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Morning Briefing Strap Line
Fri 12th Oct 2018 - Friday Opinion
Subjects: Worrying times, mixing work and pleasure, more pubs please and embrace the vegetable
Authors: Ann Elliott, Glynn Davis, Katy Moses and Michael Ingemann

Worrying times by Ann Elliott

There are times when you leave a pub or restaurant and think “that was OK but I wouldn’t rush back”. It wasn’t bad enough to complain or leave a comment about but you wouldn’t recommend it to anyone. In fact, not only do you not return to that specific venue, you blank the brand altogether. That happened to me years ago in a Prezzo – I never went back. It happened to me in a Jamie’s – I only ever use the brand in airports. It happened in a Beefeater – even the move to new branding didn’t persuade me. CAU wasn’t great when I took my family once so I never bothered again.

None of them were bad experiences, they were just average – and average doesn’t cut it any more. As we all know, average brands find it challenging to survive and none of us are surprised when we hear news of yet another CVA or administration.

Occasionally, very occasionally, operator clients don’t pay our invoices on time and that’s usually another sign something is wrong. We have only had five bad debts as an agency since 2001 – four of them were operators that delayed paying and where my personal experiences weren’t that great. They all went into administration.  

You can sort of sniff when a brand isn’t doing well. Subconsciously, or perhaps even consciously, you move gently away from it along with a lot of other people so when those brands are going through difficult times, you aren’t really surprised. It might be obvious in the food, where quality (or portion size) may have suffered in a drive to protect margins, in tatty menus that have not been replaced to save costs, in service where hours might have been taken out of the system to cut labour percentage, or in the overall experience where training could have been cut back. You can sense it.

I do think the efforts of Prezzo, with its new food, Jon Knight’s work at Jamie’s and Martin William’s regime at Gaucho, however, will help regain lapsed users into these brands. I really hope they all survive. 

However, the news on Tuesday (9 October) that The Burning Night group had gone into administration and Living Ventures had put Manchester House and Artisan into administration were both huge surprises. The Potting Shed is my “go to” pub when in Bingley (along with the fabulous Brown Cow from Timothy Taylor) and I have had fabulous occasions at both Living Ventures sites, where food and service have been exemplary. I am truly shocked.

Matt Smith, joint administrator when CAU went under, was quoted in the Telegraph in July as saying: “Unfortunately, the CAU brand has struggled in the oversupplied casual dining sector with rapid overexpansion, poor site selection, onerous lease arrangements and a fundamentally poor guest proposition all being factors in its underperformance.”

Most of these factors don’t seem to have applied regarding Burning Night, Manchester House or Artisan. I don’t know the real reasons but I am worried. When good, seemingly solid, highly regarded businesses go into administration, I think there is cause to worry – or perhaps it’s just me?
Ann Elliott is chief executive of Elliotts, the leading integrated marketing agency in the hospitality and leisure sector –

Mixing work and pleasure by Glynn Davis 

Some time ago I was invited by a City analyst to lunch at the Oriental Club in central London. Such was the nursery nature of the food in this old-school members’ club it has left no mark on my memory. However, what I can remember was the rule of “no writing allowed in the dining room” – not a great scenario for a journalist.

Such was the club’s desire to remove all vestiges of work, pens and paper were banned. My capability for retaining facts was put under intense pressure by the free-flowing claret so it took all my memory skills to remember the gossip being liberally passed my way.

I considered making excuses to regularly use the facilities where I could scribble surreptitious notes, but deemed it far too embarrassing for a pre-30-year-old to feign bladder problems. These days it’s fair to say the world in general – and certainly that of the private members’ club – has changed dramatically. 

The game-changer has arguably been Soho House, which launched a new kind of club in 1995 that successfully mixed work and pleasure. During the late-1990s its Soho venue was almost like a second home to me (even though I have never been a member) as so many of my contacts had joined. Although I always enjoyed the atmosphere I felt there was rather too much work being done, albeit from a leg-draped-over-the-chair pose rather than a more formal upright stance.

From its original Soho base in Old Compton Street the concept has expanded globally, with Amsterdam recently added to the portfolio and Mumbai and Hong Kong to launch soon. This is all part of a strategy to open four to five clubs a year around the world. Founder Nick Jones recently declared Soho House was well on its way to becoming the “first global club”.

The expansion to date has involved the business taking on debt that has been described by some critics as too much. This has been batted away by Jones, who thinks Soho House should be regarded as less of a hospitality business and more of a subscription operation – with its enviable retention rates of 95% and waiting list currently running at more than 50,000 people.

This talk will no doubt soothe the company’s debt-holders but I find it a slightly worrying description because selling food and drink to its members (in a setting conducive to their blurred work/play activities) is what the business should be about – down to its core. That is what Jones’ massive success is based on. If his statement suggests any minor change in philosophy or mindset there are concepts out there that would be up for grabbing a bite out of Soho House’s lunch.

Firstly there is the growing number of venues dubbed “club-working” spaces. They combine the social networking of private members’ clubs with the shared office space movement that is cropping up in major cities to service the growing number of startups and sole traders reluctant to sign long leases. One such example is 12 Hay Hill in London, which took out some of the sofa-style seating and replaced it with less comfortable seats that better suit a working environment.

Secondly, there is shared office space provider WeWork. It has taken on more than £3bn of leasing commitments in the UK and opened 20 sites while increasing membership numbers to 23,000. The valuation of the parent company is a hefty $20bn, which is only justifiable if you believe WeWork is completely rewriting the rules of the way office space works.

It is certainly doing its best. As well as the flexible way the space can be rented the other big feature is the way the properties incorporate social spaces and activities that blur the work/leisure balance. Regular speakers and networking events are held alongside craft beer and cocktails on tap.

These aspects are proving particularly appealing to younger business people – who are just the types Soho House wants to attract. If Jones wants to fulfil the ambition of his business being the first global club, he might have to start prising these people away from their “work” spaces.
Glynn Davis is a leading commentator on retail trends

More pubs please by Katy Moses

A property developer recently told me it has become ever harder to include a pub or bar in plans when regenerating and redesigning certain areas.

According to the latest edition of the Market Growth Monitor, licensed premises in Britain are closing at almost double the rate they were three months ago. The report showed Britain has 3,116 fewer restaurants, pubs, bars and other licensed premises than a year ago. If this continues, where will Brits hold their work events, birthday bashes and first dates? Even in the age of Tinder, a quarter of British couples claim to have first met in the pub. 

Marston’s chief executive Ralph Findlay claims from a “demand point of view” there is a lot of housebuilding in the UK – creating new towns and suburbs – while the demand is “only going to get bigger”.  

Should developers include on-trade outlets in their master plans or should residential properties be converted into pubs as demand arises? If the latter, does the planning process need to make it easier to convert residential properties?

The demise of the pub in many modern developments is part of a wider omission of “third places” – sites that provide an alternative to the home or workplace where people can meet and socialise. Harking back to the time when the pub was the centre of the community, it was our third place where you met people and relaxed. In meeting such a demand for new housing are we losing our third place? Is a lack of well-placed pubs in regenerated areas another reason people remain at home?

Good-quality design is an integral part of sustainable development. The National Planning Policy Framework recognises design quality matters and planning should drive up standards across all forms of development. As a core planning principle, plan-makers and decision-takers should always seek to secure high-quality design. Achieving good design is about creating places, buildings or spaces that work well for everyone, look good, last well and are adaptable to the needs of future generations. In my mind that includes ensuring easy access to quality on-trade establishments. 

Does good design include a pub or do we need to redefine what the pub is to us in 2018? The pub is no longer about drinking beer in a male-dominated village venue, it has become somewhere we can treat our parents to dinner, meet our friends for a coffee and take our children for lunch. Do town planners need to think about how we cater for everyone in the community in this way? How do we provide a third place for the culture of 2018 without losing the essence of the “local”?

Most planning permission these days is granted for “mixed-use developments”, with separate levels for retail, commercial and residential. These buildings are significantly easier to obtain planning consent for. Tesco has made a point of trying to snap up the bottom floor of these developments, a smart move. Meanwhile, a lot of these developments have struggled to gain permission for bars and pubs because of residents’ objections. 

However, there clearly remains a place for pubs that serve the community – and thank goodness for that. The Campaign for Real Ale, the Victorian Society and Historic England have managed to save numerous examples from demolition, as have local initiatives such as the Old Crown in Cumbria, the first co-operative, community-owned pub. There are now 42 of these community pubs in the UK including one down the road from KAM HQ – The Ivyhouse – and very nice it is too (full disclosure; I have community shares in The Ivyhouse)!

We are constantly hearing adults are drinking less. In fact the number of adults who say they drink alcohol is at its lowest level since surveys began in 2005, according to the Office for National Statistics (ONS).  Since 2005 there has also been a 2% rise in the number of adults in Great Britain who say they don’t drink alcohol at all, equating to about 10.6 million people. The ONS states “young people” are the least likely to have drunk alcohol in the past week. Our recent Generation Z report, Tomorrow’s Shoppers Today, revealed 40% of 18 to 24-year-olds describe themselves as teetotal – more than twice the number of UK adults in general.  

Should we make sure planners and developers look at the pub as something other than a location to drink alcohol? Many pubs near me seem to have sensibly exploited the lucrative family market and made their venues more attractive to the “yummy mummy” culture. Children now seem to be an accepted presence in many pubs – something that would have seemed unthinkable a few generations ago. In 1995 the ban on under-14s entering pubs in England and Wales was lifted and many pubs took the opportunity to remodel as more family-friendly and food-focused. This is where the argument to planners lies in my mind – the pub is a family-friendly third space that is necessary to cultivate a community feel in any development.
Katy Moses is managing director of KAM Media

Embrace the vegetable by Michael Ingemann

“To beef or not to beef – that is the question!” This was the battle cry of Italian butcher Dario Cecchini as he presented his bistecca alla Fiorentina at Curtice Brothers’ London launch of their ketchup brand in May.

The steak was fantastic, the tartar (“Italian sushi”) even better, and I’ve rarely eaten so much rare meat as I did that evening. In fact it was an evening celebrating beef as much as ketchup.

Such an event – ironically hosted during “vegetarian week” – also prompted a number of discussions about the future of meat in our diets, whether at home or dining out. Will we see a long-term shift away from meat? Is this a short-lived or purely metropolitan fad? And if it is a lasting trend, how should the restaurant industry and its suppliers respond?

It is interesting how the answer tends to correlate with a respondent’s age. Most under-40s will say “yes”, most over-60s tend to say “no”. Of course one could ask what youngsters know of the future as they haven’t seen much of the past yet but I would place my bet with the millennials as the case against meat-based diets is certainly a strong one when looking at the evidence.

A major scientific study reported earlier this week in the Guardian argues that huge reductions in meat consumption are essential in the fight against climate change. It stated: “In western countries, beef consumption needs to fall by 90% and be replaced by five times more beans and pulses.” This conclusion is not new but the message is making its way on to the national agenda.

Links between eating too much meat and a whole range of diseases have also been common knowledge for some time, with the implications rapidly entering mainstream dietary choices.

There seems to be growing awareness and concern about animal welfare and the responsibility each individual has through their dietary choices. Much of this is fuelled by the increasingly industrialised methods of animal production required to feed so many people at such low prices – and the fact YouTube has opened the windows for everyone to see what that looks like. Bismarck once noted the making of politics, like the making of sausages, is not a pretty sight. This also goes for modern animal farming and meat production.

Finally, it seems most people find it relatively easy to cut down on meat and find great-tasting alternatives thanks to imaginative recipes and menus, a growing number of plant-based products on the supermarket shelves, and a realisation one can eat very well without meat-based proteins driving the meal.

New industries are also emerging in response. California-based Impossible Food attracts millions of dollars from investors and has created a plant-based burger to rival many beef options in taste and texture. And Ikea, which sells more than 100 million hotdogs globally a year – achieved a 17% market share with its new veggie dog in initial test markets within a month.

So what are the implications for the restaurant industry? Firstly, my advice to most players would be to embrace this trend regardless of whether it turns out to be long-lasting or fades away in a few years.  

I’ve seen so many ambitious and quality-driven chefs up to Michelin-star level create menus that can’t be eaten by vegans, even in 2018. In one case, for example, I took a menu card in a food hall and crossed out everything a vegan couldn’t order. What remained was a starter, a salad and a dessert – hardly customer-focused menu planning in the centre of a big western metropolis.

We still seem to be in the early stages of the product life cycle when it comes to shifts away from meat, and restaurants that offer a strong vegan and vegetarian component have a great opportunity to cater to this early-adopter audience. It gives an opportunity to tell the story on social media and allows restaurateurs to reach a still mostly female target group – one that often seems to be the decision-maker in choice of venue.

This is a key point. Instead of reluctantly adding plant-based choices to a menu, there is an opportunity to innovate, communicate and engage with an audience that cares about the food it eats.

For suppliers, my advice would be don’t ignore the trend as an insignificant fad that’s bound to go away. I recently had a conversation with the chief executive of a leading importer of speciality products – mostly meat-based – about whether to add a line of quality, plant-based “meat substitutes”. It might come in the future, was the thinking, but not now. Two weeks later the company received the first customer request and it has started to explore the market and source the right products. Again, there is an opportunity to stay innovative, knowledgeable and relevant to one’s customers.

It reminds me of conversations I had as a management consultant with media companies in the 1990s, when the internet was still something most people had only read about. The idea print – or even the nascent CD ROM – could be replaced by “online” access was seen as ludicrous and not something to worry about, let alone invest in. Only the change-ready remain.

Just like the internet, a substantial shift away from meat-based proteins will pose significant challenges to many restaurants’ business model. A key problem with increased vegetarianism or veganism for restaurateurs is it fundamentally changes the game. Meat dishes are generally priced higher than plant-based dishes. While there may be some margin gain on vegetable-based dishes compared with animal protein, this doesn’t totally compensate for the revenue reduction. With fixed overheads, this is a worry for many. The problem is compounded by removing high-priced “trade-up” options, such as expensive beef cuts, which traditionally return a high cash margin. And will the decent-vintage Chateauneuf seem much more expensive when the food bill is lower? Chefs may need to learn a new culinary vocabulary if meat is not allowed, as must front of house.

As with everything else, we can’t predict the future but we can make the most of the present – and right now that seems to include embracing the “vegetable forward” trend with all its opportunities and challenges.
Michael Ingemann is executive chairman at Claus Meyer Restaurants and a partner at Think Hospitality, which advises multi-site brands on growth, brand and development strategy

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