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Morning Briefing Strap Line
Mon 30th Mar 2020 - Propel Monday News Briefing

Story of the Day:

Banks must provide immediate finance to stop high-street chains going bust: Scores of Britain’s high-street food and drink chains will go bust by the end of April unless banks provide immediate finance, UKHospitality chief executive Kate Nicholls has warned. Nicholls said short-term loans from banks would be “vital” to cover costs pending the arrival of the government’s new grant packages. She told the Mail On Sunday: “Banks aren’t moving fast enough to get the money to businesses in dire straits. If companies have to wait two to three weeks for loans, jobs and livelihoods will be lost.” Struggling brands include Landmark Group-backed Carluccio’s, which is expected to appoint administrators this week. Carluccio’s board has been working on a plan to mothball the business while retaining its 2,000 staff on 80% of pay. By placing the business into administration it can still ensure its staff can be put on furlough and paid 80% of their wages under the government’s Coronavirus Job Retention Scheme. Propel understands many other sector operators will explore this route in the coming weeks. Meanwhile 51-strong Byron has appointed KPMG to explore ways to shore up its own balance sheet. On Saturday (28 March), Propel revealed Carluccio’s and Byron had been holding talks regarding a merger, which came to nothing. Byron and Carluccio’s both undertook company voluntary arrangements in 2018, shedding underperforming sites, and received new £10m cash injections from their respective backers. However, it’s thought the performance of both had been under pressure before the pandemic and Byron could follow Carluccio’s into administration.

Industry News:

Sponsored message – Wi5 launches online forum for hospitality leaders: Mobile order and pay company Wi5 has launched Gather, an online forum for leaders in the hospitality industry. The forum is aimed at owners and senior executives of restaurants, cafes, pubs, bars and nightclubs and is a space for leaders to share learnings, resources and innovative ideas to encourage peer-to-peer support and collaboration during the covid-19 crisis and beyond. Wi5 chief marketing and strategy officer Gavin Peters said: “Having worked closely with our clients and friends in the industry since the coronavirus crisis took hold, it has been clear there’s a real sense of togetherness in the hospitality community. However, there have been a lot of requests for a simple communication channel for operators to collaborate and help each other through these challenging times. This forum is all about creating a positive environment to help operators get proactive and creative and come back stronger than ever.” To access the forum, click here

Propel launches BeatTheVirus campaign: Propel has launched its BeatTheVirus campaign to help operators through the coronavirus crisis. We have teamed up with Propel Multi Club conference series partners to offer the sector their expertise. Partners will offer more general advice and highlight some of the initiatives they are doing. Companies that have joined the campaign include Advanced Sales Network, Airship, Bibendum, Bums on Seats, CACI, Christie & Co, COREcruitment, CPL Learning, Cynergy Bank, Elliotts, Hastee, haysmacintyre, John Gaunt & Partners, KAM Media, Prestige Purchasing, S4labour, Startle, Ten Kites, The NPD Group, Toggle, Trail, Venners, Wireless Social, Yapster and sector trade body UKHospitality. Propel managing director Paul Charity said: “It is amazing to see how the industry has come together during this crisis and at Propel we want to do our bit. That is why we are working with Multi Club partners to offer expert support and advice to our readers and to answer their questions at what is a tough time for everyone.” Readers can email questions for our experts to Please use BeatTheVirus in the subject line. Our question and answer section can be found at the bottom of the newsletter.

John Gaunt & Partners provides further guidance following new government legislation: Sector licensing law firm John Gaunt & Partners has provided further guidance for operators after the government introduced new legislation amid the coronavirus outbreak. The measures, which apply in England only, have seen the former Business Closure Regulations revoked and replaced by the Restriction Regulations, which effectively puts the country into lock-down. Pubs, restaurants, cafes and other foodservice businesses that consider breaching the ban of selling food consumed on the premises will be subject to a fixed penalty notice and/or fine under the regulations. John Gaunt & Partners warned outside seating would be considered part of the premises. It also confirmed operators could remain open for takeaway and delivery. The measures will remain in place for what is described as the “emergency period” under the legislation. The regulations must be reviewed at least once every 21 days, with the first review required by 16 April. Tim Shield, partner at John Gaunt & Partners, told Propel: “These regulations essentially combine a number of announcements and advice government has given in the past few days to promote social distancing. A lot has happened very quickly and matters will undoubtedly continue to evolve.”
John Gaunt and Partners is a BeatThe Virus campaign member

MP brands drive-thru closures an ‘overreaction’: MP for Arundel and South Downs Andrew Griffith has said closing drive-thrus was an “overreaction” and might have “undermined” the battle against coronavirus. Writing in The Sunday Telegraph, Boris Johnson’s former business adviser said outlets such as McDonald’s were widely used by emergency workers before and after their shifts. He also lashed out at those who had “shamed” companies for remaining open, saying they should be “applauded” for helping the country stay “open for business” as much as possible. He said there should also be praise for the companies that have “stayed open to keep the lights of the economy on and maintain vital aspects of life for the fortunate 99% of households who aren’t expected to end up in hospital as a result of this virus”. Griffith said: “The drive-thru McDonald’s in my constituency was one of few such facilities in rural West Sussex, full of blue-light workers day and night grateful for a freshly-made coffee, clean WC and a hot bite to eat on the way to or from their shift. Where are all those essential workers supposed to go now? The economy – not to mention our children’s generation – will thank business leaders for not overreacting.” 

Government suspends insolvency rules to help struggling firms: The government has announced new measures that will allow struggling companies undergoing a rescue or restructure process to continue trading and give them breathing space to avoid insolvency. The change involves temporarily suspending wrongful trading provisions retrospectively from 1 March for three months for company directors so they can keep their businesses going without the threat of personal liability. Business secretary Alok Sharma also announced the government would introduce legislation to ensure those companies required by law to hold annual general meetings (AGMs) would be able to do so safely, consistent with restrictions on movement and gatherings introduced to address the spread of coronavirus. Companies will be able to hold AGMs online or postpone them. They will also be able to buy supplies such as energy, raw materials or broadband while attempting a rescue. Sharma said the measures would “reduce the burden on business”, giving bosses “much-needed breathing space to keep their workers employed and their companies going”. He added: “It is crucial when the crisis passes, as it will, that we are ready to bounce back. These measures will give those firms extra time and space to weather the storm and be ready when the crisis ends while ensuring creditors get the best return possible in the circumstances.” UKHospitality chief executive Kate Nicholls said: “I am pleased the business secretary has confirmed retrospective temporary suspension of the Insolvency Act to give directors confidence to act, particularly around staff and wages, without fear of liability. This was a proposal we first put to government last week and have been working hard to secure.”  

Scottish government pledges £2.2bn to support sector: The Scottish government has pledged a £2.2bn package to support hospitality businesses forced to close as part of the lock-down. The package will be implemented from 1 April. Key actions for hospitality and tourism include a full year’s non-domestic rates relief for the sector, £10,000 grants for small businesses in receipt of the Small Business Bonus Scheme or Rural Relief, and £25,000 grants for hospitality, leisure and retail properties with a rateable value between £18,000 and £51,000, including self-catering accommodation and caravans. 

OAPA calls for large-scale food support: Only A Pavement Away (OAPA), the hospitality industry charity that supports the homeless, ex-offenders and veterans with jobs in hospitality, is calling on the industry for food and catering support. The charity is looking for large-scale food donations to support its homelessness initiatives, with the situation becoming more urgent during the pandemic. OAPA founder Greg Mangham said: “We are looking for immediate support in the form of sandwiches and street food as well as large-scale catering of individual meals to be distributed to sites across London.” 

Job of the day: COREcruitment is working with a retail, hospitality and luxury products entrepreneur as they look to expand their range of brands. The overall company ethos focuses on recreating historical or culturally important brands and concepts to release into the high street. With several new avenues available, they are keen to talk to individuals who are looking to partner, invest and operate a new brand, whether that be cosmetics, apparel, luxury food or within fitness. The package would be a combination of salary in equity, ideally with capital invested at the outset. If you are interested in this project, email 
COREcruitment is a Propel BeatTheVirus campaign member

Company News:

Deliveroo pledges 500,000 free meals for NHS workers: Deliveroo has pledged to give 500,000 free meals to front-line NHS workers. The company has secured donations of 350,000 free meals from restaurants to date, led by Pizza Hut, which has pledged 300,000 meals using its network of 700 UK stores. Other meal donations include a substantial offer from healthy Asian food chain Itsu, while Pizza Hut has also donated funding to help cover the cost of deliveries. Deliveroo said it would initially focus on London and Manchester before expanding the service, with any excess funds donated to the NHS. Pizza Hut is also offering free deliveries to hospitals and 50% discounts to NHS staff, while Deliveroo is changing its app to enable customers to buy a meal for a doctor or a nurse. Deliveroo will also continue to deliver free food to the vulnerable during the crisis via London-based charities. Founder and chief executive Will Shu said: “Those in the NHS working night and day to save lives are the real heroes of this crisis and we want to do our bit to support them and the vulnerable who aren’t able to leave their homes. Thanks to our dedicated riders, the generosity of our restaurant partners and their teams, who are keeping kitchens open to serve those most in need, we hope to make a difference.” Pizza Hut UK general manager Neil Manhas added: “Pizza Hut is committed to doing what’s right during these difficult times and using our 700 Huts across the UK to make a difference.” 

BrewDog founders to forgo all salary for 2020: James Watt has said he and fellow BrewDog founder Martin Dickie will forgo all their salary for 2020 to protect jobs at the company. Watt tweeted: “In order to protect as many jobs at BrewDog as we can, many of our senior team have volunteered to take pay cuts and myself and my co-founder Martin are forgoing all salary for 2020 – but we haven’t started sleeping in the brewery (yet)”. Last week Watt said the Scottish brewer and retailer had lost “70% of its revenue overnight” following the lock-down, while the business was adapting as it “fought to survive”. He said: “We are doing all we can to adapt and think about our resources differently to try to survive and save as many jobs as we can. We’re also trying to help the country as we do this so we’re using our distillery to make hand sanitiser and giving it away. It’s going to come at a cost to the business but I think it’s the right thing to do at this time, which is a challenging time for everyone. We’ve been using some of our team members to go into supermarkets and help keep beer on the shelves. We’ve been using our bar network as delivery hubs.” 

TRG denies planning emergency rights issue: The Restaurant Group (TRG) has played down reports during the weekend it had been planning an emergency rights issue but has refused to rule out exploring one in the future. Propel understands the company has yet to appoint an adviser in regards to overseeing a rights issue or mandated anyone to approach shareholders about one. The Sunday Telegraph reported the Wagamama, Frankie & Benny’s and Chiquito operator had been forced to shelve a £500m debt restructuring as credit markets dried up and was trying to prop-up finances amid the lock-down. This included looking to raise funds via an emergency rights issue. In an update to the City earlier this month, the business stated: “Clearly the situation is evolving rapidly and there’s no certainty around the severity and duration of the impact on the business. The company is continuing to consider its funding options, both equity and debt, on an ongoing basis.” 

St Austell reveals temporary staffing structure as it sees income drop 90%: Cornwall-based St Austell Brewery has announced plans for a temporary staffing structure, protecting the employment and incomes of all 2,000 of its employees. Despite pub closures as part of the lock-down, which has reduced the company’s income by 90%, the company said it hadn’t made a single redundancy. With government support, the group has furloughed more than 75% of its staff across its pub estate, St Austell Brewery and Bath Ales’ Hare Brewery, which it acquired in 2016. All furloughed employees will continue to receive 80% of their normal pay, regardless of salary. Chief executive Kevin Georgel said: “To have the strongest opportunity to safeguard our business and employees for the long term, we’ve made the difficult decision to temporarily move a number of our team into a period of furlough. We’ll continue to keep this under regular review until normal trading resumes and we can all return to work safely.” With increased precautionary measures in place – St Austell Brewery and Bath Ales are continuing to brew for supermarkets, shops and off-licences nationwide as well as delivering to homes.

Douglas Jack – what Domino’s is achieving without full franchisee co-operation ‘shows how well system is still working’: Peel Hunt leisure analyst Douglas Jack has said what Domino’s Pizza Group is achieving without full franchisee co-operation “shows how well the system is still working”. Issuing a ‘Buy’ note on the shares with a target price of 350p, Jack said: “Domino’s has adapted its model rapidly to deal with the covid-19 pandemic. ‘Already high hygiene standards’ have been strengthened and the company has rolled out, and now moved entirely to, contact-free delivery. At company level there has been minimal disruption, with the supply chain working well. Although collection would typically account for circa 20% of sales, the growth in delivery has more than offset the lack of collection sales, with overall trading accelerating. This like-for-like sales growth has been driven by growth in items per order and a higher average price per item, partly due to the shift from collection to delivery (which has higher prices than collection). This is good for franchisee profitability, as is the fact they qualify for the 12-month business rates freeze. Reflecting the higher demand, the company is looking to recruit store colleagues and delivery drivers. Before the UK lock-down, trading in the UK and Ireland was in line with UK like-for-like sales (excluding splits) up more than 3%, driven by volume (order count). The discontinuing overseas territories have continued to underperform. Domino’s net debt was £232.6m as at 29 December 2019 versus £350m of committed facilities. Last year, its net debt/Ebitda was 2.3 times versus a 3.0 times covenant. With the suspension of the final dividend (worth £26m in total by our estimates) and our new assumption there will be no share buybacks, we now forecast net debt to fall by £45m to £187m this year, reducing net debt/Ebitda to 1.6 times. Other than a small upgrade to reflect lower interest costs, we are leaving forecasts unchanged, even though the company is withdrawing guidance. Although Domino’s has operated without full franchisee co-operation during the past two years, what is being achieved at present shows how well the system is still working. We believe focus on the successful UK and Ireland model, improving capital discipline and the recruitment of strong new management should bring a healthy re-rating.”

Castle Rock launches staff hardship fund, stands by suppliers: Nottingham-based brewery and pub group Castle Rock has launched a hardship fund to support its most vulnerable staff during the pandemic. Castle Rock said it also intends to pay all staff and suppliers in March and will be able to cover the 80% pay rate in April – even if the government’s Coronavirus Job Retention Scheme hasn’t been received by then. Earlier this month, Castle Rock managing director Colin Wilde cut his take home pay to match the minimum wage. He said: “There remains a lot of uncertainty ahead and we expect to have to make some difficult decisions. However, we’re doing what we said we’d do from the start, which is to look after the Castle Rock family as best we can, try to keep the economy going and support our suppliers and peers. Our bank, Santander, has been very supportive so we thank them for that. We’d like to thank our landlords for foregoing rent payments for three months and the people we have sold to who have been good enough to pay us.” Castle Rock owns more than 20 pubs in the East Midlands and Yorkshire.

JD Wetherspoon to settle supplier invoices: JD Wetherspoon has said it will settle supplier invoices that are due at the end of March. In an email sent to suppliers seen by Footprint, the pub chain said clarification from the government on its Coronavirus Job Retention Scheme had “greatly helped our financial planning”. It added: “As a result, we will pay invoices due for payment on Monday, 30 March more or less on time. We’re still not sure about the position for March invoices. We will be working on this in the next few days and weeks.” Earlier this week it was reported Wetherspoon had emailed suppliers asking for a moratorium on payments until pubs reopened. In its latest email, the chain apologised for the “uncertainty the closure of our pubs has created”. 

G1 Group retains all staff: Scotland’s largest managed pub, restaurant and hotel operator G1 Group has said it will retain all staff during the covid-19 crisis. In a letter to staff reassuring them of the company’s position, the group said: “Every one of our jobs is safe, including staff with less than two years’ service and those paid hourly. That means more than 1,500 jobs saved, including a 100-strong workforce at our head office. We have committed, with support from the government’s Coronavirus Job Retention Scheme, to pay 80% of basic wages to every employee for three months, as laid out by the government. While the detail of the scheme is worked through in full, G1 has made arrangements with its banking partners to cover the costs of all its employees’ salaries to ensure no staff member is disadvantaged while waiting on the scheme to formally kick in. For any members of our teams where 80% of their standard salary was above the £2,500 cap, G1 will bear the costs of any required top-up in full, in every case. The safety and well-being of our staff and customers is our primary concern and, in line with government-issued guidelines, our entire estate has been closed. The exception to this is our chain of One O One Convenience stores, which remain open to serve our communities. We have therefore announced an immediate 10% pay rise to all our in-store staff and support teams as a token of thanks.”

Boxpark shutters sites including delivery services: Boxpark, the Roger Wade-led business, has completely closed its three sites including any delivery services. The company stated: “Our number-one priority has always been the well-being of our customers, staff and traders. With this in mind, we have made the difficult decision to completely shut our sites until further notice. This also means delivery will no longer be available. As covid-19 continues to spread we must carefully consider the health and safety of our traders and employees who have continued to work. We have a responsibility to look out for them and under the current circumstances we believe it’s no longer viable for them to continue coming to work. Boxpark is a pioneering social dining and retail destination underpinned by great people so we’re confident we’ll survive this. This is a temporary situation and we look forward to welcoming you all back through our doors soon.” Boxpark’s sites are in Croydon, Shoreditch and Wembley.

Chicken & Blues sells 500 NHS pay it forward meal vouchers in first 48 hours: Josh Simons, co-founder of Dorset-based Chicken & Blues, told Propel the company had sold 500 meal vouchers in the first 48 hours of its new “pay it forward” NHS voucher scheme. Customers can buy £5 meal vouchers on website Elite Living for meals the company will prepare and deliver to staff at Poole and Bournemouth hospitals. The move followed an earlier campaign, which saw the company offer half-price meals to NHS workers. Chicken & Blues owns three restaurants – in Boscombe, Winton and Poole. 

Budweiser UK vows to donate £1m to British pubs through new scheme: Budweiser UK has vowed to donate at least £1m to British pubs after launching its Save Pub Life scheme to support the sector during the lock-down. Pub-goers are being encouraged to buy a gift card to spend at their local when it reopens. All funds will go directly to pubs and bars within two weeks to generate critical financial support during the closure. The scheme is open to all pubs in England, Wales and Scotland. Budweiser, part of the AB InBev brewing group, will match the value of the gift card up to a combined total of £1m. Budweiser Brewing Group will provide marketing materials and social media templates for venues that sign up to the Save Pub Life website. Paula Lindenberg, president of Budweiser Brewing Group, said: “We hope pubs and pub-goers throughout the country get involved to help secure the future of the industry.”

Former Bill’s chief financial officer joins Admiral Taverns: Nick Gray, formerly of Bill’s Restaurants and Fuller’s, has joined Admiral Taverns as chief financial officer, Propel has learned. Gray spent less than six months as chief financial officer at Richard Caring-backed Bill’s, leaving the business last month. Gray, a chartered accountant who trained at PwC, was previously with Fuller’s for four years as head of group finance and strategy until the £250m sale of the company’s brewing business to Asahi last year. He replaces Glenn Pearson at Admiral, who had been chief financial officer since summer 2007. Last week Chris Jowsey-led Admiral wrote to its tenants to tell them it had suspended rent payments until the end of April. The company wrote: “I want to reassure you Admiral Taverns is working hard to support you, your family and your business. Your rent is now cancelled, effective until Thursday, 30 April. We will keep this end date under review. Admiral Taverns is determined to support you through this period and we look forward to pubs reopening as soon as the virus is under control.”

Evans steps down as Tonkotsu managing director: Stephen Evans has stepped down as managing director of ramen restaurant group Tonkotsu, Propel has learned. It’s understood Evans stepped down from the 12-strong group last month to pursue other opportunities. The former Gourmet Burger Kitchen development director joined Tonkotsu as operations director in summer 2016 before becoming managing director towards the end of the year. In 2019, he oversaw a £5m investment from YFM Equity Partners to aid expansion. Tonkotsu, which was founded by Emma Reynolds and Ken Yamada, switched to a delivery and click and collect model at nine of its 12 sites last week before deciding to temporarily close them all until further notice.

Chipotle rewards hourly workers with 10% pay rise: Chipotle is giving hourly workers a 10% pay rise, joining other hospitality firms in the US to offer “appreciation pay” during the pandemic. The wage increase is effective for those working shifts between 16 March and 12 April. Chief executive Brian Niccol told Nation’s Restaurant News: “This assistance pay is simply one of the ways we’re expressing our appreciation for those who are willing and able to continue working during this time.” Starbucks is offering all store-level employees who continue to work during the crisis a $3 an hour pay rise until 19 April. 

BeatTheVirus Q&A:

From Buff & Bear co-founder Ed Turner

Q: I have one pub with a rateable value of £30,000 so I’m eligible for a grant. I have one with a rateable value of £56,000, which, due to the vagaries of the rates system, is actually less profitable than the other, but I can’t get a grant. Why is the limit set at £51,000? Is there any support I can get other than a loan?

A: The £51,000 is the level at which the small business multiplier – ie pence per pound – stops (it is better than it was it had been circa £18,000). The grant is for the company and so can be used across both sites but will be payable on the one site through rate rebate. It is an imperfect science but it is a proxy for size and scale – it’s just the Treasury doesn’t understand small companies can operate from large sites. Other help to ease cash flow include rates holiday, VAT deferment, rent moratorium and payroll reimbursement. If that isn’t sufficient, the loan is the only option. If you have less than £45m turnover, it is up to £5m interest free and 80% government backed.
UKHospitality chief executive Kate Nicholls
UKHospitality is a Propel BeatTheVirus campaign member

From Rarebreed Dining marketing and brand manager Patrick Powell

Q: How are businesses changing their CRM strategy on Airship as a result of the pandemic?

A: Firstly, brands need to ensure automated marketing around birthdays, welcomes and retentions are updated to reflect the correct messaging. If you have been issuing a voucher you either update the expiry or, more sensibly, just the content, removing the voucher altogether. Something like: “We wanted to wish you a happy birthday. We are sorry we’re not open for you to celebrate but don’t worry, as soon as this is over we’ll pop something nice over for you to enjoy.” A second option might be to include a promotion code for a customer to buy a heavily discounted gift voucher or experience for future use. What’s really important is to keep your email lists alive. Be creative by using things such as cocktail-making YouTube videos, food recipes and interesting reading material.
Airship chief executive Dan Brookman
Airship is a Propel BeatTheVirus campaign member

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