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Morning Briefing for pub, restaurant and food wervice operators

Fri 17th Aug 2018 - Friday Opinion
Subjects: Pushed to the periphery, rise of the operators, adding value through food and don’t forget the milk
Authors: Glynn Davis, John Upton, Paul Farr and Ann Elliott

Pushed to the periphery by Glynn Davis 

Visit what is known the Bermondsey Beer Mile in south east London and you’ll find the highest concentration of breweries in the country. The area is stuffed full of small craft beer producers. Although they brew a wide variety of beers, one characteristic links them all – each is housed in a railway arch.

It’s not only the capital where you’ll find this phenomenon – other major cities around the country have their fair share of railway arches, with these units perfectly suited to brewing (on a modest scale). They are capable of housing industrial equipment, are centrally located and therefore close to the customer base, and are relatively affordable compared with other city centre properties.

What will no doubt worry these craft brewers is the prospect of radically increased rents as owner Network Rail looks to auction off its 5,500 properties for a reported £1.4bn. As many as 4,455 of these properties are railway arches, with a hefty 94% of them occupied.

Ahead of the sale, which at the last count had four mainly private equity players still in the game, the rail company has been pushing through some seriously high rent rises. This clearly conveys a higher valuation on its for-sale assets to potential buyers and is also an arbiter of bad things to come because any new owner will undoubtedly be aggressive in its stance on rent renewals as it looks for some early wins on its investment. 

For London’s brewers things look particularly tough because those that have looked to move beyond the railway arch and into larger premises have found it hard to find other industrial units. The issue is residential is taking preference and former industrial areas are being replaced by blocks of flats.

On a recent visit to Truman’s Brewery it was evident the surrounding area near the Queen Elizabeth Olympic Park in east London is being transformed. The brewery sits on a site surrounded by under-construction apartments. Just around the corner are two other breweries – Crate and Howling Hops – with the former also having issues with space requirements as the area undergoes gentrification and widespread change of use.

The reality for these breweries is they are being pushed out to the periphery of the city if their intention is to grow. Many hope to retain their units – to run as small-scale pilot plants for short-run beers and taprooms – while shifting the bulk of core production further afield. By retaining their original bases, the idea is they can hold on to their London heritage and provenance.

Camden Town Brewery undertook just such a move following its purchase by AB InBev, which means its original railway arches site in Kentish Town houses its taproom and brews special beers while its flagship Hells lager is produced in Enfield on the edge of town.

Beavertown has similar plans following its recent decision to sell a minority stake in its business to Heineken. That £40m will be used to build a serious production facility outside the capital – dubbed Beaverworld – while its present site in Tottenham will be retained for its barrel-ageing programme and small-run beers and, I expect, a taproom.

Although this scenario could be seen as a largely London-centric problem, a number of the UK’s major cities are undergoing their own serious transformations. One of the drivers is more people are choosing to live in city centres, resulting in a rise in demand for residential property and an inevitability craft brewers will have an increasingly tough time in city centres.

As an especially grateful recipient of the output of craft brewers this represents something of a worry. I hope it doesn’t impede the ongoing growth of what has been one of the most remarkable growth stories in the leisure industry during the past decade.
Glynn Davis is a leading commentator on retail trends 

Rise of the operators by John Upton

It has long been the norm that brands (and their plans) are owned, grown and nurtured by marketing teams. Operators, with their front-line teams, have been tasked to lead day-to-day execution for customers. Plans have been developed, departments structured and resources deployed along these fault lines for years.

However, this traditional split is no longer fit for purpose. The seismic and still growing impact of social media means your brand can literally be made, or broken, depending on what your customers say about you. Customers talk freely about brands on a range of public channels, sharing personal experiences with an amazing level of detail and frequency.

This social media eruption has, in effect, led to a virtual democratisation of brands and their ownership.

This means operators, and how well your teams deliver, have an even greater role to play if you’re going to keep growing your business. One contact told us recently that every time a customer posted an image of a poor food image, more than 500,000 people saw it.

From listening to colleagues across the hospitality and leisure industry in recent months, we continue to hear that many marketing departments still assume they own the brand. They don’t.

Let’s be clear, this piece is not about bashing marketeers. Marketing and marketeers will still play a critical role. The point is social media has not only moved the goalposts when it comes to brand ownership and growth, it has moved the whole pitch.

Continuing with the football analogy, fans and crowds are pivotal in the make-up of football clubs around the world. Successful clubs recognise, rely and embrace the fact their fans are part of their DNA.

The smart brands have worked out this applies to them too. The incredible power of social channels, fuelled by happy (and unhappy) fans, has fused customers and their experiences into the DNA of many brands.

We’re continuing to encounter brands that still haven’t worked out how best to deal with this and are having to catch up fast. As a result, brands are now massively and decisively influenced by how well operational front-line teams are delivering for their customers. The traditional push approach from marketing is no longer adequate.

This represents a true paradigm shift. To win, you have to think like an operator and recognise it has become increasingly important your front-line teams consistently deliver the basics your customers expect from you.

It’s not just the voice of the customer you have to embrace. You must also open your ears to the voice of the operator and your front-line teams. Ask yourself: “How am I listening to and taking note of the operators in my business?”

Structures and ways of working have to evolve so marketeers and operators work side by side. For fellow operators reading this, I’m sure you’ll have a wry smile and think you’ve known this for years.

If you get it right, you’ll be rewarded with repeat business and growing sales. If you don’t, thousands and even millions of customers will find out – and that may put you squarely in a relegation battle.
John Upton is chair at fast-growing brands Mother Clucker and The Naked Deli and works with iCustomer, using artificial intelligence to help businesses identify and meet customers’ needs (

Adding value through food by Paul Farr

Research conducted for our National Pub Fortnight campaign found more than half of pub-goers champion their local pub as the place to go for food and drink, with one in five visiting between once and three times a week.

This ongoing consumer demand has opened the door for more publicans to diversify their offer and further boost sales. But for a significant proportion of our estate it’s anything but straightforward. Supporting our publicans in growing their business is something we’re hugely passionate about, particularly in the area of food development.

When I joined Ei Group 18 months ago I worked closely with the team to identify food trends we could adapt and simplify to help our publicans build their business. Simplicity was a major focus as we went through the process of finding and implementing the right initiatives, so we structured our programme around three key themes – creating the offer; providing the correct training; and process and delivery.

This year Ei Group has introduced two exciting food and drink offers across its Ei Publican Partnerships portfolio – Barrel Top Pizza and Beerista coffee. It only takes one look at the high-street casual dining market to see pizza concepts are booming, and with excellent financial margins it seemed a no-brainer to help our publicans tap into this trend and get a slice of the action. Not only is pizza a great match with beer, it can be remarkably straightforward to make if you have the right equipment and processes in place. We identified the complexity restaurants are challenged with and simplified it for our publicans, acknowledging that within our large and diverse estate, one size will not fit all.

As part of the package, we offer bespoke kitchen templates to fit a pub’s requirements, as well as measured dough quantities and quality sourced topping ingredients. We aren’t trying to reinvent the wheel, but have focused on doing the simple things well.

We are also working hard to help our publicans tap into the lucrative UK coffee market, worth a staggering £3.7bn a year, through the launch of the Beerista coffee solution. We want to give them the opportunity to take on high-street coffee chains, which continue to challenge the role of pubs as community hubs. The package includes a suitable coffee machine, appropriate training support, pricing structure guidance, 100% Arabica coffee and crockery, and marketing collateral.

When introducing any new offer, training is key. With that in mind, earlier this summer we joined forces with University College Birmingham (UCB), a major player in terms of higher education for the hospitality industry. By linking our organisations we are able to use UCB’s state-of-the-art facilities to enhance our training and development.

An immersion day for regional managers and our field-based teams topped up their knowledge on the new offers as well as the latest trends and innovation. They can now share this expertise with our publicans across the country as well as offering ongoing advice and conducting quality control tests, offering publicans as much support as needed.

It’s fair to say we have a diverse range of pubs within our business, from Michelin-starred “foodie” sites to predominantly wet-led venues, and we’re focused on unlocking the potential of each one. For those publicans who have never offered food or have a limited menu, we’ve created an easily accessible menu app as well as a comprehensive training programme.

In addition, we continue to take the key learnings from our managed house portfolio and share with publicans from our leased and tenanted estate. A further benefit of our new partnership with UCB is we also hope to inspire students who want to get a taste for pubs as fun, exciting, demanding businesses and hopefully add our sector to their career choices.

While food and drink trends change year on year, at Ei Group we are on a journey of continued improvement in how we harness those for the benefit of our hard-working publicans – and we have plenty more initiatives in the pipeline. 
Paul Farr is head of food at Ei Group 

Don’t forget the milk by Ann Elliott

On Wednesday evening this week we stayed in an Airbnb near Richmond, North Yorkshire, on the way to spend a few days at the Edinburgh Fringe to celebrate our 30th wedding anniversary. We arrived about 10.30pm and, after a bit of uncertainty on how to work out the key box and get into the place, a bit unnerving with the thought of having to drive on to Edinburgh if we couldn’t work out the key code, we got in.

The property was beautiful. Some Airbnb properties feel as if they have been used as a dumping ground for the owner’s unwanted Christmas presents and tat brought back from foreign holidays – not this one. Neutral colours, nice paintings, rugs and cushions, modern bathroom – all very tasteful and welcoming.

But no milk! We searched high and low but there wasn’t much hiding space in the small fridge and it was utterly empty. Not having milk seems such a tiny thing but it had a big impact on our feeling of hospitality. It didn’t matter how lovely the place was to be quite frank. We wanted a cup of tea when we arrived and before we left and we certainly didn’t want to get back into the car again and find a garage. We had a welcome pack but no welcome.

It got me thinking about the small things other Airbnb owners have done to make us feel welcome. In Leith a few weeks ago, Mei left us cereal, bread, jam and chocolates and waited to welcome us even though our train was late. In Besse, France, Melanie rang a pharmacy and booked a wheelchair for my dad (her kindness reduced me to tears), left us two bottles of sparkling wine and booked a restaurant for us on the day we arrived. In Eymet, Christine booked us taxis to and from the wedding we were going to and in Amsterdam, Dan, the owner, left a bowl of fresh fruit and a handwritten welcome note. In Chatham, Cape Cod, it was like walking into Patisserie Valerie with free, around the clock home-baked cakes, biscuits and scones available, while in Martha’s Vineyard the owner sat and shared a bottle of wine with us after a meal out.

Most Airbnb owners are individuals and know what it’s like for their guests when they arrive slightly harassed, concerned (“what if the place is awful?” That’s happened to me and I have had to find somewhere else to stay pretty quickly) and tired at the end of their journey. They are able to put themselves in their customer’s shoes and think “What would I like if I was just arriving in my house after travelling? How can I help this be a memorable, relaxed and easy experience for my guests? What are the small things I can do to make a difference?”

It takes some thought and effort but more than pays back in how we feel as guests when we arrive and when we leave (and what we say in our reviews). Putting others first seems, to me, to be at the heart of this. The best owners seem to get under the skin of their guests so what they do for one visitor isn’t necessarily what they do for others. Or at least that’s what it makes me feel when I stay.

I know now what my basic requirements are from an Airbnb place – it needs to be clean, safe, comfortable, well equipped and nicely furnished – but what I love most is the individualism I experience and the effort I see owners make, on top of these basics, to be hospitable. It’s the small things. Kindness and thoughtfulness just make all the difference. No milk isn’t just about no milk. It’s everything it symbolises to me as a guest.
Ann Elliott is chief executive of Elliotts, the leading integrated marketing agency in the hospitality and leisure sector –

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