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Morning Briefing Strap Line
Fri 25th Aug 2017 - Friday Opinion
Subjects: Why government needs to support the late-night sector, reality starting to bite for foodservice industry, and alcohol and the ‘alt right’ 
Authors: Peter Marks, Glynn Davis and Paul Chase
 

Why government needs to support the late-night sector by Peter Marks

One of the most frustrating aspects of running any licensed leisure business is the perceived lack of understanding from government, both national and local, of what the night-time economy brings to our towns and how finely balanced our own company ecosystems are. 
 
Many reading this will agree with me when I say that as a sector we are over-taxed, over regulated and more often than not, held responsible for any incidents that happen on or near our premises, regardless of the role played by the individual concerned. At the heart of every great town or city is a healthy, vibrant late-night economy, it makes sense that local and national government should be supporting us, rather than stretching us as far as they can.
 
The latest in this long line is the introduction of General Data Protection Regulation legislation, which, if breached, could cost businesses up to 4% of turnover in fines. This, to me, demonstrates a complete lack of understanding of businesses by the government. I fully support and understand the need to protect personal data but for me, the size of the fine exposes the gulf between the government and our businesses. Some companies’ margins can afford this, but can licensed retail’s? Our sector operates on much lower margins, and for those who invest in their estates, a 4% fine will only be destructive.
 
I have often spoken about the need for government to engage with investors, leisure operators, transport providers and local residents to ensure all interests are catered for. However, I feel the lack of understanding of the positive impact the late-night sector has on the wider economy continues. Late-night leisure businesses are known for creating jobs and drawing people to the high street but it goes beyond that – people are also spending money on getting ready for a late night out, keeping our independent and mainstream fashion retailers in business, not to mention our towns’ beauty salons and hairdressers.
 
The apparent need to change the perception and educate decision makers about the late night was one of the key drivers behind our decision to launch the Deltic Night Index (DNI). This is a piece of independent research we commission on a quarterly basis, interviewing 2,500 people across all age ranges over 18. It seeks to understand why people go out, how often they go out and how much they spend. Its results have been interesting and in some cases surprising. The study is compelling evidence to what we always felt was the case – as a nation, we love a great night out and, importantly, we’re willing to pay if the offer is right.
 
The latest index, conducted in June, sought to understand the wider benefit of the late-night leisure industry to local economies by questioning people on what they spend their money on before they go out. This might include clothes, make-up, hair and beauty treatments.
 
The stats showed 59.4% spend their money on new shoes and clothes, 32.8% on haircuts and treatments and 18.5% on beauty treatments. On average, Brits spend one hour 52 minutes and £12.40 on getting ready for a late night out – this rises to £19.28 for 18 to 21-year-olds. Men spend less in preparation for a night out, but not by a lot, £11.61 compared with the £13.14 women spend.
 
So, a healthy night-time economy helps clothes shops, shoe shops, hairdressers and beauticians and chemists. The figures demonstrate the interconnectivity between the night-time economy and the daytime economy. Often on my travels, where I see a failing night-time economy I also see ghost towns with empty high streets.
 
Of course, it is not a simple equation as the wider economy, jobs, housing, demographics, students all influence the ecosystem of a town or city centre, but what the DNI and my experience tells me is the night-time economy is part of the chain and all links in that chain need to be working. As I often say, I have never seen a town improve through the loss of its nightclubs and bars – quite the contrary. 
 
The policy makers, the government and local authorities need to understand the role our sector plays in a healthy and balanced town centre that will provide facilities where people want to live, work and socialise, rather than move away to a few prosperous cities and leave our towns slowly dying. 
 
Some councils are getting it. I have had two councils call me over the past year or so asking Deltic to invest in a new nightclub and act as an anchor tenant to the night-time economy. The key is to not let towns and cities flounder in the first place. They can turn, and many have improved of late due to council intervention. Hull is a prime example of where working together can revive a town or city – the docks area is simply amazing. But you don’t have to be the City of Culture and receive central funding to succeed – you just need focus on the right things.
Peter Marks is chief executive of Deltic Group

Reality starting to bite for foodservice industry by Glynn Davis

When you hear nearly 3,000 restaurants and cafes are expected to open in the next two years it does sound rather worrying as it comes on the back of an already lengthy period of expansion by many operators in the UK’s foodservice industry. This figure comes from property firm Cushman & Wakefield, which also suggests these openings will continue to act as the natural successor to clothing stores that are shutting up shop on the high street as a result of the rise of online retail. Really!

This may well be true in a purely transactional sense but when you look at the situation on a more granular level then the ramifications of these thousands of new openings should raise a lot of red flags. The rampant expansion we’ve witnessed is surely going to end in tears for some operators. We can pretty convincingly state the retail sector is over-shopped (with many players now right-sizing their retail estates) and I now wonder whether we have already reached a similar situation in the foodservice industry.

Such a scenario is also coming to a head in the US, which has been in the midst of a similarly arguably overzealous expansionary period. The country is finding like-for-like sales are falling as a direct result of there simply being too many restaurants.

Credit Suisse has calculated 40,000 new restaurants have opened in the past six years (that works out at a not inconsiderable 18 per day). The other interesting figure the bank turned up is unit growth has outpaced population growth for four of the past five years in America. For this to be sustainable there has to be a continued increase in the frequency of eating out by the existing population and for spend to be at least maintained on each visit.

It is definitely the case that growth in the sector, both in the US and UK, has been partly forged on the back of this increased frequency of “eating out” – with a key contributor the incredible growth in food delivery. But on both sides of the Atlantic there is doubt about the sustainability of this. 

The recent MCA Eating Out Panel highlighted this very point, with its finding that visit frequencies had “taken a marked turn for the worse” of late and this was being reflected across all parts of the day. It found this had contributed to a 3% reduction in year-on-year value growth for the total eating-out market.

It is equally interesting UK restaurant owners have increased their loans to their own businesses by 18% in the past year – to more than £200m – in order to keep them afloat, according to Funding Options. This suggests a certain level of precariousness in the financial situation of certain restaurants that were unable to secure funding via other routes. 

Surveys aside, I think it is often more instructive to hear the voices of operators and so it was extremely insightful the well respected David Page, chairman of Fulham Shore – a man who has had his fingers in many pies (that’s the US term for pizza by the way) – has recently warned of the future of many restaurants. His concern for their profitability (and survival in some cases) stems from a raft of issues that are enveloping the sector.

In no particular order, but all potentially equally damaging, Page warned of too many “me-too” offerings, over-rented sites, tails of unprofitable sites, dated menus, too much debt, poor concepts, and unincentivised employees. We can also add into this toxic cocktail Brexit uncertainty, the National Living Wage, and continued raw material inflation. 

The reality in the market is these issues are being felt by operators and the smarter players are already on the case of addressing these issues. That’s why we have seen Jamie’s Italian and Byron closing specific (unprofitable) sites in what is a clear pruning exercise by savvy operators.

It is absolutely the case that more foodservice companies will follow their lead and look at the health of each of their individual restaurants. While this is taking place there will be increasing pressure exerted on the industry if we are to believe the figure that 3,000 more outlets are going to be added to the mix before 2020!
Glynn Davis is a leading commentator on retail trends

Alcohol and the ‘alt right’ by Paul Chase 

In recent weeks we have all been treated to the sick spectacle of “alt right” activists, replete with swastikas, Confederate flags, and in some cases dressed in military fatigues and carrying firearms, demonstrating to retain a statue of Confederate General Robert E. Lee, a demonstration that led to a counter-demonstration and a neo-Nazi driving a car at speed into the crowd, killing one person and injuring others. “Alt right” is an umbrella term used to denote a rag-tag collection of white supremacists, neo-Nazis and Ku Klux Klan (KKK) members – a veritable list of history’s sick losers. 

It is up to the people of Charlottesville to decide what statues they want in their town square, but I decided to look at the position – both historically and currently – that racist, anti-Semitic and white supremacist groups have taken in relation to alcohol, its prohibition and its uses.

Historically
Historically the KKK was anti-alcohol and in favour of prohibition. After Prohibition was enacted in 1920 the KKK became one of its main defenders and enforcers. The KKK and Women’s Christian Temperance Union (WCTU) shared a common interest in promoting and defending alcohol prohibition, women’s suffrage, Protestantism, and the protection of domesticity. They also both shared hostility towards immigrants. The WCTU was also incensed by the idea that black males might get the vote before white females. For these reasons, the two groups co-operated with each other and shared many members and leaders.

Because it so strongly opposed the sale of alcohol, the new Klan attacked bootlegging. The Klan’s resurgence in the 1920s partially stemmed from its role as the extreme militant wing of the temperance movement. In Arkansas, as elsewhere, the newly reformed KKK marked bootleggers as one of the groups that needed to be purged from a morally upright community. In 1922, 200 Klansmen torched saloons that had sprung up in Union County in the wake of the oil discovery boom there. In what came to be known as “Bloody Williamson”, a county in southern Illinois, battles between the operators of wide-open taverns and the “dry” KKK killed 14 people in 1924-25.

Although Prohibition became increasingly unpopular with the passage of time, the KKK strongly and actively opposed its repeal. Membership in the KKK was limited to men. Women joined the Women of the KKK (WKKK). Lulu Markwell, one of the first leaders of the national WKKK organisation based in Little Rock, headed the Arkansas chapter of the WCTU for 20 years. Lillian Sedwick served as state superintendent and county director of the young people’s branch of the WCTU. She later became an important WKKK leader and other women followed the same path. They included Myrtle Cook of Iowa, a member of the WCTU murdered for documenting the names of bootleggers, and Lillian Rouse of the WCTU and its young people’s affiliate, who later joined Sedwick in the WKKK Indiana affiliate. Elizabeth Tyler, one of the first leaders of the WKKK, was also active in the Anti-Saloon League.

Currently
Today the “alt right”, which includes but is not limited to the KKK, still bemoans the demise of alcohol prohibition. There is a disgusting website that gives an alt right history of the United States – www.altrighthistoryoftheus.weebly.com. The section entitled “Jews and the Liquor Industry” gives a strong clue as to where it is going with this and makes it clear it regards repeal of Prohibition as part of a much wider “Jewish conspiracy” – detailing the Jewish ownership of many distilleries and whiskey and bourbon brands. And as for bootlegging, the website ignores Al Capone and the Mafia gangsters of prohibition, preferring instead to focus on the Jewish ones like Mayer Lansky and Bugsy Siegel.

The attitude of the alt right in relation to alcohol isn’t confined to racist and anti-Semitic historical revisionism, but actively embraces the misuse of alcohol and marijuana to subvert the democratic process. According to the online newspaper the Daily Dot, in the 2016 US presidential election the neo-Nazi leader Andrew Anglin announced plans to go into ghettos in the Philadelphia area to give out free alcohol and marijuana on election day in the hope that black voters would be too drunk or stoned to vote for Hillary Clinton! He said this: “We also have some teams going in to the ghettos in Philly with ‘40s and weed to give out to the local residents, which we think will lead to more of them staying home.” (‘40s’ is a reference to malt liquors commonly served in 40 fluid ounce bottles in the US). This is the same alt right that turned up to demonstrate in Charlottesville and which president Trump said had “many fine people”.

In my forthcoming book, “Alcophobia”, I lay out the history of how all the temperance and prohibitionist-supporting groups in the US accommodated racism in the southern states to avoid alienating potential supporters. This includes several temperance groups that are still active today and that accommodated racism and campaigned against giving the vote to black people both before and in the run-up to Prohibition. For these people, opposing alcohol use trumped every other consideration.
Paul Chase is a director of CPL Training and a leading commentator on on-trade health and alcohol policy

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