Subjects: School of thought to help tackle the sector’s recruitment crisis, the dangers of ultra-processed foods, premium opportunity in a cost-of-living crisis, a model to stem the tide of brewery closures
Authors: Charlie McVeigh, Ann Elliott, Mark Bentley, Glynn Davis
School of thought to help tackle the sector’s recruitment crisis by Charlie McVeigh
What do the founders of Shake Shack, Dunkin’ Donuts, the Lyft taxi app and the creator of the McDonald’s Quarter Pounder have in common? Here’s a clue, it’s a school, and the two co-founders of Burger King met there. As did the billionaire co-founders of Duty Free Stores, Chuck Feeney and Bob Miller.
No idea? Okay, here’s more – the current bosses of Intercontinental Hotels, Loews Corporation and Harley Davidson also attended – as did the man who owns the Chateau Marmont in Hollywood and the Mercer Hotel in Manhattan. The answer? The Cornell University School of Hotel Administration. A little further clarity for us parochial Brits: Cornell University is an “Ivy League School”, the American equivalent of Oxford and Cambridge universities. Think about it, there is a faculty at one of the most prestigious colleges in America that teaches hospitality.
The Cornell School was originally set up a century ago in 1922 by a group of enlightened New York City “hotel men” to address a crisis in recruitment. Sound familiar? One of these hoteliers, Edward M Tierney of the Ansonia Hotel, summarised the pitch: “There is a dearth of competent hotel employees, and such a course at Cornell would have the endorsement and co-operation of the hotel men generally throughout the country... The war brought a great change in the hotel worker, and the old-time attitude of servility has been replaced by efficient service giving and courtesy. Young men now enter the hotel business just as they would banking, railroad or commercial life, to find a future in it, and the hotel man must offer the same attractions of commensurate pay and advancement.”
At the heart of it is the remarkable Statler, the university’s official 154-room hotel, which is run by Cornell School students. The Statler group of hotels started life as the brainchild of Ellsworth Milton Statler, who launched his entrepreneurial career with the building of a temporary wooden hotel containing a mind-boggling 2,084 rooms for the disastrous Pan-American Exposition of 1901 (it is said he was the only man to make a profit). Statler grew a large collection of hotels in the succeeding years and eventually sold up in 1954 to Conrad Hilton for $111m, then the largest real estate transaction in American history. Statler’s will stipulated the founding of the Statler Foundation, which created the Cornell location and funds the ongoing participation of Cornell students in its management.
I was alerted to the existence of the Cornell School by UK hospitality investor Ian Edward at a round-table event in April. Ian had sat quietly through much of the discussion as operator after operator unburdened themselves on various topics, but principally the horrendous challenge of recruiting and retaining good staff. Chatham House rules preclude me from further specifics other than to say that – with Ian’s permission – he enlightened us all with a passionate disquisition on the abject failure of the UK to educate our hospitality workers at the highest level, citing the Cornell School as the model.
I was inspired, did a little desktop research and have had a few chats with Ian since. The (very) early summary is, there must be room in the UK educational establishment for an equivalent school or faculty. Couldn’t our world-famous roster of chefs inspire future generations of teenagers to compete for places on an under-graduate business and hospitality course at a “name” university? Wouldn’t our large (and small!) operators kill for the opportunity to send their best and brightest teams to do a Master of Business Administration (MBA) at the same place? Is it possible that the crisis in UK hospitality recruitment which, let’s face it, long pre-dates the pandemic, find a significant part of the solution with this? Might the mythical parents who don’t think hospitality is a suitable career for their hot-housed offspring be persuaded by such an establishment?
Meanwhile, catering colleges and apprenticeship schemes appear to be in crisis, with student numbers in free-fall. The proposed addition of catering and hospitality as subjects for vocational T-Levels for 16- to 19-year-olds offered some hope. But, after promising-sounding announcements at their launch in 2020, they are still not available.
Last month, I met up with James Dare and Florian de Chezelles, the founders of The Salad Project, an excellent next generation salad bar concept with four locations in central London who met at the EHL Hospitality Business School in Lausanne. It goes to show how poor our hospitality education system is in this country that I was astounded by this.
There is an honourable tradition of working your way up from the bottom in our sector. Ask anyone who has had a job in multiple small to medium-sized hospitality groups and they will tell you that the systems, and even KPIs, are often completely different – because they were made up on the hoof by founders with no practical education or training who learn each lesson the hard way, at the coalface. Nothing wrong with that, we say. Or is there? Watch this space…
Charlie McVeigh is the founder of Draft House and chairman of Butchies. This article first appeared in Propel Premium, which is sent to Premium subscribers every Friday. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email email@example.com to upgrade your subscription
The dangers of ultra-processed foods by Ann Elliott
I walked into my daughter’s flat last Friday to see her lying comatose on her bathroom floor – every parent’s nightmare. While she had messaged me to say she wasn’t feeling well, I really hadn’t appreciated how poorly she was. Eventually, a call to 111 led to a hospital visit, a diagnosis of appendicitis and an operation to remove her appendix. She was home within 24 hours of having the operation and is recovering now, and I think that’s quite amazing.
We had to wait in A&E for ten hours on Saturday before a confirmed diagnosis and a hospital bed. The team there was fantastic, but the process is just not great. Maybe not enough staff, maybe not the best of tech, maybe constant breakdowns in communication, maybe the pressure of having to work so many hours.
I really don’t know what the core issue is, but it gave me time to think about health in general and how to avoid having to visit there if humanly possible – and I appreciate it’s not possible to avoid so many health issues, including appendicitis.
This all coincided with reading “Food for Life” by Tim Spector, signing up to the Zoe app, joining the Zoe Facebook page and listening to his podcast with Stephen Bartlett, as well as reading as much as I can about ultra-processed food (UPF).
I also went food shopping this week and looked at every ingredient on every packet for signs of ultra-processing – what a pain! A quick shop took me nearly an hour. Many of the items I would have bought included UPFs.
I imagine we all know that UPFs have been altered entirely and have high levels of unhealthy fats, refined sugars and salt. They also undergo industrial processes, like hydrogenation and moulding, and contain additives like dyes, stabilisers, flavour enhancers, emulsifiers and defoaming agents. These foods are very calorie-dense and don’t contain many, if any, valuable nutrients.
UPFs are engineered to be convenient, extra tasty and highly profitable for the companies that make them. They include: soda and carbonated drinks; sweet and savoury packaged snacks including crisps; breakfast cereals; instant noodles; microwave-ready meals; energy bars; granola bars; sweets; chocolate; sausages; ham; bacon; hot dogs; store-bought bread; and, of course, fast-food. The vegan ready meals I tried on Veganuary were all truly appalling and all ultra-processed.
Everything I have read, listened to or watched suggests that excluding UPFs from a daily diet leads to improved gut health, increased energy, better mental clarity and improved sleep and well-being. In other words, a healthier life, which in turn should help reduce the chances of being ill. Interestingly, the sole option for food in A&E on a Saturday night was the vending machine, which only sold UPFs, snacks and drinks.
We can control what we eat in our own homes, but how can we control what we eat when we go out to a pub, bar or restaurant? How do we know what food on our plate has been ultra-processed beyond the obvious? Even vegan or vegetarian food can’t be trusted.
Chris van Tulleken, who has written “Ultra-Processed People: Why Do We All Eat Stuff That Isn’t Food” and “Why Can’t We Stop?” has stated that most of our calories today come from UPFs, which make up to 60% of our diet. Not just processed food, but ultra-processed food. Is the current anti UPF campaign just a fad, or is it likely to have a profound effect on how we eat going forward?
Crucially, does it present a threat to our sector? Or is there a real opportunity for operators to really think about the food they serve and how it originates? Perhaps some could really grasp the nettle and take UPFs out of their menu entirely. Not a great prospect with everything else going on, but maybe a thought for the future?
Ann Elliott (she/her) is a portfolio non-executive director and board advisor
Premium opportunity in a cost-of-living crisis by Mark Bentley
After navigating the challenges of the pandemic, the hospitality sector could be forgiven for hoping for some respite from the continual curve balls and challenges being thrown its way. However, we’ve gone from one period of turbulence and uncertainty straight into a cost-of-living crisis. Even though we’re hearing that inflationary pressures are starting to ease, last month we were still seeing headline year-on-year inflation of 11.4% on food and 7.6% on drinks, based on our tracking of more than 165,000 like-for-like site/item combinations in pubs and bars across the UK. That’s an extra £1.16 added to the average cost of a main course and an extra 26p added to the average cost of a drink – a significant burden for consumers who are already seeing their household bills rise and disposable incomes squeezed.
As always, there’s a need to look deeper and understand what’s really going on behind the headlines. Since the pandemic there has been an acceleration in premiumisation trends, something that seems at odds with the fact that we’re now in the middle of a cost-of-living crisis. In the world of drinks, consumers have been choosing to drink less but drink better, with categories such as world lager and craft beer enjoying phenomenal growth at the expense of more traditional familiar favourites. As disposable incomes have been squeezed, many people would have expected growth to soften, potentially driven by consumers trading down to lower-priced familiar favourites. However, the demand for premium is showing no sign of slowing, with the shifts in consumer preferences that we’ve seen over the last few years very much looking like they are here to stay.
There could be an element of the “lipstick effect” at play here, with consumers being more willing to buy less costly luxury goods at a time of economic crisis, but I believe that what we’re witnessing is a more fundamental, long-term shift in consumer behaviour – drinking less but drinking better. Given the acceleration in premiumisation trends, it would be easy to assume that its premium operators that are best positioned for success. However, looking at the market share across major branded pub chains for the last six months versus the previous six months shows that while the broad shape of the market between value, mainstream and premium operators remains relatively stable, we’re seeing a sliding scale of performance, with value operators growing their share overall while mainstream and premium operators have seen weaker performance.
This could be seen in the context of the cost-of-living crisis, with consumers potentially looking to make compromises and trade down their choice of venues. However, looking deeper, there’s a real mix of operators that are winning and losing share across all sectors of the market. In the premium space, many of the operators seeing their share come under pressure are located in city centres, often with a late-night orientation, and the challenges here have been well publicised recently, with lower footfall in major cities since the pandemic and a marked shift in how people are socialising, with occasions shifting earlier in the day. This presents a challenge for some, but also opportunities for operators that can flex their offer and cater to different needs across the different dayparts, as mentioned by Clive Watson of City Pub Group in this week’s Propel Morning Briefing.
Whether you’re a value-led community pub or a high-end restaurant, premiumisation is a real trend, with guests willing to pay more for quality and experiences. Having more premium options offering consumers the ability to trade-up is key to providing a compelling offer, while also enabling you to increase average transaction values. This could range from introducing more premium options to your range in a value-led venue (eg: adding a world lager to the draught beer range, enabling guests to trade up from familiar favourites), to really pushing the boundaries with experiential elements at the top-end and delivering a experiences that are worth paying more for.
So, what does this all mean? Even though we’re in the middle of a cost-of-living crisis, consumer demand for premium is greater than ever. We’re undoubtedly having to run faster to stand still given the levels of inflation that we’re seeing, but with consumers’ appetite for premium, there’s opportunities for operators to look at their food and drink offers and ensure there’s the right balance of familiar favourites through to more premium options. Getting your range and pricing right, backed up by great people delivering great service, is what ultimately sets hospitality apart, giving consumers reasons to keep coming back.
Mark Bentley is the business development director of HDI, provider of card spending insight and pricing data to the UK hospitality sector. He is a former category management controller at Molson Coors and a qualified beer sommelier
A model to stem the tide of brewery closures by Glynn Davis
Approaching the dour former Quaker Meeting House alongside Chelmsford train station, there is little indication of the stunning interior that will greet you when you cross the threshold. The open plan, double-height structure houses a floor-to-ceiling back-bar and mezzanine level encircling the entire building that puts you right in among the giant lobster pot-like lampshades that throw soft lighting around the brewery.
Yes, within this structure is a brewery, or a brewpub to be precise. It’s the most recent opening for Brewhouse & Kitchen (B&K), which is defying the trend for brewery openings as it now operates 23 such sites and is on the lookout for more. This very much goes against the grain, because breweries have been dropping like flies of late.
Brewery insolvencies have tripled in the year ending 31 March, with 45 hitting the rocks compared with 15 the previous year, according to the accountants Mazers. Among those to have found themselves in trouble are Black Sheep, Brew By Numbers, Brick, Bedlam, One Mile End, Wild Beer Co and Beatnikz Republic.
These failures are undoubtedly partly down to the unsustainable rate of openings over the past decade, which has resulted in serious overcapacity in the market. In complete contrast, nobody else has sought to open brewpubs. B&K is the only player in town and largely follows a playbook that was created by David Bruce, who pioneered the brewpub concept in 1979 when he built out the Firkin chain. There had been no serious efforts to replicate the model until Simon Bunn and Kris Gumbrell opened their first B&K in 2013, in Portsmouth, and have since been rolling it out around the country since.
Successfully combining a comfortable bar and dining space with a chunk of square footage given over to the industrial kit required for a brewery is tough in the UK, where property costs remain high in the centres of towns and cities. It has proven to be too much of a headache for others to pursue. Bunn tells me B&K has pursued a strategy of taking on buildings that nobody else wants and then investing serious sums in order to create the right dual-function space. Chelmsford cost £1.1m for the freehold and required the changing of some odd Quaker covenants, and £700,000 was invested in the fit-out. Seven of B&K’s other sites have been carved out of former JD Wetherspoon pubs.
There have been brief talks about developing another model that does not include the brewery element, but Bunn says it’s not close to becoming a reality. The company is more than happy with its lot, and the unique selling point that an on-site brewery brings. As much as 50% of each unit’s beer in brewed on-site, while 30% (its two in-house lagers) are brewed under contract.
This situation is clearly healthy for margins and is boosted by B&K being confident enough to shun the big brand competition – so you won’t find the likes of Stella, Carling, Strongbow and John Smith’s, nor even the ubiquitous Guinness, on its taps. This is proving attractive to its core audience of 25 to 55-year-olds, of which 50% are female. Other fans include some local councils, which have taken the team around their town centres as they tout their suitability as the location for the company’s next site.
At a time when cask in particular is under great pressure and cocktails are drawing more people away from beer, B&K is finding a receptive audience to its in-house brewed range. The secret sauce is that it is making beer accessible to a wider audience. There is no doubt that craft beer flies over the heads of many people – especially in the towns and cities where B&K has set up shop – and it has sought to counter this by representing it in an unchallenging way for a mainstream audience.
None of the outlandish brews found in many craft beer bars are on tap at B&K. Milkshake IPAs, pastry stouts, triple IPAs and kettle sours have no place on the menu. It prefers to cover off the accessible end of things with the likes of juicy pale, session IPA, tropical IPA and craft lager on its bars. This makes it less than exciting to beer hunters like me, but Bunn and Gumbrell will no doubt be unmoved by this as 23 B&K’s and counting is proof enough that their unique model is working for many drinkers.
Glynn Davis is a leading commentator on retail trends