The Beverage Standards Association brings you Peter’s Monday 10th January 2022 Weekly Briefing every Tuesday morning.
Monday, 10th January 2022 Weekly Report
This is the time of year for looking forward, making plans, anticipating what’s ahead. I’m generally a glass half full person, and I don’t generally suffer from SAD (Seasonal Affective Disorder) which afflicts many people at this time of the year, so I’ve been bemused by what, for me, is a sombre outlook.
Flurries of emails
What’s behind my view are several things that I’m noticing. The first is that, normally in the couple of weeks after Christmas, there is a flurry of emails and news stories from operators – pubs, restaurants, hotels – giving some very positive news about performance in the run up to Christmas,or over Christmas, or on New Year’s Eve. This year? Nothing. Of course the reasons aren’t hard to find – but surely there’s some good news, somewhere? A whole area of bad news in the run up to Christmas concerned cancelled bookings, a natural outcome of the onward march of omicron. A thwarted booking is more depressing than none at all – its impact is felt personally (as well as financially).
Christmas plans disrupted
And another area of bad news was that family Christmas plans were extensively disrupted what with dashed plans to travel to see family overseas (that includes me!) and, even when it was possible to get together, it was in smaller groups, more constrained with fears about what the next lateral flow test would reveal. And, dare I say, with more discussions about the state of the world – covid, climate change, inflation, politics – all in need of improvement
Thank you for reading part of the Monday 10th January 2022 Weekly Briefing. A full edition can be found here.
Peters Monthly Report for December 2021 is now available here.
Peter provides consultancy on the eating out market and opens eyes to brand new ways of thinking about the sector and its multiple opportunities for success.
Monday, 13th December 2021 Weekly Report
What to call them? Dark kitchens I mean. The problem with the term Dark Kitchens is, so I’m told, that it makes them sound subterranean and uninviting. Some people prefer Ghost Kitchens but that implies they don’t actually exist – when they clearly do. Others want to call them Cloud Kitchens as if they exist somewhere but we don’t know where (– when clearly they exist within a mile of wherever we’re ordering our food. Then there are Shadow Kitchens (what do they shadow?) and Delivery Kitchens which, to my mind, is sort of accurate but definitely prosaic. I’m going to argue for Dark Kitchens.
Where does the Dark come through?
Where does the “Dark” come from? It’s obviously not the absence of light – just try cooking in the dark. In practice, I suspect that Dark Matter may have something to do with it. After all, the scientists tell us that Dark Matter is suitably mysterious even though there are certainly things that are known abou.
For a start it keeps everything (in the universe) in its place – just like a well ordered kitchen. There is hot dark matter, warm dark matter and cold dark matter – the soup is piping hot, madam; your ice cream is suitably cold; everything is delivered to you at just the right temperature. Scientists observe Dark Matter via Galaxy Clusters – seems like a great chocolate dessert. It’s also observed in Cosmic Microwaves – apparently, even kitchen equipment manufacturers are getting in on it. A piece of evidence for the existence of dark matter is via Velocity Dispersions – sounds like a really cool way to whip up some mayonnaise. And then there’s Structure Formation which, I suspect, Heston Blumenthal has had a hand in.
Thank you for reading part of the Monday 13th December 2021 Weekly Briefing. A full edition can be found here.
Monday, 6th December 2021 Weekly Report
Out of the Blue?
Omicron (or “omnivore” as some spellcheckers will have it) has come out of the blue – or has it? Scientists (and politicians) have, sometimes in the past, hedged their bets when talking about the future direction of the pandemic with words such as “providing there isn’t a dangerous new variant” – but we ignored those words of gloom and concentrated on how soon vaccines would work their magic.
Well now we know how much attention we should have paid to those caveats. Many of us didn’t, but we should have. And maybe it’s not too late to start paying attention because there is half the Greek alphabet still to go through (and then whatever other alphabets or constellations, as a WHO official is reported to have suggested, are necessary). In short, there is more to come.
The hope is that whatever it is, it won’t be as bad as what we’ve already had. Let’s hope that’s correct and at the same time, ask: what can businesses do about the upcoming versions? I don’t have all the answers by a long shot, but I can put forward a number of suggestions.
Thank you for reading part of the Monday 6th December 2021 Weekly Briefing. A full edition can be found here.
Monday, 29th November 2021 Weekly Report
Who will win the land grab
In August I wrote about grocery delivery and posed the question “who will win the land grab”? Ultra-fast grocery delivery – less than 30 minutes, even 10 to 15 minutes, from placing the order to delivering it – involves a host of companies in the UK (and it’s taken the rest of the world by storm too) that includes: Getir, Gorillas, Dija, Weezy, Flink, Genie, Cajoo, and Fancy (and I have no doubt left some out). What has happened to the ownership of these companies recently that might shed light on my initial question?
Shape and reshaping ownership
Clearly a lot is going on to shape and reshape ownership in this rapidly (and I mean rapidly) developing market segment. What were 8 companies last summer have now become 3. And these 3 – Getir, GoPuff, Gorillas (together with its trade investors: Delivery Hero and DoorDash) -plus Amazon in the background, have raised large war chests for investment in operations, marketing, technology – and acquisitions.
Smallest fruits in the UK
The smallest fruits, in the UK at least, have now been picked off. What happens next? More of the same is the answer – across the world. And once all the smaller players have been hoovered up, the large players will slug it out amongst themselves. Let’s hope there is enough profit at the end of the day. But one thing stands out for me: and that is the way in which entrepreneurs, seeing an opportunity to create something for sale quickly, have created businesses with the specific intention of selling them on
Thank you for reading part of the Monday 29th November 2021 Weekly Briefing. A full edition can be found here.
Monday, 22nd November 2021 Weekly Report
Lockdown in Europe
Once again there is lockdown in Europe; it’s started in Austria and is unlikely to end there. In the meantime, there is rioting in The Netherlands, Denmark, Croatia and other countries over the threat of lockdowns to come and plans to introduce covid passes to restrict access to places where covid infections are believed to be significant – places like restaurants, bars and nightclubs.
What about the UK?
In this country, the atmosphere (at least on this score) is more relaxed. Why should this be? Is it because of the wisdom of our political leaders? Or is it the insouciance of the public, many of whom have learned to don masks only when absolutely necessary? Or is it because the impact on the NHS is (currently) limited? Or, is it due to different definitions – an example: in the UK, a death is counted as being due to covid if the person showed a positive covid test in the last 28 days; in Germany, it is if covid appears on the death certificate.
Covid cases in Europe
One answer stands out. Look at covid cases. Across Europe, they are rocketing up from low levels since mid-October (not in all countries – France and Italy for example show no such dramatic increase). In contrast, the graph in the UK is a Roman Candle – a consistent, if rather bumpy line (at elevated levels admittedly, but not changing dramatically).
Thank you for reading part of the Monday 22nd November 2021 Weekly Briefing. A full edition can be found here.
Monday, 15th November 2021 Weekly Report
Things are tight
You are running a restaurant and things are tight. You need some money to shore up the balance sheet and provide a bit more working capital. The bank says: “We really value your custom but because your business is slower to build up than you indicated in your business plan, we’ll lend you some money just as soon as you are profitable”.
But what happens if you have “tech” somewhere in your portfolio? And you are an international player? And you are making huge losses? Then the funding rules seem very different.
Take Amazon. Set up in 1994 to sell books online at a tiny margin and making no profits. Seven years later, it marks a milestone: that’s the arrival of the first quarter in which profits are made. Two years later, accumulated losses are $149 million, and then, after another five years – 12 years after starting – the company makes its first annual profit. Phew! Investment in that book business was justified. Except that the profits didn’t come from selling books.
Amazon Web Services
Instead they were coming from a new business that is a million miles away from bookselling – Amazon Web Services – created, to run the cloud, only three years before Amazon started to turn a profit.
Thank you for reading part of the Monday 15th November 2021 Weekly Briefing. A full edition can be found here.
Monday, 8th November 2021 Weekly Report
Money makes the World go around?
But how to get some of it as an investment to give your world another push? The answer to this question is going to become pressing for many businesses in the foodservice sector. But there is a problem: the answer is changing.
Will private equity still suffice?
Prior to the onslaught of covid, private equity had proved to be a wide-ranging, way to get investment into the restaurant sector. It was built on two complementary notions: one was the scalability of the model – the way to double EBITDA was to double the number of stores. The other notion was the ability of investors to flip their investment – to sell it on to another entity that, in turn, could see that it would be able to flip its investment in a few years by selling it to another investor.
This dual-headed driver – scalability and flippability – financed both emerging and expanding restaurant businesses and enabled the whole sector to grow. But there was a fly in the ointment. Even before covid, some of the shine was wearing off this model – EBITDA was becoming less easy to grow (as a result of the overcapacity that the PE-based model induced), and investments became less easy to flip because investors were becoming warier (setting off a self-reinforcing cycle of reducing numbers of investors prepared to take a stake in the sector). And then covid threw all of this into focus.
Thank you for reading part of the Monday 8th November 2021 Weekly Briefing. A full edition can be found here.
Monday, 1st November 2021 Weekly Briefing
Working from Home – is it working?
Now that summer is over we should begin to find out if the “touted” return to the office, and hybrid working, has really arrived. So far, I have only seen anecdotal evidence but not much of it. So I revisited the white paper I wrote with François Blouin earlier this year. Then I decided to have a wider look around.
I extracted information about London, specifically, from the Huq Index to see how visits to restaurants, quick service outlets and pubs in the capital compared with the rest of the country. The results are revealing, if not unexpected. Customer “traffic” in London is much lower (compared with pre-covid levels) than in the rest
of Great Britain. In fact, since the reopening in July 2020 just before the start of Eat Out to Help Out, the purple line shows London has been running at about half the levels seen in the rest of the country (where the picture is very similar in all regions).
I then took a look at how passenger journeys on the TFL System – buses, tubes, the DLR, London Overground – compares. This data is only available monthly (Huq data is available daily). This additional information is particularly revealing because it shows that journeys into, and around, London have been growing faster than visits to restaurants (and quick service outlets and pubs).
Thank you for reading part of the Monday 1st November 2021 Weekly Briefing. A full edition can be found here.
Monday, 25th October 2021 Weekly Briefing
Attracting the waiter’s attention
You know how frustrating it is when you want to attract the waiter’s attention – you wave your hand, you mutter (not too loud otherwise the people on neighbouring tables will hear) “I’m here!”. That happened to me last week in a pub, part of an upmarket chain, in the western outskirts of London. I arrived a few minutes before my lunch companion and so I had a brief chat with the waitress. She seemed friendly enough and in answer to one of my questions, she observed that “after covid, some guests are quite rude”.
I should have taken that as a clue. Anyway, a quarter of an hour later, of the 25 tables or so tables, 23 were empty – and there was a total of almost five guests. So, it wasn’t busy. And there were two waiting staff and a barman at the bar – a generous staff to guest ratio. We were ready to place our order. I waved (“I’m here. I’m here ready to place my order”). Finally, after what seemed enough time to pour a pint or two, I was spotted. In a spirit of what I intended to be helpful feedback I pointed out to the waitress that I had to wave for about a minute and a half before I was noticed (this would be a useful KPI to measure I thought). The response: “I came over as soon as I saw you”. “Well”, I said “that’s true but it’s not what I wanted to convey”. I went on, musing out loud: “How can I say this without upsetting you?”. She said: “I’m already upset”. So, suddenly I’m the one who’s at fault.
Drinks on the house?
At that point, my lunch companion, a seasoned industry veteran, said “I think we should leave”. So we did with the words of the waitress, that our drinks were on the house, ringing in our ears.
Thank you for reading part of the Monday 25th October 2021 Weekly Briefing. A full edition can be found here.
Monday, 18th October 2021 Weekly Briefing
The World can be cruel
After a year and a half of trading (if you’re lucky) at a fraction of what you’re used to, you are facing a vision, if not of sunny uplands, then at least of large scale improvement and security. And then, wham!, you’re hit by a whole barrage of issues that nobody has a right to expect. But out of this wreckage there are some signs for real hope.
Since 2020 it has been difficult for hospitality
It’s trite to observe that the period since early 2020 has been difficult for hospitality (and for the rest of the world). But that, by way of convenience, is where I’ll start. The past difficult times have included periods of fear, of lockdowns, of pingdemics, of extremely awkward and problematic discussions with employees, landlords, suppliers and many other stakeholders. It’s been a time of hopes that have been dashed. But above all it’s been a time when the hospitality sector has proved resilient.
The nature of hospitality
And without being misty eyed it has done this, in my view, because of the nature of hospitality that lies at its core. As I have often argued, this essential nature is about people – about welcoming them, respecting them, caring for them. In times of difficulty these are excellent traits to have – they call forth self-help and resilience, assisting those less fortunate, arranging things selflessly with friends, and strangers. As I say, I think these things are true, no matter how misty-eyed they may appear.
Thank you for reading part of the Monday 18th October 2021 Weekly Briefing. A full edition can be found here.
Monday, 11th October 2021 Weekly Briefing
Raising wages in the Hospitality industry
So, we are being told that the way to solve the staffing crisis (or perhaps it’s just a problem) in the restaurant sector is to raise wages. Let’s look at what this means.
How much should wages be raised to persuade someone to join your business? This isn’t about switching from one employer to another; it’s about persuading someone to become a waiter rather than, say, a worker on a construction site. The amount has to be meaningful – and competitive. Let’s say 10% is the amount (although, my guess is it needs to be substantially higher).
That has a consequence. It means that a restaurant’s costs increase by 4% (assuming that employment costs are 40% of the total). The restaurant business is a low net profit business, so the increase has to be passed on. And, of course, that increase ignores any other increases due to rising fuel costs, food costs, VAT, and the rest, which also need to be managed.
Will customers’ pay the increase?
Some will, some won’t; a recent UKH survey shows that half of those surveyed would eat out less frequently if prices went up. Maybe they’ll chose to go to a restaurant offering more competitive prices or maybe they’ll switch to buying lower priced items off the menu. Whatever happens, a likely outcome for restaurants is a mix of reduced turnover and reduced profit
Thank you for reading part of the Monday 11th October 2021 Weekly Briefing. A full edition can be found here.
Monday, 4th October 2021 Weekly Briefing
Sitting down with a few relaxing moments to myself in a shopping centre is not what I normally do. But it’s possible to break a habit and that’s what happened a couple of weeks ago at Bluewater. Its catchment area stretches from Cambridge to the south coast, and from Dover to Guildford. Over 7,000 people are (or were) employed there. It attracts (or used to attract) 28 million shoppers every year. It has (or had) 55 cafes and bars. In some ways, then, Bluewater is a microcosm of what makes the UK shopping economy tick. And what I saw there made me think. For example:
• KFC had run out of straws and salt; staff were calling in at McDonald’s for replacements. Conclusion: Shortages are disrupting normal patterns of business.
• Over 30 shops were boarded up. Conclusion: Massive changes to shopping habits are being disrupted by online shopping with a consequent huge impact on retailer sustainability.
• In the “old days”, everything stayed open until 9pm. On my visit, some restaurants like Yo! Sushi had closed early. Conclusion: Labour shortages, plus reduced customer spend, disrupt trading patterns and prevent restaurants from providing normal service
• In the food hall a constant stream of riders from Deliveroo and Just Eat were making their collections. Conclusion: Delivery continues to disrupt patterns of sales (and disrupt many consumers’ enjoyment of their shopping space).
So, I concluded that shortages of products and labour, changes in shopping habits and delivery, have disrupted Bluewater and many others like it around the country. The crucial thing is: what happens now – to shopping centres, their tenants, and their customers? I am not sufficiently experienced in the retail property world to try to answer the first question. As for the last, consumers will continue to change their ways of shopping (just as they have done over the years).
Thank you for reading part of the Monday 4th October 2021 Weekly Briefing. A full edition can be found here.
Monday, 27th September 2021 Weekly Briefing
Pret a Manger
And then along comes Pret a Manger with announcements that underline that observation. It intends to reverse recent pullbacks from its international presence by entering 5 more countries, and opening 200 more storesin the UK, with a beefed-up franchising programme. This comes on top of initiatives launched in the past year that will shortly (if everything goes to plan) account for 30% of sales – selling Pret-branded coffee beans and other products on Amazon, and in supermarkets, developing its menu of delivery items, and building up its subscription offer.
COVID has loosened the shackles
All of these things may have been on someone’s to-do list two years ago. But covid has loosened shackles – it’s allowed people and businesses to do what they have always wanted to do – while at the same time providing an imperative to do something to fill gaps in sales and profits caused by the impacts of covid. I suspect we will see more of this over the next few months and years. It will drive changes in the profiles of high streets and city centres. In this context I’m not talking about working from home (already too much talked about). But I am thinking of things like the growth of franchising (at least in the UK where home-grown brands have typically not grown by adopting this strategy).
Thank you for reading part of the Monday 27th September 2021 Weekly Briefing. A full edition can be found here.
Monday, 20th September 2021 Weekly Briefing
Is lunch the new breakfast
It seems, not long ago, there was much talk about the discovery of breakfast as a new daypart – porridge at Pret, Wetherspoons serving cooked breakfast (and claiming to serve the most coffees in the UK). All it takes is one pandemic to throw that great new opportunity into disarray.
Pick up the pieces
Now we are left to pick up the pieces and rediscover, not just breakfast, but all dayparts. During covid, consumers have (or at least so far, appeared to have) changed their habits, perceptions and requirements to a degree that has not just upset, but overturned normal patterns of trading.
City centres, suburban high streets, railway stations and many more – are being forced to reconfigure themselves to a “new” type of customer. And, in passing, I would add that I hope there is going to be a “new” customer because otherwise a lot of redevelopment activity is going to have to be thrown in the bin.
Thank you for reading part of the Monday 20th September 2021 Weekly Briefing. A full edition can be found here.
Monday, 13th September 2021 Weekly Briefing
Financial crises – 10 years ago
With the fall of Lehman Brothers and the general financial meltdown – unleashed a range of international, societal, and political issues some of which we are only now becoming slowly aware of. And a similar, slow dawning of the resulting issues will also be the case with covid. But that shouldn’t be a reason for not starting to tease them out now.
Let’s start with international travel. Maybe it was never meant to be easy. Few can remember the time before there were security searches – in those days, after passport control you went straight through to the boarding lounge. And before there were security checks, in the name of currency restrictions there were checks on the amount of money you were taking with you. These controls and restrictions still exist – but they have become manageable, and, to an extent, they operate in the background. And now, because of covid, we must face lateral flow, and other, tests at the border – taking time, costing money and making things difficult. In time though, they too will move into the background – maybe they will even become unnecessary.
Thank you for reading part of the Monday 13th September 2021 Weekly Briefing. A full edition can be found here.
Monday, 6th September 2021 Weekly Briefing
Last Tuesday I was interviewed on seven (yes seven) BBC Radio stations, plus BBC TV News at lunchtime. The subject in each case was delivery as part of a BBC day that focused on the subject. The various presenters asked me fairly predictable, but interesting, questions from “why is delivery growing so fast?” to “what are the downsides for restaurants?”. And then there was the question from the presenter on BBC Radio Cumbria, Vicky Warham; it came at the end of the interview as a real inswinger (for my American readers, that’s a cricketing term). Vicky asked “if you could only have your takeaways from one place, what would it be?”. My answer: A bento box from Wasabi.
Why did I chose Wasabi
Now here comes the interesting thing: why did I chose Wasabi in that flash of a moment? The answer needs a bit of context. I was sitting in Absolutely Starving, a deli restaurant repurposed, during covid, as a coffee shop, near London Bridge. I’d found a perfect quiet corner for my radio interviews, looking across Tooley Street. And there, on the other side of the road was a … Wasabi, it’s distinctive green and yellow logo prominent to all.
Thank you for reading part of the Monday 6th September 2021 Weekly Briefing. A full edition can be found here.
Monday, 30th August 2021 Weekly Briefing
Several years ago, I started a service which I called Voucher Tracker – because that’s what it did. It monitored the vouchers (what they covered, their discounts and so on) offered by casual dining and quick service operators. For a while it thrived and provided very useful insights into how some operators – indeed whole sectors – were building their sales through vouchers.
Slowly though, Voucher Tracker started to measure less and less of the real market as vouchers morphed from pieces of paper to online offers; from being offered by specific operators on their own websites, vouchers began to be offered by aggregators like MoneySavingExpert.
Paper to website
But importantly, although the methods used for making vouchers available changed from paper to website, the money-off enticement didn’t – and the “£ off” promise became embedded in the financial structures of restaurants that lived off vouchers. A mindset of “offer a discount or die”seemed to emerge, with all that implies for profitability. Importantly, too, restaurant brands that became known for offering money-off vouchers also felt the impact on their brand positionings which were at risk from losing whatever was their previous salience and gaining a reputation for being a price-fighter with all that it implies for consumer expectations of low prices.
Thank you for reading part of the Monday 30th August 2021 Weekly Briefing. A full edition can be found here.
Monday, 23rd August 2021 Weekly Briefing
I enjoy paradoxes – things that are but shouldn’t be – because they can tell us about the world.
Take the frequently voiced view that nowadays people want “entertainment”. So, the conclusion goes, build them pleasure palaces where they can be entertained – climbing walls, darts venues, trampoline parks. The fact that many retail sites are being repurposed for these activities is a side issue arising out of the needs of landlords to ensure their properties generate rental revenue
Restaurant meals delivered to your home
Or take another frequently voiced view (and not only a view but an actuality) that people want restaurant meals to be delivered to them at home. Now, delivery is not entertaining (unless you think tracking the rider’s progress from kitchen to your front door is entertaining). Instead, delivery is a pretty transactional activity with, I would argue, absolutely minimal entertainment value.
So, what are the paradoxes?
Thank you for reading part of the Monday 23rd August 2021 Weekly Briefing. A full edition can be found here.
Monday, 16th August 2021 Weekly Briefing
For some time in my Weekly Briefing Reports I have been talking about the way change will evolve and impact the foodservice sector. And this week, two announcements caught my eye because they embody what I believe is happening, and will continue to happen for some time.
But before commenting on these announcements, here is what I believe has been happening. We need to start in the deepest days of covid, when the foodservice sector (and indeed the wider hospitality sector) was to all intents and purposes shut down. Businesses were focused on survival and an important element of their strategies was to cut costs. That meant that sites were let go and staff were declared redundant or furloughed. As time went by, over the following year or so, some of the infrastructure – locations, people, supply chains – were left to degrade, not necessarily to a final stop but, at least, significantly.
Now, the world is waking up. Businesses are examining their remaining infrastructure. And many are finding it in a poor state. So now they are making strenuous efforts to replace those bits missing from their infrastructure; those efforts are frequently guided by a desire to revert to the status quo before covid. Thus, most businesses are engaged in a race to recapture their necessary infrastructure. But given the different natures of each business, each is engaged in its own race and its own priorities.
Thank you for reading part of the Monday 16th August 2021 Weekly Briefing and a full edition can be found at the Weekly Briefing.
Monday, 9th August 2021 Weekly Briefing
Ultra Fast Grocery Delivery
I have been contacted by the media several times in the past few weeks to talk about ultra-fast grocery delivery. In vain, I have told them that my area of expertise is in the restaurant (and wider foodservice) arena and not grocery; they have responded by saying delivery is delivery. So we have had some interesting and useful discussions but I still have felt the need to better understand the grocery delivery business (of the ultra-fast variety that delivers within 10 to 30 minutes). So I decided to look into it.
I examined the dozen or so grocery delivery businesses that are most active in Europe. My research has thrown up some revealing, to me at any rate, insights. The first, and perhaps most important, is that grocery delivery, the newcomer, shares many characteristics with its more developed restaurant delivery forebear.
Thank you for reading part of the Monday 9th August 2021 Weekly Briefing and a full edition can be found at the Weekly Briefing.
Monday, 2nd August 2021 Weekly Briefing
The last few weeks have provided both hope and fear.
The hope has come from the seeming success of vaccination programmes not only in this country, but globally. The future is beginning to look less dreadful even though it will take years not months until the world comes out on the other side of covid.
The fear, though, comes in the form of the weather we have experienced. In the UK, rain and heat have both arrived – at different times – over the past few weeks. They are both an indication of what is happening in other places – floods in Germany and Belgium, fires in Oregon – and a portent of what we will have to cope with over the coming years.
Thank you for reading part of the Monday 2nd August 2021 Weekly Briefing and a full edition can be found at the Weekly Briefing.
Monday, 26th July Weekly Briefing
“Greed is good” and “Wellness”
Two opposing concepts, ideologies even, that emerged in the 1980s, are both concerned with the individual but manifest themselves in different ways.
“Greed is good” says that the way to succeed, or at least to get on, is to be selfishly concerned with one’s own prospects – and in the commercial world that expresses itself in go-getting, profitcentric businesses. This is a good thing, not only because it generates wealth for investors but also because it provides a workplace dynamic that appeals to those who feel that “Greed is good”.
“Wellness”, too, is an expression of being selfishly concerned – in this case, to be selfishly concerned with how good one feels about oneself. It is expressed in many ways including concern for one’s fellow being. But unlike “Greed is good”, “Wellness” has much less commercial resonance. My question is: is this about to change?
The reason why it is apposite to ask this question now, is epitomised by a presentation I was privileged to hear last week from Andrew Stembridge, Executive Director of Iconic Luxury Hotels, owners of Chewton Glen and Cliveden amongst others. He knows a thing or two about people and their motivations – both customers’ and employees’. He specifically noted the increased importance people placed on wellness during covid and in our subsequent discussion we talked about why this would be.
Thank you for reading part of the Monday 26th July 2021 Weekly Briefing and a full edition can be found at the Weekly Briefing.
Monday, 19th July Weekly Briefing
There is a cultural shift towards the eating of plant-based foods or so we are told by many commentators – and last week’s Arena webinar provided several insightful examples. What is the origin of this shift and what does it have to do with foodservice?
Significant pressures on changing
As to the origin of the shift to “plant-based”, I don’t claim any special knowledge, but it seems to me that there are three significant pressures. The first is a long standing history of segments of the population in favour of a diet that eschews meat in favour of “vegetarianism”; and in the restaurant sector this extends back at least to the early 1960s when Cranks, an early vegetarian group of seven restaurants (including one in Copenhagen), was launched. But in reality, vegetarianism (if not veganism) was around in the nineteenth century if not before.
Thank you for reading part of the Monday 19 July 2021 Weekly Briefing and a full edition can be found at the Weekly Briefing.
Monday, 12th July Weekly Briefing
VAT reduction anniversary
Last Thursday (8th July) was the anniversary of the reduction in VAT, from 20% to 5%, on meals eaten out. This was initiated by the government “to boost cash flow and improve business viability” – certainly restaurants, pubs, and hotels, generally pocketed the resulting windfall by not reducing prices (which was partially academic anyway since few restaurant meals were being served to lockeddown customers at the time) – Fazenda, for example, revealed last week that it had used some of the windfall on a bonus for its staff.
Along with some other operators, Wetherspoons, true to its tradition, went the other way and passed on the reduction to its customers in the form of lower prices. This was always a poisoned chalice because, unless businesses were prepared to increase prices significantly when VAT was inevitably increased again at some time in the future, the hit to P&Ls would be grievous.
And now that VAT is set to increase to 12.5% in October (and then return to 20% next April), this moment of reckoning is approaching. It remains to be seen what operators will do.
Thank you for reading part of the Monday 12th July 2021 Weekly Briefing and full edition can be found at the Weekly Briefing.
Monday, 5th July Weekly Briefing
One of the (many) joys of going abroad for a holiday (sadly denied for many of us right now), is to sit at a table, and to be served with a drink and perhaps some food, in an unrushed manner. Compare that with what we are offered in the UK.
Is a pub a Hospitality Business?
I don’t see why, in a place that says it’s in the hospitality business, you have to go up to the bar and (sometimes) get jostled to be served which, in my eyes, is a profoundly non-hospitable activity. In passing I’d observe that there are many other places where I can be served at a counter (although now it’s more likely I’d be suing an app) – what would McDonald’s, or Costa, or Gregg’s, be like if you had to be crowded round the bar to be served?
So much choice
Then, back in the pub, having tried to make myself obviously visible as someone who wants to place an order and having been subsequently discovered by the person behind the bar, I am suddenly faced with a decision. There is a wide choice of drinks (beer, wine, soft drinks) that are spread out all over the place – in the chiller cabinet, at a pump, perhaps on a shelf – with no idea of the price (why is that legal?). And then, having been served, I have to push my way through a crowd to get to a place of solace – maybe even finding a table (which may not have been cleared of the detritus of its previous tenants). And to get a second helping, I have to repeat the process.
Thank you for reading part of the Monday 5th July 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
Monday, 28th June Weekly Briefing
The beast may be awakening. The Bank of England is warning that inflation will soon exceed 3%; in the USA it is already at 4.2%.
The headlines look worrying even though some (or even many) economists are saying the rise might quickly reverse. In the 1970s, UK inflation was running as high as 15%; for people with a variable rate mortgage – the vast majority – the result was that mortgage payments seemingly rose every month taking more and more of their disposable income. The government’s policy for some time had been to impose caps on wage increases. But this quickly frayed at the edges because it led to labour trouble resulting in the three-day weeks of 1974
A future await us
Is this a future that awaits us? And if it does, how concerned should we be for the foodservice sector? I hope the answer to the first question is “no”. As for the second, let’s look at how inflation has affected the sector. I have chosen to look at inflation in input prices of food, and because I do not have data specifically for the foodservice sector going back 50 years, I have used food inflation generally which is a reasonable proxy for changes in the price of food into foodservice.
Thank you for reading part of the Monday 28th June 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
Monday, 21st June Weekly Briefing
“Hospitality pays for low-value view of labour”
A headline in the FT last week immediately got my hackles up – “Hospitality pays for low-value view of labour”. Where, in this headline, is the recognition that hospitality merely sits on the border of unprofitability? There is a lot of hospitality about (because, for example costs of entry are low, and lots of people want to do it) and it’s inefficient (delivering hospitality relies on people, who want to do things their way, and it requires lots of customers who have many different needs and many expectations).
That means, in order to “deliver hospitality”, much money is spent on managing people, dealing with special situations, putting things right that have gone wrong (“I ordered a well done steak –not underdone”, “My sleep was disturbed by traffic throughout the night”) and so on. But limited profits sorely constrain the opportunities to develop something better. So there is a limited amount of money in the hospitality “system”, but lots of people spending what there is.
Not paid much
That means people in hospitality are not paid much. Is this really a sign of low value being placed on their efforts? It is more likely a sign that there is no money available to reward them more – despite the high value placed on their efforts. Hence my hackles on reading the FT headline.
Thank you for reading part of the Monday 21st June 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
Monday, 14th June Weekly Briefing
Specifically I’ve been thinking about the changes that will make a difference to the foodservice sector – and how the changes will come about. And what is the role of luck – and what is the role of judgement – in determining which changes will win out?
How are businesses reacting to this? Some, like Michel Roux, are shutting their business at times when they won’t have enough people to offer customers the service they expect. Another solution is to ramp up levels of pay with the long-term implications of changing the cost structure with a consequent potential long term hit to the P&L, so that funding becomes more difficult, and so it goes on.
Yet other businesses are adopting a tactic that seems novel but isn’t (because it’s been used many times in the past) – they are offering cash rewards to employees who introduce new workers to the business. How long before someone builds the app that puts employees in touch with people who are ready to become their “friend”, so they both benefit from the reward? Maybe the app already exists?
Thank you for reading part of the Monday 14th June 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
Monday, 7th June Weekly Briefing
Will the restaurant sector evolve
How will the restaurant sector evolve after covid? There are some clues from past experience in the graduates from my ten-year long project – Ones to Watch – which identifies restaurant brands that have 5 to 25 outlets with a growth rate (in terms of new sites) of 20% or more over the prior 3 years.
Over the years, 49 brands, by virtue of expanding to over 25 sites, have “graduated” from Ones to Watch. These companies are a useful collection that allows us to look at how the casual dining / fast casual sector has evolved since 2012.
The period since then has been split into two by covid. And this allows us to look at two cohorts – the first is those with at least 5 years’ trading after graduating before covid struck – and the second cohort consists of those with fewer than 5 years’ trading (some with only one year).
Thank you for reading part of the Monday 7th June 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
Monday, 31st May Weekly Briefing
The mournful whistle of an approaching express train is heard behind the hill. Since the start of the year I have been talking about this quarter (or maybe the next) as the most critical time for the foodservice sector, notably for restaurants. And now the specific challenges are coming into focus in this country, and in the US
The challenges for operators are simple: costs are going up, debts are to be repaid and demand is uncertain. Labour, food and beverages account for over 80% of an operator’s costs. Labour shortages are apparent everywhere in foodservice and its supply chain. And so wage costs are rising as the search gathers speed for workers to replace those who have forsaken working in foodservice. And as for food, global dairy prices are up +18% compared with the eve of covid, cereal costs are up +25%, oils up +50%
Pay More – and so costs go up
The reaction everywhere is to pay more – and so costs go up. A 10% increase in wages translates into an overall 5% increase in operator costs, a 10% increase in food prices translates into another 3%. Maybe property costs will be reduced (a bit) creating an overall cost reduction of, say, 2%. In aggregate though, changes of this order mean that operator costs will increase by 5-10%.
Thank you for reading part of the Monday 31st May 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
Monday, 24th May Weekly Briefing
Over the past few weeks I have been privileged to be involved with two groups of remarkable people. One group is represented by Arena Futures and the other by Surrey University; both are populated by young people at the start of their careers.
Eager & ambitious
But what ties them together is more than that. First, they are thoroughly nice people, and they are also eager to learn, eager to do things, ambitious and yet they are humble in acknowledging that they have much to learn, and respectful of those who can teach them. I have been struck by what a good job the hospitality industry has done to bring these young people to the point where they want to become deeply involved and to make their way in this frustrating, challenging but ultimately personally rewarding industry.
On another plane, it has been obvious to me over the years that the foodservice sector (and the wider hospitality industry) has been adept at formally training chefs and other back of house skills; at the same time it has also trained generations of people with front of house skills – from waiting to front desk management. In other words, skills are what hospitality has been able to teach.
Thank you for reading part of the Monday 24th May 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
Peters April Quarterly Briefing Report covering January to March 2021 is now available here.
Peter provides consultancy on the eating out market and opens eyes to brand new ways of thinking about the sector and its multiple opportunities for success.
Monday, 17th May Weekly Briefing
Contactless ordering and payment
Contactless ordering and payment have leapt out of their covid-induced requirement and now seem set for an ongoing, essential role. Sanitiser stations, sanitiser cloths at the table, single use menus, online menus, menus wiped down after each use, surface cleaning every 15 minutes. There was veritable sanitation boom. And this is undeniably a good thing for the future too. But, we Brits, being a scruffy nation, will, I suspect, not keep up this good work.
Can the good work continue?
While screens were being used between tables and at payment areas, efforts were in hand to move away from clear plastic to features that removed the starkness of plexiglass. This is a solution that, after restaurants had incurred the costs, has gone nowhere. Customers directed via one-way systems to minimise interaction will disappear before too long. For now, front of house distancing rules still in place will, on current plans, cease in June together with limits on the numbers of guests per table
Team growth or team stagnation
Definitely gone, though, is checking temperatures of staff and guests, not that it was ever much of a feature. Meanwhile, this time a year ago, many companies were proposing smaller back of house teams to ease social interaction (and therefore slow the spread of covid). Smaller teams are now likely to be a necessity as kitchen staff become more difficult to find. Another pressure on team size is uncertainty over medium-term demand – and that is likely to remain a feature over the next few months. One effect of smaller teams is the need for smaller menus, and this also appears to be a theme, for now at least.
Thank you for reading part of the Monday 17th May 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
Monday, 10th May Weekly Briefing
Goldman Sachs & Google – employee opposites
The world is waking up – at least it is in the UK – and the great debate about WOO (Working Out of the Office, my freshly minted three letter acronym) is hotting up. On the one hand there are companies – Goldman Sachs is one – who are pretty insistent that they want to see their employees back in the office. And there are others who are fairly relaxed one way or the other, and there are others – Google for example – who do not expect to see some employees at work at all. And I suspect there is a similar divergence amongst smaller businesses as well.
Issues determine what happens
It seems to me that there are several issues that will determine what happens. The first is time. What happens over the next few weeks is not the end of the story but only the beginning. Time will tell. Second is the struggle between those people who want to go back to work – and those who don’t. Some people have found working at home during covid lockdowns a trial and want it to be over; others have enjoyed the freedom, the improved quality of life, the saved commuting costs. They want it to continue. Shortly, as the world wakes up some more, a pattern will settle in.
Pattern and “experience”
But forces will disrupt the pattern, not least the force that goes under the name of “experience”. For some, experience will show that we gain productivity and increase profits by working from home – “let’s do more of it” and others will find the opposite – and will do less of it. So the initial pattern will be disrupted.
Thank you for reading part of the Monday 10th May 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
Monday, 3rd May Weekly Briefing
Shape of the Future
When covid started to bite and the first lockdown ensued, there were many questions about the shape of any future recovery in the foodservice sector. There were recoveries that were Vshaped, J-shaped, W-shaped, L-shaped (though this one was only in jest). Some mentioned Kshapes although the bifurcation of potential recovery was too much for most people to contemplate. But K-shape may be what we are about to encounter.
Economists at the IGD have developed the K-shaped recovery scenario and this forms the central part of our latest report. In effect it says there will be winners and losers. Winners will be those able to play their part in deploying the £100 billion that has accrued in combined UK consumer savings
In which way will retail and foodservice evolve?
The ways in which consumers their money on food will change the ways in which retail and foodservice evolve over the coming year (and longer). But it is already clear that this year the combined market will reach £195 billion – to within a whisker of the £202 billion in 2019
Thank you for reading part of the Monday 3rd May 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
Monday, 26th April Weekly Briefing
“UK Pubs and Restaurants warn of staff shortages”
It’s as if we hadn’t had a covid shutdown but had just skipped a year or so while conditions remained the same. And yet when the first lockdowns were put in place, it seems that our lives were filled with zoom sessions in which HR people and C-suite directors were telling us how their number one priority was staff well-being and retention.
A Year Later
And now here we are a year later, the covid numbers have been beaten down, vaccines are doing their job and the first stage of removing lockdown restrictions is underway. Al fresco dining is on the menu (to coin an awkward phrase) which means that hospitality outlets, if only a minority, are open even though, since there is no inside dining or drinking, their capacity is substantially reduced
But there’s a problem
There aren’t enough people to fill even those reduced numbers of job positions. Hospitality businesses thought they had employees on their books during covid but many had crept away, perhaps they’d gone back to their home country, or perhaps they’d got another job working in an Amazon warehouse, or doing rider gigs for Deliveroo.
Thank you for reading part of the Monday 26th April 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
Monday, 19th May Weekly Briefing
Shaping of Foodservice going forward
There are many questions whose answers will be revealed shortly and which will shape the foodservice sector over the months and years ahead. Here are my top five questions.
Will all businesses reopen after Covid?
How many foodservice businesses will not reopen after covid? As high streets (as well as shopping malls, rural areas, and the rest) come alive, boarded up storefronts will have to be counted. My estimate is that perhaps 15% or so will remain shuttered. But over time how many will be reopenedas new owners emerge and place their faith in a revived hospitality market?
Training will play an important part
Will there be enough competent, trained people around to work in the foodservice sector? It seems pretty certain that many former foreign workers have returned home and will not return. On the other hand, fewer outlets mean fewer places that need to be filled. How will this supply and demand picture balance out over the coming months and years?
Thank you for reading part of the Monday 19th 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
Monday, 12th Weekly Briefing
Within all the current short term anticipation of reopening, starting on 12 April, I have been finalising my annual update of foodservice numbers. What do they show? Broadly, they show a bad situation getting better.
I expect sales to grow quite fast this year, to reach about 55% of 2019 levels (and bear in mind trading in some commercial sectors will have been broadly non-existent for the first four months of this year). Next year I expect sales to be at about 80% of pre-covid levels with the most problematic sectors being workplace and hotels. The market will probably get back to pre-covid levels in 2024 or 2025.
Many factors at play
I have taken into account many factors such as the changing role of delivery in the makeup of full service restaurants versus limited-service restaurants, and the relative exposure of coffee shops to city centres and transport hubs. Similarly, the absence of overseas tourists and business people will have a significant impact on hotels, especially those in central London, while staycationing Brits will have a reverse (and very positive) effect in rural and seaside locations (even if they choose to stay at an Airbnb rather than in a hotel). The broader leisure sector will experience a variety of different growth rates, at least over the next two or three years.
Thank you for reading part of the Monday, 12th April 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
Monday, 29th March Weekly Briefing
Foodservice Businesses Exposure
Opening up is going to expose foodservice businesses to dangers especially those that arise from their indebted position exacerbated over the past year of lockdowns. At the start of 2021, I reviewed the impact of significant issueson the health of foodservice businesses:planned vaccinations, changes consumer behaviour, and developments in government support.
A lot has changed
Three months on, big risks still remain but quite a lot has changed, generally for the better. The level of immunisations that I anticipated against covid and their subsequent benefit to community protection, has improved slightly more than I expected. One knock–oneffect has been arise in consumers’ long–restrained but now realistic, anticipation of once again being able to eat out. This has been enhanced by the publication of the government’s roadmap which anticipates opening up for alfresco dining in mid–April, dining inside with suitable distancing and other protocols in place in mid–May flowed by removal of most restrictions a month later.
This certainty has definitely played into consumer anticipation.The government has helped by delaying the raising of VAT to the fourthquarter and then to a reduced rate of 12.5%. And help has been provided to corporate cash flowin the form of continuation of the furlough scheme and the opportunity for smaller businesses to repay their VAT backlog over an extended period to next March.Nevertheless,two big issues remain –payment of business rates and repaymentof unpaid rent which for many businesses now extends to a full year. While some landlords have been helpful many haven’t and pose a risk to the viability of somebusinesses.
Thank you for reading part of the Monday 29th March 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
Monday, 15th March Weekly Briefing
UK Delivery Market
The three largest players in the UK delivery market released their 2020 figures in the past week. Deliveroo recorded 65% growth in the UK and Ireland, Just Eat Takeaway (JET) rose 54% globally and even industry veteran, Domino’s Pizza Ltd increased online delivery order values by 21% in UK and Ireland. These figures bring into sharp relief what industry commentators and many others have been saying about the large growth of delivery during covid. But, as always, these numbers are not the whole picture and they also hide nuances.
I want to end with some reflections on why profits are elusive in the delivery sector. But first, the nuances in the reported figures. As I’ve indicated, they do not cover the same geographies – Deliveroo and Domino’s are for the UK and Ireland; JET’s figures are global.
And also note that the metrics used are different for each company. Deliveroo’s, released as part of the company’s registration for its forthcoming IPO process, are based on Gross Transaction Values (which are broadly the total amounts that customers spend when ordering from Deliveroo). JET’s numbers are based on its annual report and are a measure of revenue from operator commissions (about 90% of the total) and other sources. It is helpful to consider Domino’s figures as broadly the equivalent of GTV; and also note that they are Like for Like (LfL) results. These differences in measurement however do not detract from a picture of robust sector health.
Thank you for reading part of the Monday 15th March 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
Monday, 8th March Weekly Briefing
Number of initiatives
Last week’s Budget included a number of initiatives to help businesses –large and small. And support is absolutely necessary in a world in which covid has curtailed so much business activity. Hospitality businesses will be helped by continuation of the furlough scheme and the support for payment of business rates is a bonus for many operators. Super-deductions for investment will also be a benefit as businesses seek to grow, although all, except the smallest, will see their resulting profits taxed at higher levels.
Some people will no doubt consider this support insufficient, and it will almost certainly not be enough to save some businesses over the coming months. But, of course, hospitality, just like all other businesses, is not kept alive by support based on its costs. More crucial, because it affects the long term as well as the immediate, is demand. And this is something that the government has helped in some ways, for example, helping to keep prices down: alcohol duty is being frozen; and VAT, although rising to12.5% from September, will not be back at its pre-pandemic 20% for a year.
Less money in their pockets
On the other hand, by freezing income tax thresholds, consumers will, in effect have less money in their pockets. At the same time, the Mortgage Guarantee policy, by encouraging people to buy their homes, will perhaps take more money out of their pockets.Nevertheless, the low paid will see an increase due to increases in the minimum wage. But there is no blockbuster initiative that will drive demand, like the Eat Out to Help Out scheme, waiting in the wings (or if it is, we haven’t been told). So all in all, the budget has done a bit, but not very much, to stimulate demand in the hospitality sector. Many would argue that that is not its job. But it means it is up to the hospitality industry itself to stimulate demand.
Businesses are to be supported
So bringing all this together, businesses are to be supported with several financial packages, and there is a slight stimulus to demand contained within the budget.Outside the budget, it is helpful to recognise that there is a pool of demand locked up during covid when many people had an income but not much to spend it on –and now have more money saved than when the pandemic started.
Thank you for reading part of the Monday 8th March 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
Monday, 1st March Weekly Briefing
One defining characteristic of covid has been the prevalence of numbers which both help define the pandemic and provide guidance for human behaviour. There is the sombre daily incantation, in mainstream media news bulletins concerning numbers of cases, hospitalisations, and deaths. They are presented on screen–tens of thousands of this, hundreds of that –as if somehow by presenting them in this way, covid itself can be held at bay or shamed into insignificance. And these “bad” numbers have recently been joined by a “good” number –the number of vaccinations, currently about 20 million.
Rules (can we understand them?)
At the other end of the scale there is the R-number which is “good” if it is less than 1. Then there is another number in the Rule of 6, although what does it mean? Does it apply to me? Can I safely circumvent it? What latitude does it allow?
Alerts or Tiers
There are 4 tiers that describe what the English are allowed (or forbidden) to do. Wales –using a different name withsomewhat different definitions – also has 4, although they are called Alert levels. But Scotland, perhaps wanting to be seen to be different, has 5 levels which confusingly come with a highest level of 4 (because the levels start at zero rather than 1).
Numbers & a colour scheme
And almost forgotten, are the 5 UK-wide Alert levels that describe the status of covid –they come both with numbers and a colour scheme. Currently we are in the Orange level –Level 4 –having moved down from Level 5 in the past week. This means that the risk of healthcare services being overwhelmed is no longer an issue, but transmissions are high or perhaps rising exponentially (which they are not because they are actually falling).
And this week too, we have been introduced to another 5 –the five weeks between the 4, or possibly 5, or even 6, step changes in lockdown restrictions. Five weeks are necessary because the effects on covid transmissions resulting from a change in restrictions (perhaps restaurants being allowed to serve meals al fresco) take three weeks to appear in the statistics, a further week is necessary to analyse the numbers, and then a week to decide what to do next.
Thank you for reading part of the Monday 1st March 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
Monday, 22nd February Weekly Briefing
By virtual brand I mean a brand that has no bricks and mortar exposure. It merely exists as a “brand” on an app and, should you place an order, some food delivered to you in a bag. Virtual brands appear to be of interest to two types of operator. The first consists of operators who actually have a bricks and mortar brand (maybe more than one). Examples are pub operators, and casual dining operators such as The Restaurant Group, but smaller operators are also included. The second group is operators who only have a virtual brand. The motivations for both of these groups are broadly the same, but with slight tweaks. For example, a virtual brand from a bricks and mortar operator allows it to drive greater volumes through its existing kitchen space (and thereby reduce unit costs and increase profitability).
But for both types of business, the main purpose seems to be to build revenue – probably more so in the case of a virtual brand that has no bricks and mortar presence. This confers the (currently theoretical) benefit of the potential opportunity to build a brand that can ultimately have a very large geographical reach –even international. But the important question for builders of virtual brands is: are you in it primarily (or only) for the income – or to build a brand? And, as I have said quite often before, it is very difficult to build a brand when your exposure is limited to being viewed on an app and then as a meal in a bag. It seems that the real drivers of virtual brands are the delivery companies. Put simply, it allows them to move further into the value chain.
They already exert huge influence over meal ordering (via an app rather than via the “traditional” instore ordering experience) and meal delivery (replacing wait staff with a rider). They also exert control over communication between the “order taker” and the kitchen -and control over the priorities,and speed of operation,in restaurant kitchens. Deliverers, through their marketplace appsknow what customers order, when and how much –and this knowledge allowsdeliverers to identify what should be offered on their apps –and puts them ina powerful position to influence operators to create virtual brands to exploit that knowledge. In turn, this allows deliverers to exert “ownership” over the brand and by havingthis control, the deliverer is in a position to switch the virtual brand from one operator to another, with the benefit of increased commission rates such control bestows on the deliverer.
Thank you for reading part of the Monday 22nd February 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
Monday, 15th February Weekly Briefing
The Future of the Restaurant
Carbon comes in many forms. Under a microscope graphite can be seen as sheets that easily slide over each other but are held tenuously together. The future of the restaurant sector is a bit like that. There are sheets that describe the past. There are others that represent how the past will continue into the future. And there is yet a third type of sheet that represents a whole set of new characteristics.
But all these sheets are linked together
The challenge for suppliers, as well as investors and operators, is which of those sheets are relevant for them, and how do they link to their past and the future –and how do they interact with each other? For instance, which past trends will fall by the wayside –over capacity perhaps, or insufficient workers? Which past trends will continue –customers’ desire for eating out, or customer promiscuity and lack of loyalty? And which new trends will have to be faced –working from home? Or the growth of technology? Or new community rules about what levels of social distancing are acceptable?
Seperating the future trends
Clearly it is difficult to separate these trends into precise collections, but the future restaurant will nevertheless be defined by these trends. The implication of this is that the future will not be all new, and defined by changes that covid has wrought, nor will it be a continuation of the past. The crucial issue is going to be -for each supplier, investor, operator –which factors will be significant for its own future. For some, covid will have opened up a world that didn’t exist before – one in which delivery and technology, for example, create opportunities in former restaurant deserts.
Thank you for reading part of the Monday 15th February 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
Monday, 8th February Weekly Briefing
I hear the sound of engines revving up in the eating out market. Money is being mobilised to invest in the sector and is waiting for the off. But I won’t stretch the motor racing analogy any more because it doesn’t go too far. For instance, investment money, perhaps more realistically disaster-prevention money, has already gone into quite a number of restructurings, pre-pack administrations, CVAs and more reorganisations without waiting for the “off”.
What brought on this line of thought has been some announcements of potential investments in the pub sector. Palatine Equity Advisors have tabled three bids for Marston’s (now a pure play pub company without its former, direct brewing interest). And Rooney Anand, former CEO of Greene King,and former Chairman of Casual Dining Group, heads up RedCat, a fund with £500 million, in equity and debt, to invest in the pub sector.
The attraction of this sector for investors, being based on tangible property assets, is obvious at this time of uncertainty. But restaurants as a destination for investment are not so obvious given the fragility of the assets being invested in. Investment considerations in restaurants generally boil down to two: is there a profitable, preferably scalable business model, and is there effective management? Both of these have come under severe stress during covid.
Lack of clarity
Consequently, investment opportunities are not obvious; and this lack of clarity is compounded by uncertainty about what the post-covid restaurant world is going to look like. There are questions about the role of delivery, the resetting of profitability models, changes in the relative attraction ofdifferent locations (city centres, suburban, rural, travel-centric), the role of technology in the “customer’s restaurant journey”, and many other issues that have been upended by covid, and whose outcomes are as yet unclear.
Thank you for reading part of the Monday 8th February 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
Monday, 1st February Weekly Briefing
Food is bought in a Multiplicity of Places
As a nation we eat an amount of food each year that is broadly fixed –maybe we eat too much but the amount stays the same (after allowing for changes in the population). But we buy food in a multiplicity of places with the two biggest categories being retail and foodservice.
Retail & Foodservice
These two sectors are generally treated separately because they are different in many respects. And for the purposes of what I have to say here, the biggest difference is in the supply chain –via wholesalers in the case off foodservice, and direct from the manufacturer in the case of retail (I am simplifying of course, but the basic truth holds).
Eating In vs Dining Out 2020
All this means that the two sectors are treated separately, and not viewed as a whole, by both operators (whether retailers, restaurants or pubs) and by their suppliers. And that is why, together with the IGD I have published “Eating In vs Dining Out 2020” –a totally new update on the work we published last summer when the path of Covid was unknown and when it was possible to conceive of a world where there were no vaccines on the horizon.
Swing factors in play
This most recent project I have completed with the IGD brings the retail and foodservice sectors together –and I believe this is an industry first and not only in this country but in Europe and probably the USA too. Although we did this work considering the impact of Covid, the results are enlightening in a broader sense.
Read the report full report here.
Thank you for reading part of the Monday 1st February 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
Monday, 24th January Weekly Briefing
There is agreement that the foodservice market will open up again – perhaps in the late spring, the summer or maybe early autumn
Challenges for supply chains
Wholesalers will have to face questions: How much stock to take on? Will there be a surge which will slow down after a while? When? By how much?
Many other questions
And with the headache of overstocking, there will be other pressures too: How much credit to extend? Which accounts will still be operational? And so it goes on.
Read the report full report here.
Thank you for reading part of the Monday 24th January 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
Confidence and despair
Last week, a relative of mine, who was nervous about even leaving her house, received a text message from her medical practice with a date for her first Covid vaccination. She immediately did two things. The first was to accept the appointment. The second was to contact her sister to start arranging a holiday in the summer.
The Times reports that travel operator, Original Travel, has seen a 68% increase in bookings since the Pfizer vaccine was approved in early December. And online booking platform, Skyscanner, claims a 7% increase in bookings this week.
The lesson is this: attitudes can switch in a moment –from nervousness to hopeful holiday planning. To be sure, sometimes attitudes take a long time to change but that needn’t be the case. In the time of Covid, attitudes of gloom and despair have taken hold over the past ten months. But a date for a vaccine has the capability to change those attitudes in an instant.
Read the report full report here.
Thank you for reading part of the Monday 17th January 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
The Pub industry and its current situation
Mitchells & Butlers, the major pub operator, has just over two months available reserves before the Company runs out of cash. A pub needs three things to succeed: product place and people.
Product & Place
The product is beer, as for place, whatever else COVID does, it does not attack buildings and that means pubs, as buildings, will survive. It is people I want to focus on.
People are organised into communities. The Oxford English Directory provides 11 separate – but closely allied – definitions of the word “Community”. In essence they boil down to two, the first being “the condition of sharing certain attitudes and interests”. The second definition is “a group of people living in the same place or having a particular characteristic in common”.
Read the report full report here.
Thank you for reading part of the Monday 10th January 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
Giving & Taking
Differences was a recognition that covid has both taken some things away and given us others. In terms of taking things away: there has been little need to hit the monthly “numbers” because, when survival is the objective, hitting some target set in a former world is no longer relevant; and the need to look “perfect” has been taken away because it’s OK to be in a Zoom meeting from what looks like a broom cupboard.
At the same time, covid has provided new ”gifts”. The gift of not having to spend three hours a day commuting, and the gift of freedom and creativity to think of new things because the old things are no longer workable. The things that have been taken away, plus the gifts that have been added, provide a different space in which to try out ideas, to connect with people in ways that we hadn’t tried before, and, probably most significantly, permission to be “ourselves” in a work environment.
Foodservice will respond
What does this have to do with foodservice? Only this, that in the wider, general sense, the sector like many others has been able to revert to earlier times when life was simpler, when there were perhaps fewer “demanded and perceived” obligations, but more that were “innate and real”. Through this lens, we can catch glimpses of a time, (if it existed), when it was possible to be seen as we would like ourselves to be seen rather than as we are expected to be seen. When the fear of covid is removed, we will probably revert to the world as it was just before the first lockdown. But maybe, we will look back on this disturbing period with nostalgia as a time when we allowed ourselves to be “ourselves” for a while.
Vaccination brings immunisation. Immunisation brings confidence. Confidence brings a return to normality. Vaccines are on their way – so a return to normality is on its way too. There are questions though. How long will this take? What hurdles lie in wait? Read the report here.
Thank you for reading part of the Monday 4th January 2021 Weekly Briefing and full edition can be found at Weekly Briefing Report.
I am confused. Do not eat in a restaurant. Why? Because I say so. That’s not a grown up way of talking to, well, grown-ups. Please give me a reason. On the one hand, there are people who point to PHE statistics that show “3% of cases” arise from “restaurant settings” (which is actually of a misreading of some modelling of incidences which is the “most difficult modelling to get right” in the words of Sir Patrick Vallance, Government Chief Scientific Adviser); others have produced figures that show no infection information across large pub estates; some people claim that politicians and / or scientists are acting illogically, even with malice, to ruin the UK restaurant and pub business for no clear reason.
Not only the UK
On the other hand, it’s not only in the UK that restaurants, bars, pubs and cafes are closed – it’s a feature in almost every country around the world. So,there must be something going on beyond any capricious reason. For example, Japan follows a policy of avoiding san-mitsu “the 3Cs”: closed spaces, crowded places, close-contact settings. And that pretty much defines hospitality. The result: Japan has had 2,643 covid deaths (and as of 15 December, that is one twenty fifth of the 64,908 deaths in the UK).
Data around Hospitality
And in the UK, listen to Sir Patrick Vallance again, giving evidence to the House of Commons Science and Technology Committee on 9 December. In response to a question about the variable application of lockdown conditions, he said “If you look at the data around hospitality, there is a series of environmental factors, such as the fact that people cannot by definition wear masks; you are meeting lots of people you would not normally mix with; you are in an indoor environment; and, in some cases, ventilation may not be adequate and so on”. In other words, the conditions in which we enjoy hospitality are ripe for the spread of covid.
It seems to me that the reasons why restaurants are locked down are not articulated clearly or at all by those imposing the lockdowns. So,we are left with a sense that conditions are imposed capriciously when, in fact, there may be sound reasons. I would ask the politicians to be clear and open, so that grown-ups can understand why the hospitality sector is locked down. And if the reason is, as I suspect it may be, there is no hard evidence but a great deal of well-argued and well-supported, but nevertheless, circumstantial evidence, then we should all be treated as sufficiently grown up to understand that.
Last year, tourists from overseas spent £2.8 billion eating and drinking in the UK, having doubled over the last 15 years, according to my annual analysis of the hospitality and leisure market which valued the total overseas tourist spend at £25 billion. But, I was asked the other day, how much of this was spent in pubs –and how have pubs suffered as a result of falling tourist numbers at a time when they have lost, and are still losing, business while lockdowns and tiering regimes are in place?
While I haven’t yet been able to answer these questions definitively, based on what I know, and doing the maths, it would appear that overseas tourists spend in the range of £0.6-0.9 billion on food and drink in pubs(with food probably accounting for 60% to 70% of the total). This is a relatively small proportion – likely 3 or 4% – of total pub income. However, for some pubs in central London, central Edinburgh, Stratford upon Avon, Windsor, and other places where overseas tourists make a point of visiting, the hit might be particularly hard, especially in what are already very testing times.
Will foreign tourists return?
Still, there is always the future to look forward to. But is there, in the case off foreign tourists? It is probably too soon to forecast what will happen as covid starts to become less feared.Will overseas touristsvisitin their former numbers next summer (almost certainly not before then)? Or must we wait until 2022 –or later –or perhaps never? How may covid change holiday patterns? Will these changes be the same around the globe or will they be different? And how will tourist numbers and spending be affected by Brexit?
Time will tell if the UK maintains its high position as a destination that overseas tourists want to visit. I believe it will.
Pressing questions for the future
Nevertheless, pubs that have a high level of income from tourists are faced with some pressing questions about their future. And I fear that the answers will not be on the positive side. The numbers of pubs involved in this particular situation are not large, but they often occupy noteworthy sites – and their loss will be especially obvious in what, anyway, are likely to be a denuded town and city centre landscape. But hope springs eternal, and over the years, pubs have been great at reinventing themselves. Let’s hope they can pull it off again.
Thank you for reading the Monday 14th December Weekly Briefing – Weekly Briefing Report.
Monday, 7th December Weekly Briefing
Many restaurant, pub and quick service businesses faced an existential crisis in the face of the effects of the November lockdown.
Tier Lockdown systems arrive
And now they must face the introduction of various tiered lockdown systems throughout the UK, not forgetting the partial lifting of restrictions over the critical Christmas period. But even for the worst hit operators the emergence of effective vaccines may be bringing a brighter glow on the horizon. And that is encouraging many businesses to begin to ask me: what does the future look like?
Looking to the past
In my answers, I often point to the past and show that there are lessons we can learn. I am exceptionally fortunate that I have been around since the early 1980s to assess, in real time, how past recessions have impacted the foodservice sector. I have the data and reports to prove it and this information sheds light on what the future might look like. One significant factor has been that each recession (they have come along more or less every ten years from 1981) has influenced the types of companies that thrive in the restaurant, pub and quick service sectors.
Growth sectors incuding franchised businesses
These growth sectors have included franchised businesses (from 1981) and the emergence of PE-fuelled casual dining (from 2011). Other sectors have changed; contract catering was boosted into education and health care after the 1991 recession and pubs evolved into significant suppliers of cooked food in the same decade. At the same time, the supply chain had been transformed during the 1980s with the growth of large scale wholesalers – Booker McConnell, Brake Brothers, DCL, Fitch Lovell and others. And the next decade saw the emergence of contract distributors – such as Holroyd Meek, Excel Logistics and Hays.
Thank you for reading the Monday 7th December Weekly Briefing – Weekly Briefing Report.
This week, the government issued its, several times delayed, summary of the results of the Eat Out to Help Out scheme that it ran during August.
The topline numbers revealed were in line with, or slightly below, those the government had published shortly after the scheme had ended.
Did the EOTHO scheme meet its objectives?
But the key question seems to me to be “Did the EOTHO scheme meet its objectives?”. At its launch, the government said that the scheme was intended to boost spending in restaurants, and the Chancellor enhanced that by saying that its objective was to boost the sector back into long-term growth. How did the scheme do on that score? Sales were undoubtedly high in August, helped by warm weather, and they were within touching distance of a year earlier after allowing for the many sites that remained closed. So on that measure, yes the scheme succeeded.
But what about the long term boost?
That is much more problematic. Many operators felt that the scheme was sufficiently successful for them to continue to fund it themselves, in some form or other, into September. But, with the onset of autumn and the end of summer holidays, sales started to slide and this continued into October, traditionally a slower-trading month. This was exacerbated during the month, by the many, seemingly haphazard, regional lockdowns which, amongst other things, precluded eating out; and it became increasingly clear that there would be a second national lockdown. As a result, sales faltered in October and during the November lockdown, they seized up altogether.
What can the Government claim?
Can the government claim that EOTHO was successful in boosting the restaurant sector into growth when three months after the scheme, dine-in sales were at zero? I think not.
Thank you for reading the Monday 30th November Weekly Briefing – Weekly Briefing Report.
Thursday and two headlines
Last Thursday, two headlines appeared. They purported to say the same thing, but the details were almost contradictory. That’s the way things go sometimes. And they set me thinking. The first headline, jointly from UKHospitality, British Beer and Pub Association and the British Institute of Innkeeping, said “72% of hospitality and pub businesses face closure in 2021”; the other, from the ONS (based on the Business Impact of Coronavirus Survey) said “Covid: One in three UK hospitality firms fear collapse”.
So, which is it – one in three or 72%?
The answer is quite likely both. As always it probably depends on definitions – what is included within the sectors that each headline covers? And as important, what timeline does the question on which the headlines are based, actually cover? Did respondents look at the next month? The next six months? Longer than that? What was it?
The pain for Hospitality will continue
As I have pointed out many times since the start of covid, the real pain for the sector, in the form of corporate failures and lost jobs would speed up in the last few months of the year. And so it is coming to pass. And that means that the real answer to the question of how many jobs will be lost is “a lot of jobs”. No doubt there will be plenty of discussion and disagreement over the precise number – both now and when the effects of covid are long past.
Thank you for reading the Monday 23rd November Weekly Briefing – Weekly Briefing Report.
Two weeks into Lockdown 2.0. How is it going?
Specifically, how are they going for the restaurants sector? I’ve been talking to some operators and, as always, I’ve also kept my eyes and ears open to the bigger picture too. There are two major differences between this lockdown and the earlier one, that provide a certain resilience.
Firstly, restaurants that are around now have the confidence that comes from having made it through the first lockdown. And the second difference is that there is (or appears to be) a time limit to the current lockdown – it has just two more weeks to run. A timetable with a reasonably firm end date creates a stronger mindset.
It’s hurting financially
Preliminary numbers from my next Ones to Watch report reveal that 12% of sites run by smaller, previously fast growing, Bubbling Under brands, have closed in the last six months. Operators are probably more worried than they’re letting on. They have been racking up debt since the start of Lockdown 1.0 – there are almost four quarters of unpaid rent on most books; utility bills have to be paid; and any VAT backlog is to be repaid next spring.
What next financially?
Some larger operators raised loans or equity in the early stages of lockdown, and those funds will probably be enough to see them through to the other side of the pandemic. But for most operators, finances are a worry. They are kept going through government-backed interventions, such as the furlough scheme. To the accusation that such businesses are zombie companies and should be exposed to the rigours of the economy, I would say that many (probably most) restaurant businesses are operated on a sustainable business model (that was certainly the case before covid struck), and they will return to health in due course, but in the meantime they need the financial help that is on offer to stay afloat.
Thank you for reading the Monday 16th November Weekly Briefing – Weekly Briefing Report.
Marcus Rashford gets to change government policy
It’s not often that a footballer, even such a high profile and respected footballer as Marcus Rashford, gets to change government policy. And yet that’s what happened on Saturday, to the tune of about £400 million.
School meal history
In 1906 parliament passed the Education (Provision of Meals) Act which allowed, but didn’t require, LEAs to provide free meals to elementary schoolchildren. Over the years, these provisions were extended together with mandated nutritional guidelines. Additionally, a fee was charged to all but needy children, and more recently, those in Key Stage 1. Other countries have similar laws and regulations. In the USA, the National School Lunch Program was established in 1946 to provide nutritionally balanced, low-cost or no-cost lunches to children. In 2016 it served 30.4 million children. And in France, the government has just rolled out the provision of free breakfasts and €1 canteen meals to 200,000 young children.
School meal provision
The provision of school meals recognises that the nation has a responsibility to ensure the young are fed. But up to now, in the UK vulnerable children have been denied free school meals or vouchers during the holidays. Nevertheless, childhood poverty and hunger remains a real issue that needs to be addressed 365 days a year, not just in term time. To its great credit, the foodservice industry is very aware of this problem and charities such as Meals and More press home this point. Earlier this year, the issue received an unexpected ally in the form of covid which shone its harsh light on the problem. Operators, such as Brewdog, Tom Kerridge and many other independent have been making a difference by providing free warm meals over the latest half term. And now, Marcus Rashford has used his considerable influence to help make it clear to government what needs to be done.
Thank you for reading the Monday 9th November Weekly Briefing – Weekly Briefing Report.
Here we go again
But it won’t be exactly as it was in March. There will be pluses and minuses.
Let’s start with a plus. It won’t be totally uncharted territory – we will have learned how to do things and what to expect. So, for example, we have learned that delivery and takeaway are not only perfectly acceptable – but are much in demand from customers.
Operators will need to pivot
So, operators who pivoted to delivery and stuck with it, are in a good place (indeed their place seems to be specifically protected under the forthcoming lockdown rules). Operators who pivoted to delivery and then pivoted back to dine-in can brush off the operating models that stood them in good stead six months ago. Although, I would note, that the world of delivery and click and collect has moved on and it might be necessary to look again at products, pricing and packaging to ensure they are still relevant.
A month’s time limit
Another plus: the new lockdown has a month’s time limit. Or has it? What happens if the numbers don’t move as far as the government would like? Will there be an extension?
Thank you for reading the Monday 2nd November Weekly Briefing – Weekly Briefing Report.
The 2021 menu
Perhaps the last thing operators have on their minds right now is their 2021 menu. But there are still some potential issues that they, and especially their suppliers, can be thinking about this far ahead as they fill up their NPD pipeline.
Google Trends showed a huge spike in searches for “loss of taste” and “loss of smell” in March. In some cases, early indicators of a covid infection were loss of taste and smell, which caused people to begin searching for more information on these topics.
Loss of taste & smell
Roll forward to autumn and we find that, in addition to being an indicator, in many cases loss of these senses also outlasted the infection. There are already many instances of people who, having contracted covid, lost their sense of taste totally. Suddenly, that gin and tonic tastes like tap water. Others recovered only a bit of the lost senses, perhaps only 10%, perhaps more.
These conditions are already known to science and have names, anosmia (the absence of the sense of smell) and parosmia (a distorted perception of smell). But reasons for the link with covid are not yet known with any certainty.
Thank you for reading the Monday 26th October Weekly Briefing – Weekly Briefing Report.
Coffee Shops hit the headlines
Turn the clock back to the late twenty tens. One sector hitting the headlines was coffee shops. They catered for lunchtime trade, the travelling public, workers needing a low cost office to work from for the price of a latte and students walking down the corridor of their uni.
The reasons for this burgeoning trade puzzled many observers: just what is it that drives so many people to have a coffee so frequently? Many reasons were put forward: it was available everywhere you turned, replacement of the pub for a drink, the zeitgeist and many more. And these reasons haven’t deserted the coffee shop sector.
Coffee Shops today and tomorrow
Recently Tim Horton’s announced a drive into southern England from its Scottish and north of England heartland, while Watch House, an artisan coffee shop based in London is adding new sites to its existing estate. Both of these will feature in my forthcoming Ones to Watch report – indeed Tim Horton’s has been rising through the ranks for the last couple of years.
Operators are already working their way around these changes. Pret, again, has launched its subscription model to encourage well-established customers to retain their Pret coffee-drinking habits. Artisan coffee shops are now springing up in the suburbs, forsaking their former city-centre location as they address the working at home trend.
Thank you for reading the Monday 19th October Weekly Briefing – Weekly Briefing Report.
With Boris Johnson’s announcement on Monday night, the regions likely to be impacted account for about 5% of the UK restaurant and pub sector by food sales, but other than that I don’t intend to comment on the cataclysmic impact, serious though it is, on the people, livelihoods and businesses likely to be involved. Instead I want to focus on regions.
Travel links have altered us
In this country we are not very good at thinking regionally and we seem uneasy with the idea of giving economic and social power to regions. Historically, probably as a result of weaker central power and perhaps greater regional awareness, the UK was regionally segmented, much like the USA or Germany are today. But then, with the rise of factors such as better travel links, the divide began to blur. More recently, and specifically for the restaurant industry, this meant that the consumer was able to enjoy the same pizza from Pizza Express whether in Brighton or Burnley.
Thank you for reading the Monday 12th October Weekly Briefing – Weekly Briefing Report.
Pubs are to shut at 10pm. Up to 1988 pubs were open for six and a half hours a day (and an extra half hour at weekends). They were open at lunchtime until 3pm and then reopened at 7pm until 10:30. And there were over 30,000 more pubs in those days. So, what’s the big deal about early closing?
The answer has to be a change in behaviour caused by the fact that in 1988 pubs were allowed to serve alcohol from 11am to 11 pm; from 2005 these limits were scrapped in favour of publicans being allowed to apply for licenses that could permit 24 hour trading (although in practice most pubs chose to close at midnight or thereabouts).
Consumers reacted to these changes by permitting themselves to visit the pub for longer – and hence the furore when this freedom became subject to the 10pm limit last month. Consumers shifted their behaviour from drinking until well into the night, to not going to the pub at all. Figures from Huq Industries show that footfall declined by -33% over the last week compared with the immediate pre-lockdown period. While this does not provide a direct read across to actual sales it is a pretty good indicator. So, the conclusion is that consumers have modified their behaviour to the detriment of pubs. But I have three questions.
What are those three questions; read here.
Thank you for reading the Monday 5th October Weekly Briefing – Weekly Briefing Report.
So, the much feared second wave of covid is hitting us. It has arrived just as the restaurant sector was achieving some stability after a boost in August from summer and EOtHO. And for the last few weeks it has been operating at something above 60% of pre-covid levels.
And now we have a lockdown – less stringent than before but it comes at a critical time. The government’s furlough scheme is ending (albeit to be replaced but by one that provides less financial support) and the rising toll of redundancies looks set to grow even larger. Another quarter’s rent becomes due. And there is Brexit, no longer just over the horizon. The government is stressing the potential impact on the supply chain bringing with it disruption and higher costs for operators and their suppliers.
Thank you for reading the Monday 28 September Weekly Briefing – Weekly Briefing Report.
By last weekend, events had taken a much more sombre turn with scary warnings about a second wave, growing pressures on frontline NHS services and partial lockdowns in about 15% of the country, with more to come.
Maybe it’s difficult to count one’s blessings right now – and for many it is a painful process. So, what positive signs did I see last Wednesday? More restaurants are being reopened on most days. VAT was reduced in August which means for some it’s been possible to lower prices and attract more custom and for others, it’s been an opportunity to retain prices and increase gross profit. Eat Out to Help Out has brought money into the restaurant system, provided some respite, allowed employees to enjoy working again and helped many operators pay off some debts. And during the whole Covid experience, new business models have been identified and tested, particularly in the areas of delivery and the use of IT for customer engagement.
But this is thin gruel for the many operators who are still facing questions over bringing back staff from furlough or letting them go. It’s not much comfort, either, for those many who will struggle to pay off a rent backlog (with the next quarter day coming this week) and other debts. And now there is also an impending period of renewed restrictions on restaurants and pubs.
Thank you for reading the Monday 21 September Weekly Briefing – Weekly Briefing Report.
I don’t normally step into the political arena, but today I will do so, tentatively. The background is that I’ve been mulling things over in the light of the government’s announcements about Test & Trace and the Rule of Six, a necessary set of rules in my view.
In the case of Eat Out to Help Out, the government clearly realised that the restaurant sector was the solution to a problem – that is, for a while it helped to resolve the problem of paying salaries for a large number of workers who would otherwise be furloughed. One key to the scheme’s success was that it was simple for restaurants to access and operate, demonstrated by the speed at which the government was able to reveal the numbers behind it.
But it seems to me that with the Rule of Six and its heavy reliance on coercion (“powers to close venues” and “fines will be levied” in the prime minister’s words) – together with another announcement during the week regarding obesity rules – means the restaurant sector is having to face further added pressures, albeit necessary ones, at what is already a very trying time. But, I have no doubt the sector will solve these problems. Adaptability and resilience have already been established and evidently demonstrated in the last six months. The industry consists of millions of people, who all have the best interests of their customers at heart.
Thank you for reading the Monday 14th September Weekly Briefing – Weekly Briefing Report.
The three essentials of the infrastructure of eating out are: places, people and product. Each of these has been damaged to a great or lesser extent by covid.
The supply chain for product has been affected least because retail has been a secure alternative market for many suppliers (but not distributors) and that will clearly remain. But for the future, we will also have to see what effect Brexit might have on the supply chain.
Places have been badly hit over the last six months. In my Monthly Briefing Report, released last week, I examined the popular (sometimes known as the destination) eating out market – restaurants, quick service, pubs – and I concluded that about a quarter are unlikely to reopen.
And within the sector, for several reasons, full-service restaurants are likely to be the worst hit. Places in other sectors will not be so badly affected – schools, hospitals and the like, will still be there in former numbers (perhaps reduced slightly); and while the leisure and hotel sectors will see some closures they are not likely to amount to the numbers seen in the restaurant sector.
Thank you for reading the Monday 7th September Weekly Briefing – Weekly Briefing Report.
As the future becomes ever so slightly clearer, high street operators – restaurants, quick service, take aways, pubs – are engaged in a rapid process of reviewing what their business will look like in the future. Some are pivoting to delivery because that seems to be an important component of the future. But it doesn’t suit all; perhaps they are in the wrong part of the country or the wrong location or sell the wrong range. I doubt whether there is enough demand for delivery to allow all operators to pivot in that direction. Other operators are downsizing to focus on those sites that are profitable, or that are likely to be profitable when the dust settles.
And while this process of changing the profile of their business is engaging many operators, there is perhaps another process that is closer to home that can yield dividends – in more than one sense of the word. Customer pricing has not got much attention when operators have been talking about their business over the last few years. Yet it is one area over which they have control.
Thank you for reading the Monday 31st August Weekly Briefing – Weekly Briefing Report.
It seems to me that most of the comment about the current state of the foodservice sector has focused on the infrastructure – the numbers of businesses that have failed, the decline in sales, the redundancies and so on. This all goes under the heading of the supply side. But the future, as always, depends on the consumer – the demand side. So, what does that future look like? We have the next few months to get through – maybe longer, before we can start to make assumptions. There is the potential for further waves of covid for example. Nevertheless, I think there are some factors that we should be looking out for.
We can probably speculate, fairly accurately, that consumers generally will be poorer. They will have drawn down on their savings, they may be out of a job, or in a job but earning less. Of course, this is not true of everyone. Some will have improved their financial position and prospects; others will have seen their prospects diminished far worse than they could have imagined only six months ago. Overall though, consumers will have less money. And they are likely to be significantly more.
Thank you for reading the Monday 24th August Weekly Briefing – Weekly Briefing Report.
Last week I started to discuss the challenges that face suppliers to the foodservice sector as they process the huge changes that the sector has experienced since the start of lockdown. This week, I’ll pick up where I left off and hopefully come to a useful conclusion for suppliers – and operators.
It seems to me that of all the issues arising out of covid, one of the most critical for the foodservice sector has been restrictions on travel. This has massively affected the numbers of visitors from overseas. But it hasn’t stopped there. Travel on London’s underground is down to 24% of pre-covid levels because “locals” (otherwise known as commuters and shoppers) are less likely to travel by tube. Fewer travellers have impacted a multitude of places, from restaurants in historic properties and bars in theatres, to hotel conference buffets and coffee shops at railway stations. Business in these areas will remain dismal until travel reaches its former levels.
Meanwhile operators must find ways to continue to pay their bills. That means taking a different look at opportunities. A clear-cut example is to look at the flipside of fewer visitors travelling from overseas. A combination of more staycationing Brits plus good weather has brought booming business in British holiday areas. The opportunity for more business waits next year. And maybe a combination of more warm weather (boosted by climate change), improving standards of accommodation and a market that is once again willing
Thank you for reading the Monday 17th August Weekly Briefing – Weekly Briefing Report.
The challenge for the thousands of suppliers to the foodservice sector – they include food, drink, equipment, janitorial supplies and much more – is to process the huge changes that the sector has experienced since the start of lockdown, and meld that with the vast amount of information that is being provided by the media, social media, zoom conferences and much more.
Anybody who is involved in the foodservice sector will be quick to point out that it is not a single sector but an array of distinct markets. And perhaps the clue to resolve the challenge is to unpack each of these markets separately. In doing so, it seems important to me to have a view about two things. The first is the time frame one is considering; and the second concerns the trajectory of coping with the coronavirus. For the purpose of what follows, I am working in the context of a two-year time frame, say to the end of 2022. And I am also assuming that, by then, ways will have been found to cope with covid, on a day to day and a month by month basis. As I say, this is the context of what I have to say which concerns the more immediate term for the major markets within foodservice.
Thank you for reading the Monday 10th August Weekly Briefing – Weekly Briefing Report.
This is it. We’ve arrived. Welcome to the world of New Normal.
That is the implication of what the Chief Medical Officer said on Friday “We have probably reached near the limit or the limits of what we can do in terms of opening up society … What that means, potentially, is that if we wish to do more things in the future, we may have to do less of some other things, and these will be difficult trade-offs.”
Is it a world where visitors from overseas – they made 40.9 million visits to the UK in 2019 – no longer arrive? What effect does their absence have on they hotels where they stay? And what about the meals they will not eat – almost 500 million last year, 4% of all meals eaten out in the UK – in restaurants, coffee shops, museums, and art galleries?
Thank you for reading the Monday 3rd August Weekly Briefing – Weekly Briefing Report.
What will happen when coronavirus leaves town?
The answer to this question depends on many things but they will all be influenced in one way or another by the length of time between now and the end of the virus. I have been investigating these issues in conjunction with the IGD over the last few months (and some results have been published in our joint report “Eating Out vs Dining In”).
But there are many specifics that remain to be investigated and answered. Up until now, there have been four ways that coronavirus has impacted the foodservice industry and the people and companies within it. It has exposed faults that underline foodservice, it has led to a process of degrading, there has been an acceleration of past trends and an unleashing of innovation.
Thank you for reading the Monday 27th July Weekly Briefing – Weekly Briefing Report.
In the two weeks since restaurants and pubs opened to serve food, it’s clear that the sector is not enjoying much of a boom time.
In normal times of stress in the sector, the lever to get things going again is money in consumers’ pockets. Whilst people are rightly worried about their finances in the medium term, the big issue now is fear of being infected, making it a medical and hygiene issue.
Interestingly, consumers have been wary of hygiene and safety in restaurants for far longer than the period of coronavirus – in the Food Standards Agency’s biannual survey of consumer attitudes towards food in in 2018, one third of the population was concerned about food hygiene when eating out.
It seems to me that this general wariness has been partly transferred to the coronavirus world of eating out. To that extent, could consumers’ current concerns about safety be part of a bigger, longer term picture? Until it can be fully addressed by the sector, can we assume demand will remain low?
Thank you for reading the Monday 20th July Weekly Briefing – Weekly Briefing Report.
Last week saw an unprecedented move from the Chancellor with a reduction in VAT leading to an effective 13% fall in dine in meal costs and the launch of the unique ‘Eat Out to Help Out’ scheme.
This is, I am sure, a result of a disparate industry coming together in a time of crisis and the sterling effort of UKHospitality and other lobbying groups. Hospitality, it seems, is now very much on the government’s agenda.
The sector faces other existential challenges, but for now, last week’s announcements offer some much-needed positive news in what was beginning to look like a bleak outlook.
Thank you for reading the Monday 13th July Weekly Briefing – Weekly Briefing Report.
Underwhelming. That is my take on the flow of business into the restaurant and food pub business on Discovery Day –4 July.
I must make clear that my view is based on partial evidence and supposition. But let me set out what I saw in the 48 hours after most of the sector was allowed to reopen. I visited Muswell Hill, a prosperous north London suburb, at late lunch time on 4 July. I found that almost exactly half of the 25 restaurants up and down its high street were open –business was OK but certainly not brisk.
And the chains were noticeable by their closures. In the evening I visited Hampstead. Bear in mind this is a Saturday in July when in normal times, you can’t get a seat anywhere without arriving very early or booking in advance. What did I find? Again, half the sites were closed –some permanently. And chain restaurants –Cote, Pizza Express, Wagamama for example –were not open. In total I saw about 30 tables occupied – that amounts to about 25% of all seats available. So,50% open with 25% occupancy – that’s 13% of the possible business. As I say, underwhelming. It doesn’t reflect survey findings which tend to show that a third of Brits are keen to eat out as soon as they can. But it is only correct to note that the weather, at least in the evening, was drizzly and certainly not warm for July – this may have kept diners away.
Thank you for reading the Monday 6th July Weekly Briefing – Weekly Briefing Report.
Eagerly awaited, 4 July is the day when restaurants and pubs will be able to join delivery and takeaway outlets to serve customers. And, it will be the start of discovering how successful they will be.
The consensus is that around two thirds of outlets will open in July and with the revised 1 metre social distancing rule. These businesses will be able to operate at something like 70% capacity. And 70% of two thirds is about 50%. In other words, on these figures the industry will be set up to cope with about half of pre-covid levels of business. This is just about break even for an average business. This implies that the industry as a whole, will just about survive and this should, thankfully, form a platform for longer-term growth.
Thank you for reading the Monday 29th June Weekly Briefing – Weekly Briefing Report.
The industry is waiting….
…waiting to open up and waiting to see how many customers will come through the doors.
This issue of Weekly Briefing Report is lighter than usual. The industry is quiet as it waits for the government’s announcement on the lifting of restrictions. Many operators are pinning their hopes on opening their doors in early July as they can no longer afford to keep them shut.
For some, the new rules are forcing a complete rethink of their business models, whist others are prioritising making their existing environment as acceptable and inviting as possible for both customers and staff under the new conditions.
Thank you for reading the Monday 22nd June Weekly Briefing – Weekly Briefing Report.
My reports for the last few weeks have centred around a bleak outlook for the hospitality industry. Yet, it’s important to note, that periods of ‘trial’ often create change that eventually leads to long-term growth. For example, the great recession of 2010 led to the expansion, some say ‘explosion’ of PE-funded growth in the restaurant sector. And the recession of the early 1980s led to the large scale development of the fast food sector.
So, what new and positive development will the current “period of trial” lead to? It would be a very brave person who would nail their flag to the mast at this stage, but it’s possible to see some potential areas where some good will emerge.
Thank you for reading the Monday 15th June Weekly Briefing – Weekly Briefing Report.
The accelerator effect continues…
The inevitable wave of closures and associated redundancies has begun, with The Restaurant Group’s announcement that it will close 120 sites (mainly Frankie & Benny’s). This is yet another example of the ‘accelerator effect’ of the coronavirus pandemic, as the group announced six months ago that it would close this number of sites over the next few years. Sadly, many more redundancies are expected industry-wide as brands review balance sheets and the effects of the reduced government support as the furlough scheme begins to wind-down.
Meanwhile, the industry is fervently lobbying the government to reduce the 2 metre social distancing rule to 1 metre; this reduction will make the difference between survival and closure for many operators.
Thank you for reading the Monday 8th June Weekly Briefing – Weekly Briefing Report.
The coronavirus pandemic has been a tragedy for many and a trial for most. But, there have been certain activities that have benefitted over the last 10 weeks. In the foodservice sector at any rate, some developments that were happening before the lockdown have been given a boost and, as observed by one of the people I interviewed last week for my report on “What’s Hot in the USA”, development times have been shortened by perhaps as much as two years.
Delivery, and especially food delivery, is clearly one area that has flourished. Last week The Times reported that online food sales now account for 13% of the grocery market – almost double the figure of a year ago.
Thank you for reading the Monday 1st June Weekly Briefing – Weekly Briefing Report.
Publicly quoted players in the foodservice sector –ranging from international operators such as Compass and Whitbread, to UK-focused Restaurant Group –have been increasing their cash reserves either through equity raises or increased banking facilities over the last few weeks and are reasonablywell placed to withstand some really rocky times ahead.
But most operatorsare not so wellplaced. Last week for instance, Casual Dining Group announced that AlixPartners has been retainedto explore future options, and in doing so they are joining a growing list of companies that are showing signs of distress, or worse.
Thank you for reading the Monday 25 May Weekly Briefing – Weekly Briefing Report.
Following the Prime Minister’s speech on 10 May, the lockdown rules have been lifted very slightly, but sadly, it’s clear that the foodservice sector, along with hospitality and travel will be amongst the last to emerge because they are “crowded by design”.
Nevertheless, thoughts are being turned to how to cope with social distancing. There are long lists of solutions including screens, one-way front of house traffic, sanitising stations and checking staff temperatures. There will be many initiatives and only time will tell which will work. But, I have no doubt that the industry, as always, will pull together to share ideas and best practice.
Thank you for reading the Monday 18 May Weekly Briefing – Weekly Briefing Report.
Whilst there is some sign of activity in the foodservice sector. A heartbeat somewhere in the takeaway and delivery sector. Most businesses are turning their thoughts to how to open up, whenever that is allowed. Sadly, many are facing an existential crisis as they see their liquidity running out.
It seems as though the government is sympathetic to the needs of the foodservice and hospitality and leisure sector. This sector is likely to be asked to endure the implications of lockdown for longer than any other sector in the economy. But, it remains to be seen whether this will be turned into action.
In his address yesterday evening, the prime minister revealed some restrictions “in parts of the hospitality industry” may be lifted by July. The industry waits with baited breath to see what this might look like…
Thank you for reading the Monday 11 May Weekly Briefing – Weekly Briefing Report.
There seems to be a coalescing view across the industry that there are three stages to the impact of coronavirus, and on this occasion I very much agree. The first stage is the one we are in now and it will last until lockdown restrictions are lifted sufficiently for people to be allowed to visit restaurants and pubs. The second stage is from then until consumers feel comfortable about visiting these places – and that is likely to have to wait until there is a vaccine or some mitigation of the effects of the virus. The third stage is from then onwards, in what many are referring to as a “new normal”. Each stage has its moment of truth and I outline these in my Monday 4 May Weekly Briefing.
In terms of the numbers, there is likely to be a 66% decline in sales compared to last year. And, this assumes some relaxation of the lockdown restrictions by the summer and a reasonable level of trading by the end of the year. So, it seems some of the most challenging times are yet to come.
Thank you for reading the Monday 4 May Weekly Briefing – Weekly Briefing Report.
Over the past week, there has been an engendering spirit of innovation and “getting things done”, as exemplified by Meals for the NHS, which has already raised over £1million to pay small takeaways to provide meals for NHS staff. That spirit is also behind developments such as those at Sysco (the US parent of Brakes) where, as The Economist has reported, the company “built an entire new supply chain and billing system to serve grocery stores in less than a week”.
Several restaurant chains have reopened some sites for delivery and takeaway including KFC, Costa, I am Doner and Wingstop. It’s an encouraging move in the right direction but should be kept in proportion; the openings represent just 2.6% of the sites operated by the re-opened brands.
Thank you for reading the Monday, 27th April 2020 – Weekly Briefing Report.
Now that some people are turning their thoughts to the future, they are beginning to challenge me to come up with creative thoughts about what may happen. Therefore, I have been using my Market Structure and Trends data (which starts in 1981) to review what happened in past recessions. While none were based on the truly unusual conditions we face today, they may provide some benchmarks.
My insight Covid-19 is testing the delivery model –and the news from the Competition and Markets Authority (CMA) is:“The ongoing lockdown in the UK has resulted in the closure of a large number of the key restaurants available through Deliveroo, and a significant decline in revenues.
Thank you for reading the Monday, 20th April 2020 – Weekly Briefing Report.
This past week has seen a new form of normality start to set in. For some businesses, it has been an incredibly busy time. For others it is become a time for assessment and reflection. Yet, for others it has become a time for thinking about a new life.
The overriding feature of this past week or so has been the continuing build-up of activities –
- that support the vulnerable
- the elderly
- NHS workers and
- other key workers.
Interestingly, job roles, that in other times would be considered humble, such as cleaners, supermarket cashiers and delivery drivers and riders, are today crucial in keeping the economy going.
Thank you for reading the Monday, 13th April 2020 – Weekly Briefing Report.
In this past week, news stories slowed down slightly compared to the previous week. This indicates that the market is beginning to enter a new phase after its two weeks of turmoil, which has required multiple, often painful, decisions and subsequent actions. Many foodservice businesses have now been mothballed. Operations being stopped and workforces furloughed. In these companies, those people left to work are beginning to find that they have some time on their hands. And they are using this to start to think about the future.
Of course this does not apply to all people and to all businesses. Many of whom are still very active, such as delivery aggregators, foodservice suppliers who are pivoting to the retail sector, and all operations involved in providing food to the health care system. And a notable number of foodservice operators, often in partnership with their suppliers, have put initiatives in place to feed the vulnerable and key workers in the NHS and other emergency services.
Thank you for reading the Monday, 6th April 2020 – Weekly Briefing Report.
My insight captures news stories from the week commencing 23 March 2020. Therefore it become known as The Great Reset. The news stories picked up where the previous week left off with a huge amount of activity. For instance, involving mothballing businesses or closing them down entirely.
We have already seen –
- Liquidation of Food & Fuel and notice that Chiquito’s and Byron are likely to follow the same route.
- The retail food supply chain has been showing massive activity, and the foodservice supply chain is pivoting towards the retail market where it is able –but this is likely to be only a short term development that will unwind when things return to a new “normal” and the upturn, whatever it looks like, can begin.
- The most dramatic development for the foodservice sector in the past week occurred in the early evening of 23 March with the Government’s instructions that the population should lock down and that restaurants, pubs etc will no longer be able to provide dine-in facilities.
Thank you for reading the Monday, 30th March 2020 – Weekly Briefing Report.
Peter provides consultancy on the eating out market and opens eyes to brand new ways of thinking about the sector and its multiple opportunities for success.