisure industry in the UK. When I recently read Birmingham-based chicken and chip shop Jaqks (let’s hope the chicken is crisper than the spelling) was looking to expand its estate of restaurants by housing them in containers it got me thinking about how these simple steel boxes are helping myriad businesses get off the ground and grow.
 
Jaqks’ owner achieved significant cost savings by opening an initial outlet in a shipping container and so the plan now is to abandon bricks and mortar and instead transform 40-foot long steel boxes into mini-diners. He also found as well as being cheaper to acquire than high street units the beauty of the container is its standardised sizing, so all fit-outs and processes can be identical across all units, thereby reducing costs and increasing efficiencies.
 
Deliveroo is also taking advantage of the container to roll-out its innovative “Roobox” concept of delivery-only production kitchens. Since no customer visits them they don’t need to be in places of high footfall and therefore do not require a high street location. Instead containers are being kitted out with the relevant kitchen equipment and being placed on brownfield, industrial estate-type land.
 
Rentals in such locations are clearly massively cheaper than retail/high street locations, and nobody has any qualms about lots of delivery riders hanging around waiting for their next order. These kitchens can also be moved very easily to another location if required – simply by sticking them on the back of a lorry.
 
This portable capability was behind the Snoozebox modular hotel and lodges concept. It uses containers that have been fitted out as hotel rooms and transports them to locations where overnight accommodation will be needed for specific periods such as at festivals and major events. The individual containers can be easily linked in modular fashion and the standardised plumbing and electrical connections installed enables easy connections to utilities.
 
This ability to treat containers like large Lego bricks, combined with their standardised nature, made them the ideal vehicle from which to construct the Boxpark concept. Being able to stack them in flexible configurations has been massively useful. And it was also the intention to move them off the original site in London’s Shoreditch after a certain period that made them ideal. So popular has been the original Boxpark that it remains on this site.
 
The numerous attributes of containers have made them essential components of the second (food and drink only) Boxpark in Croydon, with each of the food providers housed in containers positioned around centrally located areas of tables and seating.
 
Family-owned brewer Hall & Woodhouse has truly treated containers like Lego with its Portishead pub on the town’s Quays Marina that is made up of a carefully balanced pile of the steel boxes that looks rather like the game Jenga. The company has created something unique from something ubiquitous by giving the containers a full and glossy refit.
 
But containers are equally at home in their absolute basic pure state and a number of craft brewers have taken advantage of their extreme cheapness to help them get their businesses off the ground. Affinity Brewery in Tottenham, north London, has its brewing kit and tiny drinking area in a single container and uses a second for storing ingredients.
 
In fact, such was the beauty of the container to the co-founders of a brewery in east London they named their business 40FT Brewery and the brewing kit and taproom remain housed in repurposed containers located on a disused car park in Dalston. There is no doubt about it, the container has changed the world, and the way things are going with the continued adoption of the steel boxes by the hospitality industry it looks set to have an increasing impact on the way we eat and drink in this country.
Glynn Davis is a leading commentator on retail trends
 

Using benchmarking as a weapon for change by Kate Nicholls

This week the Association of Licensed Multiple Retailers (ALMR) launched the latest edition of its annual Benchmarking Report, highlighting some of the opportunities and challenges businesses in the sector face, as well as gauging the mood of employers. The annual report, which is produced in partnership with specialist property adviser Christie & Co, provides a comprehensive overview of operating costs for pubs, bars, nightclubs and restaurants and is used extensively by the ALMR in its lobbying efforts.

Past iterations of the report have been used to effectively inform and influence policy on issues such as service charges, National Living Wage, business rates reform, PPL proposals and changes to gaming machine stakes and prizes. It is recognised by government and RICS as providing accurate information on rental valuations for, and lobbying on, commercial and industry leases. If you have read our previous reports, you will know it is a comprehensive and authoritative breakdown of the costs of doing business in the eating and drinking out sector. The survey is nuanced and has evolved over the years to adapt to the changing landscape of eating and drinking out in the UK.

The results of this year’s report show that although the eating and drinking out sector is in growth across every trading style, growth has slowed as increased costs start to hit. With margins being squeezed, it is important the government does not increase costs or introduce additional regulatory burdens. The report will be a crucial resource in showing policy-makers that businesses need support and stability.

This year’s enhanced survey also contains an added value section with information on business confidence, with particular emphasis on Brexit. A snapshot of business confidence is going to be incredibly useful over the next two years or so as the government negotiates withdrawal from the EU, as it will allow us to present data and sentiment from a very important sector that is going to be crucial to the UK’s economic success.

Uncertainty regarding Brexit has certainly caused some instability for employers, but the majority of respondents to our survey thought it would have little impact on their business. Fewer than a third, 29%, thought there would be some sort of contraction, but 64% expected business performance to be broadly flat, with 7% predicting moderate growth.

Looking ahead to the long term, more than half (56%) believed performance would be broadly flat because of Brexit, with 16% predicting moderate growth because of the withdrawal from the UK. Despite this relatively positive feedback, it will still be crucial we stress to the government the importance of providing stability at every stage of the Brexit process to give businesses a chance to plan, invest and continue growing.

Business rates reform has been, and will remain, a priority for the ALMR and this year’s report shows the issue is also important to eating and drinking out venues. Two-thirds of respondents believed their business had been overvalued at the last revaluation with a quarter believing they had been significantly overvalued. Less than one-third of businesses surveyed thought the valuation was broadly reasonable. The broken business rates system is clearly having a huge impact on businesses, a fact highlighted by our report’s findings that 88% of those who believed they were overvalued confirmed they would seek professional assistance to challenge valuation.

While some of the responses, chiefly around business rates, feel negative, they are an indication businesses are concerned, and the report should provide us with plenty of ammunition as we push for change. The ALMR’s lobbying can only be successful if we have strong data and insight from our members and the wider sector to back up our arguments. The ALMR Christie & Co Benchmarking Report is arguably our most valuable weapon in this regard.
Kate Nicholls is chief executive of the Association of Licensed Multiple Retailers
 

Illiberal anniversaries by Paul Chase

We’ve just had the tenth anniversary of the ban on smoking in all enclosed public places, and much has been written about its effect on pubs. Also, in a couple of weeks’ time, the UK’s Supreme Court will consider the legality of the proposed introduction of minimum unit pricing (MUP) in Scotland. Here’s my take on both:
 
Firstly, as a lifelong non-smoker I personally much prefer smoke-free pubs. And if I were going to die in a ditch defending the right of individuals to make free choices, the right to set fire to a paper tube containing tobacco and inhale the smoke wouldn’t be my starting point. But it is nevertheless the case an awful lot of hypocrisy is attached to the reasons given for the smoking ban. This was never really about protecting people against second-hand smoke, and the statistical case for the ill-health effects of second-hand smoke was always pretty dubious in any event. This was about stopping people from smoking by criminalising their behaviour if they did so in certain circumstances. The alleged ill-health effects of second-hand smoke on the rest of us were never more than a fig leaf.
 
Has the smoking ban been bad for pubs? Most commentators agree it has. If they are correct then I am forced to conclude the ban was introduced on the basis of a false prospectus when the real reason for it was to force smokers to quit, and the impact that has had on the pub trade is regarded by anti-smokers as acceptable collateral damage. The fact the template for pursuing the smoking ban has now been replicated by those who are similarly opposed to alcohol leads me to suspect the two groups of people have much in common.
 
There was no decline in smoking after the smoking ban in 2007 and I would suggest the drop in smoking prevalence since 2012 is mostly attributable to vaping. The “public health” community is very divided on the issue of vaping because it finds it hard to accept a private sector solution to a public health problem – one that involves enabling people to enjoy nicotine in a safer way is preferable to simply banning something.
 
I think there are many reasons why pubs have closed over the past ten years – supermarket pricing, the shift towards home drinking and the growth of home entertainment, a fall in the number of young people who drink alcohol – to name but a few. Some have called for a review of the smoking ban and the reintroduction of ventilated smoking rooms in pubs. I think it would be a mistake to refight yesterday’s battles, particularly when there are plenty of battles we need to fight today. Reversing the smoking ban is a lost cause and we need to reserve our powder and shot for more immediate problems.
 
One such problem is the possibility of MUP being declared “legal” by the UK’s Supreme Court. The Court is due to consider this matter on 24-25 July, with a decision published probably in the autumn. I’ve written more on the subject of MUP than any other single issue, at least in part because its introduction has become such a totemic issue for the neo-temperance crackpots of so-called “public health”. I’m opposed to MUP because I believe it’s a bad policy that will penalise responsible drinkers, and will not impact on problem drinkers who are overwhelmingly located in in the moneyed middle classes, not because I think it is unlawful. If it turns out it does offend against EU competition law then as far as I’m concerned that would be very helpful.
 
A minimum price for a unit of alcohol was introduced in legislation passed by the Scottish Parliament in 2012. Since then it has been the subject of legal challenge by the Scotch Whisky Association and others who argue the measure acts as the equivalent of a quantitative restriction on EU trade, for example, by penalising efficient wine producers who are able to reflect their efficiencies in the price charged for their product. It would appear the European Court of Justice (ECJ), and indeed the Scottish courts accept this is the case, but argue for a “public health” exemption. The ECJ has stated it is ultimately for the domestic courts of any member state to decide whether MUP is a proportionate measure, the health benefits of which couldn’t be achieved by some other, less trade-restrictive measure, such as duty rises.
 
The Scottish inner Court of Sessions concluded it was a proportionate measure and it met the test set by the ECJ, and it is that decision that is now being appealed and the UK’s Supreme Court will rule on. My gut instinct is the appeal will fail and this will open the door for MUP in Scotland, where it is already law. Wales and Northern Ireland also want to introduce this measure and if they do it would be very difficult for England not to follow suit. I fear this is another anniversary we may be marking in the future, and not one that should be a cause for celebration by the trade.
Paul Chase is a director of CPL Training and a leading commentator on on-trade health and alcohol policy

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