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Morning Briefing for pub, restaurant and food wervice operators

Fri 19th Nov 2021 - Friday Opinion
Subjects: No time to COP out, putting covid in the rear-view mirror, things are looking up for London’s pubs
Authors: Kate Nicholls, Paul Chase, Glynn Davis 

No time to COP out by Kate Nicholls

Wherever you stand on the debate surrounding the phrase “phasing out” as opposed to “phasing down”, what cannot be denied is that COP26 this month demonstrated the clear step-change in both political and public opinion on the issue of climate change. And this will require change from our sector that goes further and faster than we have done previously.

We need to keep pace with changing government regulation but also public expectation. Thankfully, the sector had already started on its own sustainability journey pre-pandemic and is ready, despite the continuing challenges facing it, to step up the pace in this area. To celebrate this and to signal the industry’s commitment to this cause, we held our own showcase in Glasgow during the two weeks of COP.

We presented our net zero plans and showcased the best the sector has to offer – as well as its ambitions. We believe this placed the hospitality industry firmly on the map, affirming to the government our alignment with their agenda and highlighting, for example, the launch last month of our net zero roadmap, in collaboration with the Zero Carbon Forum.

The roadmap provides hospitality operators with guidance on the steps they can take to decarbonise their businesses and set net zero strategies. Business leaders from the hospitality sector have worked together to quantify the carbon impact across the hospitality industry and shared all the initiatives they have thus far taken to reduce emissions to help define the pathway to net zero. The roadmap outlines current trends, sector emission hotspots, decarbonisation opportunities, and practical steps for setting net zero goals. The action it calls for is consistent with limiting warming to 1.5°C and can be feasibly implemented in a wide range of businesses across the sector. The ambition is to reach a 90% reduction in operational emissions and reductions in supply chain emissions by 2040.

Looking ahead, UKHospitality’s Sustainability Group is looking to make rapid progress across a range of areas and is developing targets for industry action as we move into 2022, including on packaging, food waste, biodiversity, water and supply chain. There will be ambitious targets set by the government that we understand and appreciate may seem daunting, but we are committed to working together to ensure we get this right to provide a sustainable future for the sector.

At the same time, it is also vital we get government support – regulatory and financial – to deliver our ambitions. Next April, we face the inequitably high financial burden of business rates, coupled with a resumption of an uncompetitive 20% VAT rate, which would be catastrophic for hospitality, dumping a cost of £7.4bn to £8bn on an already debt-laden sector. This is in addition to rising labour costs, utility bills and price rises across the supply chain. Very few businesses are going to be able to absorb these costs and at the same time make meaningful investment in the technology, expertise and equipment needed to achieve net zero as quickly as we may wish.

Therefore, as well as supporting the sector in making actionable changes to reduce their carbon footprint, we will continue to lobby the government to provide adequate support and conditions for the sector to recover. The most meaningful of which would be keeping VAT at 12.5% permanently and removing the business rates cap that unfairly penalises successful businesses in the sector. Without such measures the industry will struggle to move as fast as it would like towards lower emissions and will undoubtedly lead to higher prices for consumers.

It is important to note there are many in the sector that have been on the front foot of sustainability issues for many years and this gives the industry a huge advantage. We can use these learnings and share carbon reduction plans and initiatives, and combine expertise and resources to identify all possible actions to decarbonise operations. The key will be to do this collectively and so we urge as many businesses as possible to commit to the net zero roadmap so we can all move forward together.
Kate Nicholls is chief executive of UKHospitality

Putting covid in the rear-view mirror by Paul Chase

It has been said when people judge political parties, they first compare them with their ideal of what their perfect political party would look like, what its policy stance would be and what their ideal leader would be like. But come election time they compare the actual political parties with one another and then choose the least bad option. I’m not here to shill for any one political party but if you feel critical of how this Conservative government has handled the pandemic, you don’t have to imagine what the alternative would have looked like, you just need to look at how the authoritarian parties that run Wales and Scotland have behaved.

Both the Welsh Labour government and the SNP government in Scotland have adopted longer and harsher lockdowns, and now, with the pandemic receding, have opted for the authoritarian measure of covid passports – which are hitting the Welsh and Scottish nightclub industries hard. So much so that a nightclub in Glasgow has repurposed its dancefloor as a seating area to avoid being classified as a nightclub and having to insist on proof of covid vaccination as a condition of entry.

It is time we put this nonsense behind us, and it is to the credit of the government at Westminster that it has so far resisted the siren calls of the shroud-waving public health zealots at SAGE and Diet SAGE (independent SAGE) to implement Plan B.

Between October 2020 and March 2021, there were 3.8 million recorded cases of covid in the UK and 85,000 deaths. In the following six months, during which restrictions were systematically reduced to virtually nothing, there were 4.8 million recorded cases and just 14,000 deaths. But you can still read stuff on social media from the intellectually challenged saying: “Meh, vaccination doesn’t stop you getting it or passing it on – take some vitamin D – and what about ivermectin?” Yeah right! These figures show the case fatality rate fell from 2.2% to 0.3%. Since approximately half of all infections are not recorded, the infection fatality rate is now around 0.15%, similar to seasonal flu. Since these figures include a significant number of deaths among the unvaccinated, for fully vaccinated people, the risk of dying if you catch covid is lower still.

After two surges of the epidemic – in spring 2020 and winter 2020-21 – we have reached endemicity, notwithstanding the fact that around 700 people a week are still dying from covid. We always knew there would be an exit wave, but that has now peaked, and we can expect cases and mortality figured to jiggle up and down. Given the level of vaccination and the development of new viral treatments I can see no realistic scenario in which either cases or deaths will increase exponentially.

One wonders why so many people are still obsessing about covid and the imminent prospect of Plan B. There will always be the covid conspiracy theorists who see a dark plot to control us all and who believe government should have done nothing to control the spread of the virus. These people say we should just have put a wall around care homes and left everyone else to get on with it. But the people who call for enhanced shielding of the elderly and vulnerable in these settings are at the same time appalled at the idea that those caring for these people should be fully vaccinated against covid. It is a hallmark of the perennial critic that he wills the ends but isn’t prepared to will the means.

At the opposite end of the spectrum of covid craziness are those who have published alarming predictions of outrageously high mortality figures and shown no contrition for being wrong on an epic scale. And Keir Starmer even described England’s “Freedom Day” as a “dangerous and unethical experiment” in July. The prospect of 100,000 cases a day was, in their view, baked in and there was a real possibility of this rising to 200,000. Diet SAGE called on the government to revert to step two of the roadmap in which socialising indoors with anyone from outside your household was banned. 

Overgrown student union activists will continue to hold demonstrations, but I think the prospect of Plan B in England is now vanishingly small. Covid will remain a health issue for years to come – and the most visible manifestation of restrictions generated by it will be the hassle and bureaucracy of taking foreign holidays. But covid restrictions in England, and soon in the rest of the UK, will no longer be a civil-liberties issue. We need to put covid in the rear-view mirror and our trade bodies can then concentrate on helping hospitality recover rather than fighting off new and pointless restrictions.
Paul Chase is director of Chase Consultancy and a leading industry commentator on alcohol and health

Things are looking up for London’s pubs by Glynn Davis

When diverting off Berkeley Square in Mayfair and turning into Bruton Place, the cacophony that hit me was overwhelming. The sound echoing down the street emanated from a very large boisterous crowd of drinkers, enjoying a mild November’s evening outside the renowned Guinea pub that now straddles units on both sides of the road.

With the exception of the taxi driver attempting to navigate his way down the narrow thoroughfare, everybody was visibly and audibly enjoying this much-needed after-work hospitality in central London. It was a similar story down the road, on the pedestrianised Avery Row, where the compact Iron Duke pub was surrounded by local workers enjoying a beer before heading home.

There is no doubt that not all London boozers are experiencing quite such a buoyant time as this pair. The latest figures from the Coffer CGA Business Tracker for October show a contrast in trading in London, where a shortage of office workers and tourists meant sales were down by 4% on the same month in 2019, versus the regions, where sales rose by 6%.

Despite this slower pick-up in the capital, expectations are building. Last weekend was the first time the West End has been busier than before covid-19. Footfall around the key areas of Oxford Street, Regent Street and Mayfair on Saturday was 13% higher than the same day in 2019, according to the New West End Company, which also found that footfall levels after 6pm were an incredible 35% up on the same day in 2019.

The expectations that the West End might lose out on £1bn of spending are now being reassessed amid a pub sector in the capital that is building in confidence, and where an acceleration in corporate activity has been seen in recent weeks. The Guinea’s owner, Young’s, has confidently reported it is to invest around £30m over the next 12 months, compared with the normal £20m per year, as it has already signed off on various projects, and Patrick Dardis, chief executive of Young’s, expects to see other opportunities cross his desk.

I’d earlier been sceptical about the much-discussed wall of money that was supposedly heading into the pub sector as there was little evidence to support the speculation. However, this has changed, and I stand corrected as some big, experienced names in the sector have been very active in the market recently, with the support of institutional capital – and London is enjoying its share of the action.

Nick Pring and Malcolm Heap have accelerated the expansion of their Urban Pubs & Bars business, with the support of Davidson Kempner and Global Mutual, and acquired 13 premium central London pubs from Barworks, which had built an eclectic mix of craft beer-focused pubs and bars. The sale has not diminished the appetite for growth at Barworks though, as its remaining six pubs are being added to with the recent opening of the Gas Station at King’s Cross and the planned boozer for Heddon Street.

Another long-established pub operator, Mark Crowther, chairman of Portobello Brewery, has secured the backing of Zetland Capital and formed Portobello Starboard, whose recent move suggests growing confidence in Greater London. It plans to build an 80-strong business, and the first move involves the purchase of 12 freehold pubs from various sources including Antic, that had all been backed by investment fund Downing.

The pubs represent a great mix of unique buildings located across the capital’s so-called villages and suburbs including New Cross, Streatham and Forest Gate. Zetland has stated its intention to commit further funds to Crowther and his team in order to further expand the Portobello Brewery footprint in London.

Although not yet back on the expansion trail, Shepherd Neame has been expressing more confidence in the company’s city centre pubs that include a batch in the capital. Chief executive Jonathan Neame has stated that the recovery across its estate has spread from its community-focused pubs and into the town and city centres as people are moving about more. With a continuation of these trends, Neame expects that by the middle of next year, the company will be back in the market for acquisitions and have returned to its previous strategy of investing around £20m annually.

Ahead of then there is, of course, Christmas to navigate. Despite much concern from many operators over subdued bookings for the festive period, Young’s, like some others, has seen an uptick in recent weeks and is now managing waiting lists at some pubs for Christmas Day lunch as people reacquaint themselves with their local pubs – including those in the capital.

Having missed out on my regular couple of pints on Christmas morning last year at my North London local The Great Northern Railway Tavern, I’m certainly intending to do my bit this year and will be found propping up the bar on 25 December – and a few times ahead of then too.
Glynn Davis is a leading commentator on retail trends

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