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Morning Briefing Strap Line
Fri 10th Sep 2021 - Friday Opinion
Subjects: The price of liberty is eternal vigilance, delivery pains, hospitality offers amazing career opportunities – start shouting it out, co-sourcing
Authors: Paul Chase, Glynn Davis, Katy Moses, Mark McQuater

The price of liberty is eternal vigilance by Paul Chase

The Propel Multi-Cub Conference held at the Oxford Belfry on 7 September was the first face-to-face industry conference I have attended since before covid restrictions came into force in March last year. It was a great pleasure to be part of the event, along with some 350 hospitality colleagues from across the spectrum. It almost felt like we were getting back to normal, but the questions I was asked in the panel session at the end reflected the deep anxieties of many in the room that the lifting of restrictions may only be temporary, and that government could row back from “Freedom Day” at any moment. It seems to me that, moving forward, the task of our trade bodies is to persuade the government not to move backwards.

Listening to the vaccines minister, Nadhim Zahawi, defending the indefensible in parliament as numerous Tory MPs rose to denounce the plan for introducing vaccine passports was more than a little excruciating. I almost felt sorry for him, but I am reminded that it is never a good idea to feel sorry for those with power, but rather for those who are powerless and hardest hit. It’s hard to know what more our trade representatives can do to oppose this policy other than entreating the government not to do it. But it is worth noting that the minister would not confirm that parliament would get a vote on this issue, although he did mutter something about parliament having an opportunity to hold the government to account, presumably by a debate without a vote at the end of it.

I don’t buy into the idea that this was all part of a cunning plan from the beginning to impose digital IDs that would then pave the way for a Chinese-style social credits system. The government has bet the farm on vaccination as the way out of the covid crisis, and this measure is designed to nudge more people to ignore the anti-vaccination scare stories on social media and get the jab. At present we have cases at a very high level, and deaths from covid at ten times the level of last summer. This isn’t because vaccines don’t work, but because the Delta variant is twice as transmissible as the Alpha variant that was circulating last summer, and we still have around 20% of the adult population unvaccinated.

It is hard to find historical precedents for this global health crisis, and the non-pharmaceutical measures governments around the world have introduced to mitigate its effects. But such precedents as there are do not encourage me to believe that vaccine passports, if introduced, will be abandoned any time soon. In 1940, the wartime coalition government of Winston Churchill introduced food rationing and, for the first time, a national ID card system. These were both temporary measures supposed to last until the end of the war in 1945. In fact, food rationing finally ended in July 1954 and the ID card was withdrawn in 1952.

As much as I hate the way in which covid restrictions have impacted on our sector – a sector in which I spent 25 years running licensed premises, and many more years involved in training – I do accept that in an emergency, sometimes the government needs to tell people what to do. What the last 18 months has taught us is just what a government in thrall to a puritanical, anti-alcohol public health establishment can lead to. It has led to the erosion of democracy; to authoritarian government ruling through executive dictat without parliamentary accountability, and to the arbitrary closure of businesses. Authoritarianism is a drug that politicians can easily become addicted to. The price of liberty is eternal vigilance – this isn’t over yet.
Paul Chase is director of Chase Consultancy and a leading industry commentator on alcohol and health

Delivery pains by Glynn Davis

We used to have chief executives but they have been gradually replaced by CEOs and many of the items we bought from retailers previously fell under the umbrella term FMCG but this has almost been superseded by the US equivalent CPG. Whether we like it or not we invariably end up adopting an endless stream of Americanisms. 

The food delivery companies including the big guns Deliveroo and Just Eat will be very much hoping we don’t also adopt some of the legislation that seems to be causing a growing headache for their counterparts and subsidiaries across the pond. New York’s City Council last week voted to approve legislation to make permanent the commission caps that were supposedly brought in temporarily during covid-19 to ease the burdens on hospitality companies. 

The present situation involves a 15% cap on fees charged by the delivery firms, as well as an additional 5% for advertising and 3% for transaction charges. This represents a significant reduction on the 30% commission level the large delivery companies had been charging many restaurants before covid-19.

Such a move follows similar action being implemented in San Francisco that has been leading the way in reducing the power of the delivery firms. Its council voted in June to keep a 15% upper fee limit in place and threw out the original plan that would have seen the cap removed 60 days after the city’s restaurants were allowed to reopen. 

Feelings have been strong among council supervisors and representatives. One stated: “We really have an imperative to protect independent restaurants from the exploitive and predatory practices of third-party food delivery apps that seek to extract wealth from our local economy.”

Such moves have cities across the US looking on with great interest to see how events work out. Those who introduced temporary caps include Los Angeles, Washington DC, Chicago and Seattle. Needless to say the delivery companies have stated their intent to vigorously fight the action on the basis that it is unconstitutional among many other gripes. 

At a time when companies such as Just Eat-owned Grubhub along with DoorDash and UberEats are fighting to achieve profitability on any half-legally recognised metric, such aggressive legislative moves are incredibly damaging. The same would be said for Just Eat in its core UK market and Deliveroo if Britain were to adopt such initiatives or something along similar lines. There will be a high level of comfort taken from the fact no such temporary caps have been introduced at any point in this country.

However, there is something else that has reared its head in the US and has potentially damaging consequences for the delivery companies within any country that has customer privacy high on its agenda (ie every country). Under a new bill approved recently in New York City the third-party delivery providers will have to share more customer data with restaurants. 

The legislation is the first of its kind to win approval in the US, and was part of a group of bills passed in late-July intended to yet again limit the power of third-party delivery companies. Under the bill, companies such as DoorDash, UberEats and Grubhub will be required to share customers’ names, phone numbers, email addresses, delivery addresses and order contents on a monthly basis with restaurants that choose to receive it. Customers will also be able to opt-out of sharing their data with restaurants.

This issue over who owns the customer relationship, and the unwillingness of the delivery firms to share any customer-related data whatsoever, remains one of the major bugbears for restaurants. It contributes greatly to the often fractious connection between the two camps. With access to customer details the hospitality companies would have the opportunity to incentivise these individuals to order via the restaurants’ own websites rather than going through the delivery company apps.

Although the delivery companies have so far enjoyed a continued level of buoyant order volumes despite the reopening of restaurants there looks to be few things on the horizon that suggest the landscape will get any easier going forwards. Sorry, I meant in the future.
Glynn Davis is a leading commentator on retail trends

Hospitality offers amazing career opportunities – start shouting it out by Katy Moses

Two weeks ago, I was staggered to get an email from a “concerned mother” who lives abroad but still works in hospitality, and is therefore one of the recipients of my weekly Friday email – where I share my experiences in trade as well as KAM insight.

This lady told me all about the appalling way her son, a chef, has been treated by a particular hospitality operator, the end result being his severely damaged mental and physical health. We exchanged several emails – her asking what she could do from afar, me suggesting who her son could speak to for help (thank you to Licenced Trade Charity and others) – and generally discussing the current industry issues.

I explained the current staff shortages (Brexit, “pingdemic”, covid non-returners) and how they are affecting those left trying to hold the fort. I spoke about recent controversies in staffing within pubs, bars, and restaurants and what the industry is doing to help put a stop to behaviours that, let’s be honest, have no place in 2021 – not that they ever did.

She described occasions where her son had been physically attacked; where he had reported someone for molesting a colleague; where he was doing so many shifts in a row that he’d not slept for three days straight – and all for minimum wage and a free meal a day. Sadly, not a great sales story for a career in hospitality.

KAM’s latest research shows that only one in five UK adults consider hospitality to be an appealing industry to work in. We found that 45% think a career in hospitality means unsocial hours and 23% still view hospitality as a “short-term stopgap”, while only 10% see it as a well-respected career choice. Worrying news indeed.

A key issue the research identified is that younger adults at the beginning of their career are unlikely to be encouraged by older family members into the hospitality sector. Only 11% of UK adults said they’d be “very pleased” if a younger family member chose hospitality as a career. No doubt the mother I spoke to would agree on this one. In fact, just 12% say they would actively recommend working in hospitality as a career. Without a doubt, the hospitality industry has a serious image problem. We know hospitality offers amazing career opportunities, it’s time we started telling the world. Loudly.

The research also found that the view from within the industry was, in fact, more positive compared with those who had never experienced working in hospitality. It showed that 28% of past or present hospitality employees said they saw it as an appealing career compared with just 14% of those who had never worked in the sector. 

Those without experience in the industry were more likely to view it as a “short-term stopgap career” – 27% compared with 19% of past or present hospitality employees. As John Lennon once sung and Allen Saunders once wrote: “Life is what happens while you’re busy making other plans”. There’s an outdated perception among some that hospitality is what you do while you’re waiting for other jobs, and that simply doesn’t have to be the case anymore.

We need to elevate the entire view of the industry to make it a more viable career prospect to avoid the ongoing continuation of this current crisis. Hospitality is fast-paced and exciting, and the rewards can be immense, but we need to attract the right people into it.

More positively, the research also found that one in two UK adults of working age said they would at least consider working in hospitality if the opportunity arose, while two thirds of ex-hospitality employees said they would consider returning to the industry in the future. We need to start promoting hospitality as a viable career option. We need to show that it’s not just a stopgap, but that satisfying, fruitful careers with good pay and benefits can be had.

Campaigns such as Hospitality Rising, run by Mark McCulloch, with the aim of rebranding the industry, are fantastic and needed. But we also need to make sure that, as a sector, we are putting our money where our mouths are. Good pay and conditions, good training and development and good leadership and mentoring (shout out to Plan B Mentoring, which does a fantastic job of helping women in the hospitality industry) should all come as standard.

If they don’t, and if we don’t shout louder about what a wonderful industry we all work in, then this staffing crisis won’t be going away any time soon. And I’ll have to keep dealing with distraught mothers, which I can assure you, is not my strong point.
Katy Moses is managing director of KAM Media
KAM Media is a Propel BeatTheVirus campaign member

Co-sourcing by Mark McQuater

In the context of life after covid, this is a big month for hospitality and leisure businesses. The return of office workers, students and schools has all sorts of implications for our industry.

Variants and infection spikes notwithstanding, there has clearly been a positive shift in sentiment among business leaders in terms of demand and footfall, despite all the challenges that remain, notably staffing and supply chain issues.

One of the bigger unknowns for the industry is about to be answered: to what extent people will return to larger city centres as we head into the autumn and winter, and at what pace can we (hopefully) continue to pull away from the stop-start disruption that our businesses have endured during the past 18 months.

It’s clear that many companies that house groups of workers in offices are moving to a split or hybrid model, with the workforce expected to be present in the office for some, but not all, of the traditional five-day working week. Many businesses are reportedly contemplating a split two-to-three days in the office, with the remainder spent working from home. 

While there are clear trading implications for this change in behaviour – and city venues and businesses near offices that have been built on a five-day working week and investment thesis – it strikes me that the prevailing sentiment is not universally negative. There is a growing optimism that our guests will fully make the most of those days on which they are commuting to city centres, be it for dinner, drinks, catching up with friends and colleagues (#InRealLife!) or for more networking and socialising on those days. 

There does appear to be huge pent-up demand, with the industry’s confidence further bolstered by the massive initial positive response from consumers that many businesses experienced in the weeks since restrictions were further eased in July. Clearly, we are in a period of huge change, with significant adjustments in behaviour, and while it won’t be without pain or challenge, for many the doomsday scenario is dissipating. 

For hospitality businesses with significant central support teams, the new normal also has other implications. We’ve all learnt, possibly against our better judgement, that our teams don’t have to be sat in the same place all the time or be physically next to each other every day to deliver what the business needs. 

This fact clearly gives rise to the opportunity for businesses to tap into expertise and knowledge from outside their organisations all together to deliver every-day functions.

A recent study by professional services firm EY found that 73% of business leaders were more likely than not to outsource or “co-source” (building a partnership between their business and an outside vendor) some critical activities in the next 24 months in order to add value, reduce risk and decrease cost. A separate study by Grant Thornton suggested 6% of global activity was now outsourced and that two in five businesses were now delivering a core business function via an outsourced or co-sourced approach. 

A business I am involved with as chairman, Virgate, which provides an end-to-end finance function and team, is seeing enormous growth on the back of this trend. Its customers know it can, by working in partnership, help them elevate certain functions, improve their resilience and harness expertise from beyond their four walls.

Co-sourcing is a decision that is coming into greater focus for many sector companies as we enter a new phase of the crisis. Many management teams are wrestling with a choice between building out their own capabilities or working with a third-party expert provider which is 100% focused and dedicated to that task or area of expertise. 

It’s not just in finance either – companies in our industry are also harnessing co-sourcing opportunities in many other disciplines such as purchasing, supply chain, menu, labour management and, of course, marketing. 

This increasing trend prompts a fundamental question for management to answer: “Is our business proactive or reactive?”

In my experience, proactive, progressive finance functions, for example, are more agile when it comes to responding to major challenges and events, and are looking to continuously improve and drive efficiency. By doing so, they build in resilience and reduce risk in the face of a fast-evolving business landscape.

In the past, the principal objections to outsourcing central functions have been around the cultural challenges and an unwillingness to lose control. This, however, ignores what can be big wins.

Firstly, co-sourcing gives key figures in the company the ability to step back and gain a clearer picture of what’s happening in the business, analysing what’s working and adapting where necessary.

Secondly, it allows staff to focus on delivering business-critical projects or tasks – essentially meaning you have your people in the right place at the right time. Slicker admin and fewer systems mean they can focus and move more quickly.

Thirdly, it means you can access new expertise and thinking, as that external resource becomes an integral part of your team, working side-by-side with the existing one. What is your cultural preference – is it in or out? Increasingly, for many, it’s both. 

The driver is less about having everyone sat in the same place all day every day, and more about shifting further to a hybrid model whereby resources are genuinely co-sourced, with structure or design preferences driven by performance, agility and expertise.
Mark McQuater is former chief executive of Revolution and Barracuda, and chair of Roxy Leisure, Barworks, and Virgate

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