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Fri 1st May 2020 - Propel Friday News Briefing

Story of the Day:

Loungers CEO – this is an opportunity to assess how we can evolve: Nick Collins, chief executive of cafe bar operator Loungers, has told Propel the current lock-down provides the circa 170-strong business with an opportunity to see how it can evolve. Speaking as part of Propel’s “navigating the coronavirus” series, Collins said the company’s focus was on reopening, understanding what that looks like in a socially distancing environment, and how to best position the company to get through it. He said: “There is a real risk of running off in a million directions in circumstances like this and not achieving a great deal so we are trying to stay focused and doing a lot of analysis, So from a table perspective what is the difference between two metres, one and a half metres or one metre – how does that impact capacity? Then we’re looking at our dayparts and how we trade on a site-by-site basis and understanding what impact that might have on our sales. In some respects, we are well positioned, as our trade is broadly split across the week and there are lots of occasions when the Lounges and Cosy Clubs are not full. That could position us well, but who knows in the long run.” Collins said the business was looking at reopening with reduced menus across both brands for two reasons – the supply chain was likely to be compromised and to support back of house operations. He said the company was also looking at service models and added: “We have had an ongoing debate whether we should have a pay at table app, and each time that has started we have stopped it relatively quickly because we want to encourage engagement between our teams and our customers. It is what we are best at, so why on earth would we want to stick a piece of technology between that relationship and prevent that interaction? But, I think now, for a short period of time, it might be the right thing for us and might help get through this difficult period. So, it is something we are going to explore.” Collins said if there was an opportunity for the business to evolve, “to learn more about our customers, about our teams, about our offer, during what will be a difficult time, then we should take advantage of that”. However, a switch to delivery is not on the table. He added: “I think what is interesting and a potential threat to the sector is people seemed to have really enjoyed cooking at home over this period, and having the time to cook at home, and there seems to have been a real reconnection there. I see that as a potential behavioural change that as a sector we might come up against.” Collins will share more of his thoughts in the video, which will be released on Friday (1 May). 

Industry News:

Ian Dunstall to outline reasons why consumers need the mid-market casual dining industry back as part of latest Premium Opinion: Brand strategist Ian Dunstall will outline his reasons why consumers need the mid-market casual dining industry back as part of this week’s Premium Opinion, which will be sent to subscribers on Friday (1 May) at 5pm. Meanwhile, Propel insights editor Mark Wingett looks back at the key talking points over the past week, including delivery, property and the threat of home cooking. There will also be the latest sector whispers from Premium Diary. Propel Premium subscribers also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out, discounts to attend Propel conferences and events, and regular columns from Mark Wingett. Subscribers also receive access to our database of multi-site companies, which has grown to 1,600 businesses. An annual premium subscription costs £395 plus VAT for operators and £495 plus VAT for suppliers. Email

Hospitality’s pessimism for future prompts renewed call for business support extensions: Gloomy forecasts from operators over their prospects for the rest of the year has prompted renewed calls from UKHospitality for the government to extend industry support. A survey by the trade body showed businesses overwhelmingly expect a very slow recovery in the second half of 2020, with a “worst-case scenario” in December showing sales down by a crippling 61% compared with 2019, and a worrying “best-case scenario” of a 31% decline. The shorter-term outlook is yet more severe, with expectations for August, a key month for hospitality and tourism, at between an 82% and 53% decline compared with last year. The survey comes after UKHospitality chief executive Kate Nicholls wrote to cabinet minister Michael Gove with a six-point plan to shore up the hopes of an achievable return to a healthy hospitality sector. It highlighted the unique needs of hospitality, urging longer-term commitments from government on furlough, rents, loans, insurance, regulations and stimuli for sector growth. Nicholls said “A bleak outlook from hospitality operators should send shock waves across government and the economy. Hospitality is a key economic force for the UK, with 3.2 million jobs reliant upon it in normal times. Social interaction is key to hospitality, so at a time when public health is rightly the government’s top priority, it is essential our sector is seen as a special case. For most venues, enforcing full social distancing is financially unviable, though we are undertaking substantial work to prepare for a return. The government’s generous support measures so far have given many operators real hopes of survival – it would be a tragic waste of jobs and public funds if such businesses were to fall at the last, with the recovery rug pulled from beneath them.” 
UKHospitality is a Propel BeatTheVirus campaign member

Leisure site closures to accelerate as social distancing ‘near impossible to implement across many corners of market’: The closure of leisure sites is set to accelerate as social distancing measures will be “near impossible to implement across many corners of this market”, according to a new report by the Local Data Company (LDC). The number of leisure units that closed in the second half of 2019 accelerated to 984 from 352 in the first half of the year. This meant the number of occupied leisure units fell by 1,386 in total, a 78% increase on the 749 fall in 2018. The second half of the year saw the net loss of stores accelerate across all categories apart from convenience, which saw a slowdown to 434, compared with 787 units in the first half of the year. There was a total of 44,883 store openings and 54,052 closures during the year. Barbers was the fastest growing category for the third year running, with a net increase of 783 units. Cafes and tea rooms added 275 net units while the nett number of bars grew by 167. Estate agents was the fastest declining category, with a nett loss of 827 sites in 2019, while pubs saw a net loss of 393 sites. All location types saw a net decrease in units of between 1.3% and 2.6% in 2019. Shopping centres saw the sharpest losses, from 2.2% to 2.6%. High streets had a lower net change, at minus 1.7%. Retail parks were the only location type to see no increase in net loss of units in 2019 compared with 2018. LDC head of retail and strategic partnerships Lucy Stainton said: “Many of us are hypothesising the coronavirus pandemic will accelerate the existing trends we are already seeing, condensing years of forecasted change into months. After many years of new stock being added to the market and growth across key operators, the slowdown in leisure is particularly notable. Social distancing will be near impossible to implement across many corners of this market, hence the reversal in this previous trajectory looks set to continue and intensify as hospitality battles multiple challenges presented by this virus.”

NTIA calls on government to release PoolRe funds to break insurance deadlock: The Night Time Industries Association (NTIA) has penned an open letter to chancellor Rishi Sunak calling for an end to the deadlock over insurance that is “putting the survival of the leisure and hospitality industry in serious peril”. It comes after insurance broker NDML identified an opportunity that it said would help the night-time industry survive, without crippling insurers with “unmanageable” business interruption pay-outs, putting the insurance industry itself under serious strain. PoolRe, the UK’s leading terrorism insurance underwriter, has amassed a fund of £6.6bn, and NDML said drawing from excess capital in this fund would provide the financial breathing space necessary to break insurer deadlock and save businesses. NTIA chief executive Michael Kill said: “I think any opportunity to save people’s livelihoods should be grasped with both hands, and this proposal put forward by NDML seems to offer a glimpse of light at the end of the tunnel that will hopefully break deadlock, and support the businesses that need it most right now. There’s no time to waste to save our industry, and I’m urging the government to release these funds.” PoolRe was established to offer the necessary protection to businesses, and NDML said it was time for a similar scheme to be introduced to protect the UK against future pandemic threats.

CAMRA to launch app offering pubs and breweries a new route to market: The Campaign for Real Ale (CAMRA) is launching an app called Brew2You on Wednesday (6 May) that will allow customers to order their favourite drink from pubs and breweries trying to stay afloat during the lock-down. Pubs and breweries can use the app to create a menu that customers can order from. Pubs and breweries will receive the full price charged for their products and CAMRA will not charge a commission to suppliers for use. Pubs and breweries just need to pay a £2 per month fee for Stripe usage, which manages payments separately. CAMRA national chairman Nik Antona said: “The Brew2You app is the next logical step in CAMRA’s Pulling Together campaign, launched with the Society of Independent Brewers and Crowdfunder to support the industry during this difficult time. We already have 2,000 breweries, pubs and cideries listed as offering takeaway or delivery services so consumers can support local businesses during lock-down, but it is still a multi-step process to then go on and order beer. The Brew2You app brings all this on to one platform.” 

Job of the day: COREcruitment is working with a pub company that is keen to appoint a new general manager for a quality gastro-pub in Woking, Surrey. This is a great opportunity for a general manager who is keen to move into a creative position where they can be hands-on and autonomous. It is essential the incoming general manager has previous senior management experience within a fresh food environment as well as strong financial acumen. A salary of up to £50,000, plus benefits is being considered. Anyone interested can email with their CV or profile.
COREcruitment is a Propel BeatTheVirus campaign member

Company News:

McDonald’s expects steeper like-for-like decline in second quarter as international closures weigh down sales: McDonald’s has said it expects even steeper like-for-like declines in the second quarter as international restaurant closures due to the coronavirus pandemic continue to weigh down sales. It comes after global like-for-likes sales shrank 3.4% in the first three months of the year with a 22% fall in March. Chief executive Chris Kempczinski told analysts on a conference call: “Looking at comparable sales, we expect the second quarter as a whole to be significantly worse than what we experienced for the full month of March.” More than half of restaurants in McDonald’s international operated markets segment are closed. Three countries in the segment — the UK, Spain and Italy – have closed restaurants entirely to slow the spread of the virus. The company said this segment’s like-for-like sales in April are down about 70%. Locations in France and Austria are showing signs of pent-up demand as they reopen with miles-long drive-thru lines. But in China, where 99% of restaurants are open, consumers have been slower to resume their old habits, with like-for-like sales still declining “by mid-teens”. Kempczinski told CBNC: “It’s really a country-by-country situation because each country’s going through a different level of opening, each country has a different consumer psychology.” In the US, like-for-like sales are showing signs of improvement. From mid-March to mid-April, sales at locations open at least a year fell 25%, but McDonald’s estimates April’s like-for-like sales only fell 20%.

Honest Burgers to reopen eight London sites next week: Active Partners-backed Honest Burgers plans to reopen a number of sites for delivery only over the coming month, including eight in London next week, Propel has learned. The 37-strong group will reopen eight sites within the capital on Tuesday (5 May), to be followed by a number of further sites in London over the following week. Later in the month, it also plans to open a number of its seven sites based outside the capital. The group has also reopened its delivery kitchen through the Deliveroo Editions site in Swiss Cottage and hopes to add a further kitchen at the Editions site in Canary Wharf. It is also in talks to take space at the Foodstars kitchen site in Colindale. Honest Burgers will not be doing click-and-collect or takeaway in the short-term. The group is introducing a range of safety measures at each site to protect customers and staff, including pre-shift temperature checks, social distancing where possible and the wearing of personal protective equipment. Through its internal bot messaging system, the group asked its staff for feedback on returning to work, and many highlighted their mental health as a reason for wanting to come back. The company also triangulated where each member of staff worked and where their nearest Honest site was, to cut down on the need to take public transport. Co-founder Phil Eeles told Propel: “We want to keep hold of our guys and as employers we have a responsibility to start helping move the wheels of the economy too. We will reopen the sites that will generate the most profit. But profit for us right now is about getting revenue into the business to ensure we don’t have to do anything drastic when the government support falls away. It will also hopefully ensure we protect the people that make up our business.”

Pret to reopen further 20 London sites: Pret A Manger, the JAB Holdings-owned business, is to reopen a further 20 sites in London on Friday (1 May) – and is working on further reopenings. The sites will offer takeaway and delivery only and follows the reopening of ten sites in the capital near hospitals in mid-April. The latest sites to reopen are Borough High Street, Brixton, Ealing, Elephant & Castle, Fulham Broadway, Fulham Road, Fulham Palace Road, Hammersmith Broadway, Harbour Island, Highbury Corner, Islington –Angel Central, Kingston – Clarence Street, Ladbroke Grove, Notting Hill Gate, Praed Street, Putney High Street, Richmond –Lower George Street, Shoreditch High Street, Wimbledon and York Way. All shops will be open daily from 8am to 2pm, with delivery available through Deliveroo, Just Eat and UberEats. There will be a designated pick-up point for delivery drivers, and separate doors will be used for deliveries and customers wherever possible. The shops offer a limited menu of Pret’s sandwiches, salads and baguettes, as well as hot and cold drinks, baked goods, fruit and snacks. In addition, Pret is selling a selection of essential items, such as milk, butter and coffee. It is extending the 50% discount for NHS workers until 15 May. The company has asked staff who usually work in the 20 shops to return and all team members have undergone a thorough interview to ensure they are fit to work. Those living with anyone vulnerable are not be permitted to return. Each site has social distancing measures in place and there will be enhanced cleaning processes, including 30-minute sanitising of all hand contact surfaces. Protective Perspex screens are fitted to the till counter, only card payments are permitted and no more than six customers will be allowed at any time. Customers will queue outside two metres apart, with clear markings in place. Chief executive Pano Christou said: “These Pret shops look and feel a little different thanks to the new safety and social distancing measures we’ve put in place, and I believe we’ve found a way to operate that reflects the government’s guidance and looks after our teams and customers.”

Abokado working on measures to reopen and ‘everyone itching to get back to work’: Mark Lilley, chief executive of London-based healthy eating chain Abokado, has told customers it is working on measures in order to reopen and “everyone’s itching to get back to work and look after you once again”. He told them he has been sharing their well-wishing messages with the team, which is “helping to give us a sense of purpose” In an email to customers, he said: “In the meantime we’re keeping ourselves busy working on the measures we’ll need to put in place to serve you the same nutritious, delicious food in safety. Our team is continuing to support the amazing people working in the NHS through the Feed Our Front Line initiative and next week we’ll make further drops to the St Mungo’s food bank to support many vulnerable and homeless people in London.” Sharing a recipe for Abokado’s poké bowl and inviting them to share their recreations, Lilley also gave customers a glimpse into his family life. He said: “We’re home-schooling four kids. That’s proving interesting! We’re making the most of our time together as a family. Long walks exploring our neighbourhood, bike rides, home-cooked meals (a lot of baking!) and movies. The slower pace of life has given us time to reflect and enjoy the simple things in life, things we took for granted or had simply stopped seeing. When we come out of this I think a lot of us will make a concerted effort to stop and smell the roses more often.”

Gourmet Burger Kitchen begins reopening sites for delivery: Gourmet Burger Kitchen (GBK) has begun reopening its sites for delivery, Propel has learned. The company has reopened its outlets in London’s Waterloo and Chiswick and is planning to add Belsize Park soon. Last week it was reported GBK appointed advisors to assess its options going forward. The Famous Brands-owned business had appointed Deloitte to oversee this process, with speculation increasing the group would need to be placed into administration after Famous Brands announced in April it was pulling the plug on its investment.

Goodman and Burger & Lobster launch delivery brand Prime Feast: Global Craftsman Group, the company behind Goodman, Beast and Zelman Meats, has teamed up with sister brand Burger & Lobster to launch delivery offer Prime Feast. The offer will comprise a collection of premium meat boxes that will allow consumers to “recreate the restaurant experience at home”. With delivery across London and Home Counties within a 30-mile radius, Prime Feast boxes can be ordered now, with delivery from Monday (4 May). The boxes will feature different prime cuts of “consciously-reared meat” that make up the signature dishes of Burger & Lobster, Zelman Meats, Goodman and Beast restaurants. There will also be the option to upgrade each box with Beasts’ King Crab legs as well as wine, charcoal, the Goodman cookbook, knives and other branded merchandise. Owner Misha Zelman said: “Launching Prime Feast is just one way that we can connect and bring joy to our loyal and supportive guests, as well as to ourselves. This is just the start and we want to grow this into a full butchery and start to offer other products we are passionate about such as lobster and other seafood.” Each box also contains easy to follow cooking instruction cards and links to online video tutorials to recreate the restaurant dish at home.

Franco Manca reopens five more sites for delivery only: Franco Manca, the Fulham Shore-owned brand, will reopen five more sites for delivery on Friday (1 May) in London. The circa 50-strong brand, which last week reopened its site in Chiswick from 4pm to 10pm for delivery only through Deliveroo and UberEats, will reopen its sites in Balham, Belsize Park, Broadgate (Liverpool Street), East Dulwich and Westbourne Grove. It then plans to reopen a further four or five sites before the end of May, with a target of having 20 sites reopened by the end of June. The company said: “Social distancing guidelines will be followed by our work force. The safety of our pizzaioli, customers and front of house is our number one priority.” At the same time, parent company Fulham Shore has reopened the Real Greek site in Paddington Street, Marylebone, for delivery only.

Belgian food technology startup raises €16.25m to help restaurants manage online orders: Deliverect, the Belgian startup streamlining the restaurant industry with its online food delivery management software, has raised €16.25m in its Series B funding round. The fund-raise was led by Omers Ventures, with existing investors Newion, Smartfin, and the company’s founders also participating. Deliverect is a subscription-based service that integrates third-party online ordering platforms such as Deliveroo and UberEats into restaurants’ point-of-sale systems, automating the inbound online order flow through a single point. Deliverect is also used by virtual kitchens. The company, which has a team of 50 people around the world, will use the investment to support further research and development and product development, and look into international expansion. Omers Ventures managing partner Jambu Palaniappan will join the Deliverect board. Founded in 2018, Deliverect has processed more than 3.5 million orders since its inception, with UK customers including chicken concept Absurd Bird and crepe concept Crêpeaffaire. 

Island Poke launches DIY home kits: Island Poké, the White Rabbit Fund-backed concept, has become the latest operator to launch a DIY home kit. Launching on Friday (1 May), the kits comprise everything needed for four bowls – “two classic Ahi tuna and two Yuzu Lomi Lomi salmon, plus a load of sriracha mayo to slater on top”. A limited drop will be made each day at 9am, with orders needed by 2pm for delivery in 48 hours except Sundays. Delivery is only available within the M25. The company shuttered all of its eight London-based sites last month.

Chestnut Group targets further 10,000 free meals: East Anglian-based pub and restaurant company The Chestnut Group is aiming to deliver a further 10,000 free meals to NHS and front line workers. The company has reached its initial target of donating 10,000 free meals, having raised £25,000. Since launching the initiative 12 days ago, meals have been supplied to hospitals, care homes and communities within the region. Along with 800 weekly meal deliveries to Norfolk and Norwich Hospital and Colchester Hospital, Chestnut is now helping care homes. Chestnut has also joined forces with Newmarket Festival co-ordination group to deliver 1,000 meals to support local communities in Newmarket and surrounding villages. Chestnut will be making available a second kitchen – at The Crown, Stoke by Nayland – with more of its 11 pubs and restaurants to follow as requirements increase. Founder and managing director Philip Turner said: “The impact of coronavirus extends beyond front line NHS workers, so it feels right to increase our target to 20,000 meals. Having personally delivered a lot of the meals to the hospitals and care homes in the region, I have seen first-hand the stressful conditions on the front line – for a brief moment we can make their day a little brighter.”

Carlsberg warns of worse to come as first-quarter sales fall 7%: Carlsberg has warned there is worse to come after a 7% decline in first-quarter sales, as increased revenue from supermarkets failed to balance the closure of bars and restaurants during the coronavirus lock-down. The company said it saw signs of recovery in its biggest market China, where smaller outlets had reopened, but in Western Europe volume fell 6.0%. Carlsberg has already suspended guidance after sales at bars and restaurants, especially in Western Europe, were severely impacted as many countries were in lock-down. Chief executive Cees ’t Hart said: “Social distancing requirements will continue and will impact consumer behaviour. Consequently, volumes will decline further in the second quarter.” Carlsberg said sales between January and March came in at 12.9bn Danish crowns (£1.43bn). The company has over the past year shifted its focus from cost-cutting to revenue growth, especially by selling more of its pricier brands. But the closure of bars and restaurants has hurt that strategy, as consumers under lock-down tend to take no chances with speciality beer in the supermarket and instead stick to multipacks of less expensive mainstream brands, ‘t Hart said. 

Moto extends free food offer for HGV drivers: Moto, the UK’s largest motorway service area operator, is extending its free food offer for HGV drivers. Another 14 sites have now been added to the list of those offering free hot food to HGV drivers parking overnight, bringing the total to 24 – half of Moto’s nationwide network. In addition, sites that feature the Chow brand will be offering food with an Oriental twist. HGV drivers will also get free hot drinks on Tuesday (5 May) and Thursday, 14 May. 

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