Subjects: If any sector can make a success of this Christmas it’s hospitality, be like Ben Stokes and believe in your team, investing in pubs will help secure their future, cutting out the middle men
Authors: Kate Nicholls, Ann Elliott, Chris Sladen, Sarah Travell
If any sector can make a success of this Christmas it’s hospitality by Kate Nicholls
I was recently asked what is the biggest challenge hospitality facing right now, and I really struggled to whittle it down to one answer. There are always challenges, but 2022 seems to have been relentless in putting up hurdles. At the start of this year, there was a real feeling that we were heading to a period of normality after the pandemic and that the sector was recovering strongly. The public were heading back out in their droves and rekindling their relationships with hospitality.
That all changed in March with the chaos we have seen, and been victim of, in the energy market. It was staggering to hear reports from businesses despairing because they were seeing their energy bills tripling or quadrupling. The sudden impact our sector felt was unique and it allowed UKHospitality to make the point firmly with the government that the status quo was simply unsustainable. Enter the Energy Bill Relief Scheme we helped deliver, where UKHospitality was instrumental in getting the government to act swiftly.
It was never going to be a silver bullet, but the scheme has been crucial in providing some relief, despite the unscrupulous behaviour of some energy suppliers seemingly taking advantage of this significant government investment to hike their prices even further. UKHospitality has been continually raising this issue with the government, and I’m pleased we’ve succeeded with the business secretary and Ofgem taking this up.
Of course, this support is only in place until the end of March, and clarity on what the energy landscape looks like from April is essential. UKHospitality has not taken its foot off the gas and we’ve been engaging with the government daily on these issues, making the case for hospitality to be included in any scheme post-April and feeding in reports from operators. When you add in ongoing staffing shortages that are forcing businesses to slim down menus and reduce trading hours, rising supply chain inflation and a squeeze on consumer spending, there are dramatic changes taking place.
On all of these issues, we’ve been making the case for the sector at the highest levels of government, and I’ve been told numerous times about the recognition within Westminster about the importance of hospitality in terms of what it means to society, the jobs it creates and the tax receipts it delivers back into the Treasury. We know that those three elements should be a central cog in any plan to build economic growth and lift the nation out of recession. It’s a plan that hasn’t been forthcoming, but one we continue to push for.
Despite the challenges that face us, the vast majority of people I speak to in the sector are determined to weather this storm and come out the other side to realise their ambitions, whether that’s on business growth, innovation, or sustainability. I want to be relentlessly positive about the sector. I am incredibly confident that we are the sector that can help drive the economy. The government has it in its gift to make small, relatively low-cost, changes that can free us up and allow hospitality to quickly deliver economic growth.
On workforce, for example, if the government was flexible in its immigration scheme to reflect labour shortages in sectors or regions, it would make a huge difference in filling vacant roles. Other simple measures such as expanding the Youth Mobility Scheme to include EU member states would be hugely beneficial. When we’re looking at skills and developing our own talent, let’s reform the Apprenticeship Levy.
Those are just three examples we’re offering to the government and presenting easy wins that can boost our sector. We were one of the only sectors forecast to grow prior to the energy crisis, and I want us to be one of the first to return to those levels. I appreciate that it’s not easy for many of you to look beyond the next few months, and I often feel the same way, but I truly believe one of the key roles of a trade body like UKHospitality is to make sure we get the future framework for business right.
We’ll continue to have your backs in Westminster, Edinburgh and Cardiff, fighting on the sector’s behalf when it comes to energy, workforce and, of course, rail strikes, but we’re also continuing to plug away on those long-term, structural issues too. Securing the commitment from the prime minister this week that he will deliver a Tourist Accommodation Scheme to tackle short-term lets is a prime example.
Back to the here and now, I really do hope that the sector can enjoy a busy and profitable Christmas period. It’s hugely disappointing that it will be disrupted for the third year in a row, this time due to rail strikes, but if anyone can make a success out of it, it’s hospitality.
Kate Nicholls is chief executive of UKHospitality
Be like Ben Stokes and believe in your team by Ann Elliott
“I think that there is a real risk that by this time next year, the eating out landscape might look like it did in the early 90s in terms of numbers of outlets. You know, when eating out was a something you didn’t do very often and was a bit special.” The words of one our most senior chief executives in the sector earlier this week. I dread that prospect.
I sat down last night to work out where I had been to eat and drink in the last three weeks or so, for a mix of business and pleasure – albeit they are much the same thing nowadays.
I had been to Gusto twice, visited two Hall & Woodhouse pubs, Tossed twice, Grind three times, a Vintage Inn, a Timothy Taylor’s pub, J Sheekey, Caravan three times, Serata Hall, 31 Below, an Oakman pub, four Fullers pubs, Libertine, Ciao Bella, Searceys St Pancras, the Charlotte Street Hotel, the Coal Office and Vermuteria in Coals Drop Yard, Molly’s café in Steeple Claydon, the Rusty Bull in Huddersfield, Mina in Fulham, Le Pain and Dishoom.
The quality of food I’ve been served has been consistently good, service has been friendly and efficient as a minimum, and mostly, the ambiance has been warm (though literally so cold in one coffee shop that everyone was wearing coats) and welcoming. I would happily go back to all of them, and patently do. I love the fact that I can eat what I want, when and where I want. The choices I have from QSR to coffee shops and pubs to restaurants are just fantastic. Eating out with friends brings huge joy to my life.
I don’t want to go back to the days when eating out was a bit special. When special meant going to the local Berni restaurant for a first date. Or a very upmarket and intimidating hotel for a birthday celebration. Or The Singing Kettle in Gargrave on the way back from a day out, where my brother and I were told not to even think about ordering desserts because we couldn’t afford it, and we could have a bun when we got home instead
It terrifies me that so many businesses might go under in the first or second quarters of next year due to the pernicious combination of rising food and drink prices, utility price increases, labour costs, the additional £1 on minimum wage due in April and the pressures on consumer spending. Even those businesses coming out of covid with decent cash reserves will be worrying how long that cash will last if they lose money in January, February and March.
This sector is going to need exceptional leadership to see it through the vicissitudes coming its way.
I was thinking about the subject this morning after reading about Ben Stokes’ leadership of the England cricket team in the legendary match against Pakistan a few days ago. He said he would rather have an absolute stinker of a game and for the team to win than do something great and not win. For him, nothing is off the table to win, no idea too crazy.
“Everyone’s played enough cricket and understands their game enough that if you give the responsibility to the individuals to get ready, why can’t that work?” he said. He has to win.
The temptation for businesses faced with the current commercial threats is to be cautious, conservative and cash conscious. That is totally and utterly understandable. It isn’t necessarily, though, the winning mentality of Ben Stokes.
There will be businesses who believe that now is the time to be bold, to believe in themselves (and their teams) and to go out to win. Who believe that now is the time to challenge all their current ways of working and do things differently. Who will take risks for the rewards they might win. Who are determined to survive and thrive.
I don’t want to see the sector decimated, or for eating out to return to the 90s. I have confidence in the leadership (and the number of Ben Stokes equivalents) in the sector to believe this won’t happen – not now, not next year, not ever.
Ann Elliott is a hospitality consultant
Investing in pubs will help secure their future by Chris Sladen
Our industry is one of the most adaptable in the business world. When the smoking ban came into force in 2007, the industry invested heavily in broadening its consumer appeal to attract new customers, such as implementing food and opening to families.
Likewise, when the coronavirus pandemic hit the UK in 2020, operators reacted creatively with takeaways, outdoor dining and community shops to support not only local people, but their livelihoods. Star Pubs & Bars also provided £62m in rent relief to further support the sector. And again, as the world continues to change with cost-of-living challenges and the evolution of how people work, pubs will adapt to cater to new and emerging consumer needs.
The sector will need investment to ensure pubs can evolve to meet these new demands. Star Pubs & Bars understands this, and we aim to upgrade 280 local pubs in 2022. For us, our operators and our estate, this is a massive vote of confidence in the future of our estate and the future of the great British pub.
The investment has been targeted to ensure pubs can maximise footfall and revenues by tapping into key consumer trends. As we prepare for the new year, we will continue to monitor trends and changing consumer behaviours to ensure our investments in the pub industry continue to yield positive results.
The renovations and refurbishments will make a difference to so many pubs, creating 700 new jobs in the process. Improvements this year have ranged from redecorating exteriors to major internal refurbishments, with over 100 pubs set to receive full makeovers that will cost more than £125,000 each. Additionally, we ringfenced £10m for day-to-day pub repairs throughout the year to ensure as many venues as possible benefit from the investment.
Following this, at the end of 2022, Star Pubs & Bars will have invested over £115m in pub improvements since covid hit, bringing the total to more than £300m since 2014. Refreshing and renovating pubs is vital to ensuring existing pub customers remain excited by their local, but it also helps to attract new and curious customers to venues.
Focusing on consumer trends
Our investments aren’t just about providing a lick of paint and some new furniture. We are tapping into key consumer behaviours to help operators take advantage of new revenue streams, such as the continued working-from-home trend.
As more people continue to work from home for at least some of the week, our investment is focused on suburban pubs and high street pubs within or close to residential areas. All refurbs are tailored to suit each site and look to incorporate spaces where customers can choose to comfortably work from the pub instead of at home.
We believe this option will become more prevalent as people seek warm places to work and enjoy themselves away from home so they can reduce their reliance on their own utilities. Pubs have always been the centre of the community, and this is just one of the ways the sector can help support locals over the coming months.
Reacting to premium trends
But these venues must also appeal to the increasing number of people looking to enjoy themselves with premium food and drink when they are not working. Insight from our most recent Stars of the Future Masterclass series, focusing on food, showed comfort food, but with a premium twist, would become more important to consumers in the colder months ahead.
At a time when many people are looking at ways to cut back, including pubs seeking to reduce costs and maintain margins, premiumising traditional pub dishes can be a cost-effective way to increase spend per head.
So, pubs that have been earmarked for or have undergone major makeovers have been given a look and feel that will help them to deliver on these premium yet comforting experiences consumers are looking for. This includes kitchen refits and new bars that will allow venues to keep up with pubgoers’ continued higher expectations for food and drink.
Although the pub trade is set to face new challenges, the sector has proven itself to be robust and creative enough to not only withstand difficulties in the past, but to thrive during these periods by listening to what their customers want and need.
Chris Sladen is head of property at Heineken-owned Star Pubs & Bars
Cutting out the middle men by Sarah Travell
If we are to take any learnings from previous downturns, one is that the mid-market category usually gets squeezed. Those that can afford high-end offers usually still do so, while many consumers trade down looking for value and convenience. Some will cut back on the frequency of their eating and drinking out occasions focusing on one or two “treats” a month, and therefore look for “affordable luxury”.
A look at the latest openings over the course of the past month, and you can already see the patterns above mirrored in those companies that have continued to open sites in the face of the challenging environment. The Propel New Openings Database in association with Virgate has seen 164 additions during November, with the majority again driven by franchise and QSR operators, with a smattering of high-end operators thrown into the mix
Unsurprisingly, one of the latter is serial sector investor Richard Caring. Last month, Caring launched Bacchanalia, his new high-end Greek/Italian restaurant in Mayfair. It followed the launch of his new Scott’s on the River site, in London’s Richmond. The riverside restaurant spans across two floors; the lower with an “impressive crustacean bar serving oysters, wine, champagne and cocktails”, while upstairs has a central bar hosting DJs every Thursday to Saturday, appealing to a younger audience”. A 32-cover terrace offers “outstanding views of the River Thames and the perfect backdrop for year-round alfresco dining”.
At the same time, Artfarm, the hospitality company run by Iwan and Manuela Wirth, which recently acquired the iconic Groucho Club in London, relaunched The Audley in Mayfair. The new site offers a range of draught beer and cider alongside a bar snack menu from executive chef Jamie Shears, ranging from scotch eggs and sausage rolls to fresh crab on toast, half a pint of prawns and the London Dip sandwich – roast beef with a gravy dip. With art at the heart of the project, the pub displays several pieces of notable contemporary artwork alongside framed caricatures, cartoons and maps dating as far as the 17th century.
This followed the latest opening from St John, the restaurant concept from Fergus Henderson and Trevor Gulliver, at 98 Marylebone Lane, in Marylebone Village. The company opened its debut site in Smithfield, in 1994, and St John Bread and Wine in Shoreditch, which opened in 2003.
At the other end of the spectrum, the new wave of franchise brands continue to build market share. Burger franchise concept Burger & Sauce will open seven new restaurants over the next six months as it expands across the Midlands. Sites in Leicester, Coventry, West Bromwich, Walsall and Derby, plus Bearwood Road in Birmingham and Sutton Coldfield, will create around 140 jobs. In September, Burger & Sauce franchisee Subhan Munir opened the concept’s fifth site, and first outside of Birmingham, in Alfreton Road, Nottingham.
German Doner Kebab (GDK), owned by Hero Brands, has opened a site at the Merry Hill shopping centre in Dudley. The restaurant, which has created 40 local jobs, forms part of plans by the brand to open 78 new outlets across the UK in 2022. Döner Shack, the fast casual kebab concept, recently signed up Bobby Sidhu, a Starbucks franchisee, to be its franchise partner in the West Midlands. It comes after it opened its fourth site, and first in Scotland, in Glasgow’s Silverburn shopping centre. Its next opening will be its first in London – in the former Gourmet Burger Kitchen site in Baker Street – the first of four sites it is planning in the capital.
Meanwhile, dessert parlour operator Creams, which is led by managing director Othman Shoukat, has partnered with Tesco, in a move which will see it opening in two of the supermarket’s stores. The first cafe opened in the Tesco Extra, Streatham, south London, last month.
In the wider branded QSR sector, the competition for space is set to get fiercer over the coming 12 months, with the likes of McDonald’s, Burger King, Domino’s and KFC set to fight it out with Popeyes, Wendy’s and another new entrant from the US, Little Caesars Pizza. Since its return to the UK last summer, Wendy’s has opened 25 outlets here, a mixture of restaurants and dark kitchens. It has approved six franchisees, who will take on territories including Scotland and Wales. The present focus is on the north of England, where its first franchise partner, Square Burgers, opened the first franchised dine-in restaurant in Sheffield for the brand at the start of this month. Meanwhile, company-owned units will open in Liverpool and Greater Manchester.
Not to be outdone, Popeyes has announced its next raft of openings in the UK, including what is set to be its first drive-thru in the country, in Rotherham. The business expects to open 20 restaurants in 2023. All this activity goes to show that it’s still very much a case of all to play for still – but sadly not everyone will have the opportunity or right offer to take the field.
Sarah Travell is the founder and chief executive of Virgate, sponsor of the Propel Multi-Site Database. The comprehensive database is updated monthly and provides company names, the people in charge, how many sites each firm operates, its trading name and its registered name at Companies House if different. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £895 plus VAT – whether they are an operator or a supplier. The single subscription rate is £445 plus VAT for operators and £545 plus VAT for suppliers. Email email@example.com to upgrade your subscription.