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Morning Briefing for pub, restaurant and food wervice operators

Fri 24th Feb 2023 - Friday Opinion
Subjects: Where do food halls go from here, failing to deliver the desired results, my journey to becoming the UK’s first trans arbitrator, gastropubs delivering affordable treats in the cost-of-living crisis
Authors: Simon Anderson, Glynn Davis, Gaynor Mary Warren-Wright, Ann Elliott

Where do food halls go from here by Simon Anderson

When considering the future, it is always sensible to consult the past. In my opinion, two openings from 2014 played pivotal roles in shaping our modern food hall scene. One is Time Out Market Lisbon, a 32,000 square-foot food hall with 900 covers, 26 kitchens, eight bars and cafes and five shops. The other is Altrincham Market in Greater Manchester, a converted market hall of no more than 6,000 square feet with 180 covers, six kitchens, two bars and a coffee shop.  
These two ventures could not be more different in size or scale, but they share one important ethos of showcasing the best talent and food in their area. In analysing these two styles of operation – one being large and marquee, the other hyper-local and community-focused – it is easy to understand the influence they had on future food halls and, in my opinion, why these two broad styles will continue to shape the operation, success and impact of food halls in the future.
Large marquee food halls play a significant and growing part in the culinary landscape of our large cities. Food halls are perfectly suited to modern consumers and the economic climate. Customers love their unpretentiousness. They are particularly popular with millennial and Generation Z audiences, but if you look across the floor of a successful food hall you will see a diverse selection of ages, families, office workers, friends, singles and groups, all enjoying the space equally. Choice and the ability to cater to different tastes and dietary requirements are key, as is the ability to order and pay individually, especially in these difficult financial times.
Covid affected the sector, with several major projects either cancelled or stalled. But almost all the main players survived, and since the lockdown, everyone has seen growth. A key post-covid development is a shift in the kind of deals being considered, with management agreements as well as traditional leases now being offered, especially as landlords have started to understand the benefits of improved tenant mix, letting appeal, increased rents and property values that proximity to a successful food hall brings to their surrounding estates.
Location and density of population are the two most crucial factors in the success of large food halls. Anyone who has struggled to find a seat on the terrace at the popular Shelter Hall on Brighton’s seafront, sat at the cheese bar in Kerb Seven Dials or queued for a roti in Victoria Market Hall, can only marvel at the advantage of a great location – whether it is close to a transport hub, landmark, seafront, city or business centre. Large food halls need that density of population and footfall because the biggest challenge you face as an operator with 200, 400, 800 or more covers is to make the place feel alive on a busy Friday night or a cold Tuesday afternoon.
Sadly, in the food hall world, the perfect-sized building in the perfect location rarely presents itself. It is more often the case that the perfect building presents itself in a not-so-prime location. This is where the superpower of large and small food halls can come into play. 
In managing and curating compelling independent traders with quality food offerings, superior bars, drinks and entertainment, all within a stunning or unique building, then you have a fighting chance of becoming the most mythical of beasts – “a destination”. Mackie Mayor in Manchester and Cutlery Works in Sheffield are two perfect examples of this. We have recently seen a living example of the importance of offering with the turnaround of Arcade London, a stunning food hall that opened at an unfortunate time just before lockdown, with a slightly off-pitch location by Tottenham Court Road. Its partnership with London restaurant masters JKS instantly improved the quality and scope of their offering, bringing almost instant success with very little change to the building. In showcasing the best chefs and cuisine from a whole city, region or country in one location, food halls are perfectly positioned to benefit from the growth in culinary tourism, which by 2032 is expected to pass $4.530.9bn, according to Future Market Insights. 
The sector shows no signs of slowing, with several large openings to watch out for over the next year. Two are from Boxhall, the new food hall concept from the successful industry outlier Boxpark. First is a 20,000 square-foot space with two external terraces overlooking the historic floating harbour in Bristol, and most intriguingly, the conversion of the old Metropolitan Arcade by Liverpool Street station. Another is Shipyard, a 30,000 square-foot venue in the emerging St Johns district of Manchester, close to the new Soho House and Mollies Motel, with an operator to be announced soon. Perhaps the most ambitious is Arcade’s 24,000 square-foot opening at Battersea Power Station, which will house a mixture of new and existing food concepts along with three standalone restaurants, games room, live music, taproom and cocktail bar.
Another exciting development for UK operators is the expansion into international markets. Kerb recently announced its plans to open a 24,000 square-foot site in the Potsdamer Platz area of Berlin with 12 kitchens and four bars. Mercato Metropolitano (operator in Elephant & Castle of the UK’s largest and best-performing food hall) is looking to expand into Europe and the US. The Middle East is a rich potential source of opportunities. Time Out currently operates a venue in Dubai and has announced further openings in Abu Dhabi and a huge 90,000 square-foot venture in Diriyah Square, Riyadh. There is also potential for operators to come the other way, with Boxooo, a UK-based international company, currently developing three sites in Saudi, with plans to open here and in Europe. It has a unique business model that combines digital and hospitality with a 360-degree solution for operators, entrepreneurs, start-ups, and customers.
But there are only 76 cities in the UK, of which maybe just over half have the population to support a large food hall. Meaning it’s the other 1,186 towns across the country that provide the most potential. If you view large food halls as those few football teams chasing Champions League glory, then the most exciting, impactful and challenging element of the future of food halls is every other team in all the leagues. This is where operators must interact with their fans in completely different ways to succeed. They are community-driven, passionate and relevant, ingraining themselves into their locations by providing a more valuable offering. It means food halls have the possibility to make themselves vital in reviving the fortunes of our high streets and town centres. 
Simon Anderson is a food hall consultant at Ideas Food Consultancy and was previously chief operating officer at Market Halls. This piece first appeared in Propel Premium.

Failing to deliver the desired results by Glynn Davis

Any morning visit to my local Pret A Manger invariably involves passing through a number of couriers milling around the door and waiting at the dedicated counter within the store, which appeared during covid-19 to service orders for home delivery, and which has become a permanent post-pandemic fixture.
It has always amazed me that there are many people out there willing to pay the higher prices charged for orders taken via the likes of Deliveroo, Just Eat and UberEats – as well as the additional charges they impose for delivery – for a transaction that might comprise little more than a coffee and a croissant.
Maybe I’m a bit old school in that I’m more than happy to walk down the road for my morning coffee and to avoid paying any additional charges – especially in the middle of a cost-of-living crisis. Maybe I will be joined by other people, as they potentially look to jettison their home delivery habit and live a tad more frugally by visiting their favourite foodservice joints in person for takeaway or to dine-in. 
Such actions would certainly crimp the progress of the delivery firms who have been battling hard to hit profitably. The most recent numbers released by Deliveroo and Just Eat Takeaway show them both near to break-even or achieving modest profitability, but the measures they use are invariably adjusted to remove various charges. 
Their recent numbers also showed they enjoyed higher gross transactional value but falling order numbers. Delivery volumes fell 12% in January alone, according to CGA by Nielsen’s Hospitality at Home Tracker, which marks the 15th consecutive month of year-on-year sales declines. This is worrying not just because Deliveroo and Just Eat Takeaway have serviced fewer orders, but that they have also nudged up their delivery charges to customers and their fees to restaurants.
With commission fees to their restaurant clients already around the 25-30% mark, any increases above this would raise further questions about whether the model really stacks up for these restaurant and quick-service restaurant businesses who are already under intense pressure. They are dealing with increased charges on food, utilities, taxes, rentals, staff wages and pretty much anything else you can think of that is part of running a restaurant or takeaway food proposition.
Evidence of a decline in delivery levels was seen at Chipotle in the US, with the company reporting in the fourth quarter that it had seen delivery transactions decline 15%, partly driven by consumers choosing to avoid the extra fees imposed. This follows the trend of the previous quarter, when it reported in-restaurant sales had risen 22.1%, which had helped boost the company’s profits as it reduced its charges being paid to the delivery companies.
In the UK, we’ve had The Restaurant Group last year call time on the delivery boom as it announced it was ceasing the roll-out of its Wagamama delivery kitchens. The channel accounted for 19% of its sales, and the softening of demand for delivery was cited as a key reason for the outperformance of the noodle chain. This view of delivery retreating has been echoed by the management of Hostmore, the parent company of Fridays and 63rd+1st, which expressed its desire to not be reliant on delivery because of the low quality of this revenue – with the costs associated with engaging with the delivery providers.
Other companies have completely eschewed delivery, including the US-based Darden, which operates Olive Garden and Longhorn Steakhouse. The company has made it clear it finds the margins involved with delivery unappetising, and the company’s chief executive stated: “Right now, we have no interest in delivering a $10 meal…to an individual household. That’s just not a business that we think we want to be involved in right now.” 
While Darden represents a clear outlier with its hardcore negative stance on delivery, the reality is that as the cost-of-living crisis continues to bite and inflationary pressures represent an ongoing threat to many businesses, both consumers and restaurant operators will no doubt be assessing how they handle their future relationships with the delivery companies.
Glynn Davis is a leading commentator on retail trends

My journey to becoming the UK’s first trans arbitrator by Gaynor Mary Warren-Wright

By way of introduction, and in brief, my career started in Covent Garden in 1977 when it was a godforsaken bomb site. The fruit and veg market had vacated some ten years earlier. There were just two retail units and two restaurants, Mon Plaisir and Rules. I am proud that at some point during my long career, my hand has touched every single building of somewhere that is now an incredible place to live, work and relax.  

I retired from [real estate group] CBRE in April 2020 after 18 years, having been senior director responsible for the London mid-town (including Covent Garden) and Southbank lease advisory teams. I now practice upon my own account – although I didn’t really mean or indeed expect to, as it was then that I accepted my own reality and came out as Gaynor. I am the first trans arbitrator to be appointed by the Royal Institution of Chartered Surveyors (RICS). There is much written about me already, and readily available on Google. The lead article, Finding Gaynor, can be seen here.

I remain active in those geographies, in the food and beverage and office sectors, and in the private and NHS health sectors in England and Wales. I was a founder member of the Restaurant Property Advisors Society. I am highly experienced (44 years) in contentious landlord and tenant arenas. As an experienced expert witness, arbitrator and independent expert, I have a wealth of experience that is invaluable in resolving and minimising litigation risk.

I was part of the team representing the RICS in discussions with the Department of Business, Energy & Industrial Strategy over the Commercial Rents (Coronavirus) Bill 2022, now enacted. I was responsible for the roll-out of the legislation to the arbitration communities for the RICS and educating the markets. An advocate for diversity, equality and inclusion (DE&I) and the trans communities in the UK, I am open, accepted and a proud transwoman operating in an industry that historically is not known for its diversity or inclusion.

My proudest moment was joining the selection and interview panel for the appointments of director general and chair of the RICS, representing some 134,000 members worldwide – that’s diversity and inclusion, operating at the global level of governance responsibility. I have been recorded in Ireland, televised for The Crown Estate interview, and spoken to many of the biggest property companies in the world about my journey and the benefits the corporate sector gets from having a comprehensive diversity and inclusion strategy.

Following the highly destructive and transphobic article written on 6 January this year, I invited Propel managing director Paul Charity and group editor Mark Wingett to visit the London Transgender Clinic, meeting surgeons, nurses, psychologists, communications officers and representatives from the LGBT+ networking forum Freehold, which works within the property sector. This was a rendezvous with the reality of the horrors that have to be endured daily by the transgender community – and the network that supports this minority. They both described this as an eye-opening and truly humbling experience. 

As a result, Propel asked me to advise it on diversity, equality and inclusion matters, and to write a monthly opinion article on DE&I, and professional matters such as dispute resolution or landlord and tenant issues focused on the hospitality sector. I accepted this invitation as I could not believe the archaic falsehoods and misrepresentation that had been communicated to the hospitality sector by that opinion piece, contrary to all clinical and scientific knowledge available. It was wrong in every respect. I know, as I have got the badge. But I have already formed a strong working relationship with Paul Charity, and I believe Propel will now be a source of illumination and support on these issues. 

We now have seen Brianna Ghey, a 16-year-old trans teen, stabbed to death in an “extremely brutal and punishing” attack in a park in Warrington – stabbed and murdered for being trans. That is what hostile and ill-informed articles like that one – and a climate of prejudice – can do. Remember her next time anyone suggests that we are not “real” women. Vigils have been held in every major city in the UK in remembrance of her. 

The hospitality sector could do well to demonstrably express its support for the community. Indeed, an example can be seen at the beauty studio I first visited when I came out as trans. It hung trans bunting in its windows in support and changed its website as a demonstration of support for the community.

Let me briefly correct a misrepresentation readily broadcast by our media. A Gender Recognition Certificate affects four things:
a)     Birth certificate;
b)     Marriage certificate;
c)     Pension; and 
d)     Death certificate.
You must still go through the medical mill to physically change your gender. 

My next article will focus upon statistics about the community, the rise in violence and hate crime and what we can all do to redress the balance. Our money is as valuable to this industry as any other’s. While I am planning to slow down my professional work, I will continue to stand up and speak out for the trans and non-binary communities so badly damaged by the current political climate and major newspaper editors and journalists, whose sole object is to perpetuate transphobia. We see another progressive country, Spain, permitting self-identification and extending trans rights. What is wrong with the UK?

For those in doubt, I suggest you take a few minutes out to watch Dr Vickie Pasterski’s TEDx talk on “The Essence of Gender”. I hope that my input will prove of benefit. I am open to any suggestions for topics going forward.
Gaynor Mary Warren-Wright BSc. (Hons) FRICS is Propel’s diversity, equality and inclusion adviser

Gastropubs delivering affordable treats in the cost-of-living crisis by Ann Elliott

There are several things I want to achieve in the next 12 months or so.

1. Visit at least 20 key casual dining brands including ASK Italian, Bella, Cote, Turtle Bay, Prezzo, PizzaExpress, Frankie & Benny's, Zizzi, Wagamama, Honest and Mowgi, to name but a few. This is specifically to focus on their menu construction, pricing, plate presentation and value for money – and overall experience.

2. Visit a selection of Young’s and Fuller’s pubs to fully understand the recent report from Doug Jack (equity analyst at Peel Hunt), where he analyses and compares the performance of both businesses.

3. Visit the Ego estate, which is led by James Horler (he does know this). I'm hoping to do that sometime this year (he knows that too).

What I really want to do though is visit the top 50 gastropubs announced in the recent Estrella Damn awards. I have booked into The Unruly Pig for Sunday lunch and The Sportsman for a dinner and overnight stay, and have been to six of the rest, so just the odd 42 to go.

There are a number of dynamics happening right now in the gastropub market that are fascinating. There's the challenge of finding and paying for brilliant chefs if the owner isn’t working in the kitchen, because outstanding food is patently at the heart of a gastropub proposition. There's the need to have the right number of covers available for commercial viability, balanced by the desire for differentiation versus a branded pub operation. Then there's the high costs of marketing an individual pub (versus a group of pubs and being able to amortise the cost) but appreciating how vital it is to success.

Gastropubs, like all others, are also managing the rising costs of food. But, as the wonderful Rebecca Mascarenhas –  the restaurateur behind Elystan Street in Chelsea, Kitchen W8 in Kensington and Church Road in Barnes – once told me: really skilled chefs know how to make the most of every ingredient, like a whole pig or sheep, which can help mitigate against price increases.

This passion for the gastropub was really brought home to me the other week when I had lunch with Amanda Pritchett, founder of Stanley Pubs, at one of her pubs, the de Beauvoir Arms in Islington. Amanda worked at the original gastropub, The Eagle in Farringdon, opened in January 1991 by Michael Belben and David Eyre, and is a chef by training. She invents the recipes for her pubs, designs the menu, runs the cook-off and chef training, and is unbelievably obsessed with wonderful, tasty food made from fresh ingredients.

Her menu is written on the pub blackboard and changes monthly. Her daily specials are just that – and £8 a plate. We shared Portuguese chicken hash with a soft fried egg; harissa roasted broccoli with green tahini and spiced almonds; and a beetroot, blood orange and Radicchio salad with a pistachio dressing (£7). Her food was so tasty, so beautifully presented on the plate and such fantastic value for money that eating it felt like a huge privilege and treat.

Even in times of the cost-of-living crisis like these, customers are still going to want to go out and experience food like this; to try ingredients that they will not have at home, and if they do, won’t necessarily put them together in the same way as Amanda.

It is possible that this year may see the dining out market polarise into gastro-type venues, including premium pubs and restaurants and value-for-money type venues including quick-service restaurant, takeaway and fast casual. Those brands in the middle may well be caught out. Those that are good, but not outstanding, and affordable, but not really great value. History (and experience) would suggest that customers still want a treat in time of economic difficulty – and true gastropubs deliver that experience.
Ann Elliott (she/her) is a portfolio non-executive director and board advisor

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