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Morning Briefing for pub, restaurant and food wervice operators

Fri 17th Jan 2014 - Friday Opinion
Subjects: the vital role of operations manager, the pub market and restaurants and South African-style
Authors: Nick Bish, Neil Morgan and Ann Elliott 

Operations managers – their vital role by Nick Bish

The sharp end of the on-trade is the individual pub, club, restaurant or bar. This is where the business is done, the customer impressed and the money made. It’s the touchstone where the collective reputation of the industry resides – spectacularly improving food, wonderful hospitality, imaginative décor and, yes, responsible alcohol retailing. This is a complicated, multi-faceted business where the customer experience is the purpose and the end result of training, marketing, financial planning, property maintenance and endless hard work. Licensees who are good at it are remarkable and deserve the praise they frequently get.

The owners of the premises are vital too. They require their assets to make a financial return; they provide the financial and the logistical support to make many individual places coherent and successful as a group. This business model is valid for all companies with however many sites and is why industry leaders find it so easy to relate to each other: whether they have seven, 70 or 700 sites they are all multiples of the single premises that ploughs the lonely furrow at the customer-facing coalface.

The operations manager cohort is the connection between the company and the premises. For many years this job was characterised as being merely a link, a message carrier and sometimes a policeman. The truth of course is that the ops manager is and always has been the gearbox, between the power and resources of the company and the traction of the place where the retailing happens and the revenue earned. And no amount of business rationalisation or IT efficiency will provide an alternative to this job and its importance in the scheme of things. The founders of a small start-up company, launched with passion and 24/7 energy, will find that their first increased head-count will be to recruit an ‘area manager’ even before they take the finances in-house.

It is therefore very gratifying to see the increased attention being paid to the development and skills of the ops managers and their multi-site responsibilities. Many appointments are made from unit general managers and it’s true that retail skills and front line experience are vital qualities but the job of the ops manager is essentially about leadership and the sort of leadership that depends on insight, understanding and awareness rather than command and control. This is leadership of the hands-off variety where remoteness and infrequency of visits should not be obstacles, where a quick and focused visit can provide what’s needed until the next time. And furthermore the unit manager requires and deserves the certainty that support will be provided, through the ops manager, by the myriad of departments and agencies at head office. And in spite of the wonders of email and the intranet the essential requirement of the ops manager is to maintain an effective personal relationship that works on a human level – before the laptop gets opened!

Degree courses at Leeds Metropolitan and Birmingham City universities on retail management, tourism and, crucially, multi-site management are evidence that this subject and these people are being taken seriously. And within the industry the ALMR’s Operations Managers Awards seeks to identify the best and to gain recognition for them. The competition process is gruelling; an extended entry paper requires narrative answers and a demonstration of commercial and organisational management understanding. That’s a filter that discovers 20 individuals from either the managed or the leased sectors and then each is judged on a routine day of accompanied visits to sites. It’s expected that the visits include business reviews, site meetings or budget planning – not just a chat over lunch! This phase carries the most marks of the entire process that is completed by a programme of face-to-face interviews with two panels – one on Business issues and the other on People. The winning Area Manager and BDM are announced to a senior industry audience at the ALMR’s Christmas Lunch.

Part of the Awards process is the MasterClass – three days of high energy focus on strategy and leadership taking the finalists beyond their routine operational skills and exposing them to the insights of a ‘learning organisation’. This is based on realising that since we cannot know what the future will bring the only real strategic advantage comes from being able to learn and relearn quickly together, and take the action required. This is the enjoyable and hugely empowering experience that has underpinned the success and future careers of the Awards ops manager finalists over the last eight years.

The seismic plates of licensed hospitality shifted forever at the time of the Beer Orders when the old dispensation was rocked into a new world. The Licensing Act, welcome or not, changed retailing opportunities in a fundamental way and the ban on smoking in public places accelerated the priority for food as the lynch pin of most pubs and bars – allowing them to compete with and even displace mainstream restaurant brands. And at the centre of all this have been and will be the operations managers making sure it works and delivering the success of the new and visionary entrepreneurs which one day many will become.
Nick Bish is an industry consultant and non-executive director of the Association of Licensed Multiple Retailers

Optimistic signs as fewer pubs call ‘time’ by Neil Morgan

2013 was a year which, as Christie + Co reported in Business Outlook 2014 earlier this week, saw the average price of pubs sold increase by upwards of 3% should go down as a good year for pubs. But I believe there is a yet more significant figure to emerge from our cogitation on the year just passed – one which suggests that the pub sector is in ruder health than it has been for some time.

Evidence gathered by Christie + Co from its tally of sold pubs in 2013, showed that the percentage of pubs acquired to remain as pubs reached 67% – a massive 5% up on 2012 – which is surely a cause for comfort for those who bemoan the closure rate of pubs. More than anything, this in an indicator that after a round of disposals of pubs from the bottom-end of estates, we are now seeing a big improvement both in the quality of pubs and the people who own, operate and manage them.

However, amid the optimism we should remain cautious, for while trading performance seemed to improve in general terms, the better results remain geographically predicated. London remained in its own bubble, trading-wise, and also saw most of the higher premiums paid for pubs. Elsewhere, the UK regions rather reflected the ‘recession-recovery effect’ – the belief that recession starts in the north and recovery in the south was certainly mirrored in the trading performance of pub companies.

Yet while the recovery remained on the slow side, the transactional landscape seemed unaffected by the slow recovery, as experienced operators, returning entrepreneurs and first-time, lifestyle, buyers flocked to acquire the higher quality of pub that came to the market during the year. Smaller operators sought to pick-off individual, regional sites to add to their burgeoning estates and there was a real appetite for pubs from tenanted lease estates – again reflective of higher quality pubs coming to market.

Tenanted pub disposals generally declined to sensible levels as the pubcos sought to improve the tenant relationship rather than continuing to fight over the beer-tie battleground. The beer tie is going through a natural evolution anyway, and the pubcos understand there is more to be gained by managing the tenant relationship better and encouraging new tenants into the sector.

Distress disposals continue to be something of a way of life in the pubs sector. In late 2013, Christie + Co was instructed by administrators to sell the 103 pubs remaining in the Bramwell Pub Company estate, after Stonegate had acquired over 70 sites. And we should not expect Bramwell to be the last word in distress.

As we move into 2014, we’re forecasting at least one tenanted group deal during the year, but there is likely to be a slowdown in tenanted disposals generally as the pubcos become satisfied with the quality of their estates. This, again, should result in the trend seeing more sold pubs remaining as pubs continuing upwards. Much of the focus on the restaurant sector in 2013 centred on a thriving London market, and particularly on the growing influence of the branded chains.

As we look ahead, however, there is more than a glimmer of hope that this enthusiasm for the sector is going to be replicated throughout the country. Brands, buoyed by their experience in the capital, will increasingly take their confidence into the UK regions. Private equity, which invested heavily in the sector in 2013, also looks set to repeat the dose in 2014.

Looking forward, it is likely that the brands (and private equity) will increasingly come to dominate the restaurants scene in 2014. Whether independent operators, and small local and regional groups, can keep pace and compete with the power of the private-equity-backed brands will be interesting to observe. One hopes, for the sake of diversity, that consumers – spoilt for choice like never before – will find enough choice and quality in their local independent establishments.

However, brand-less, imageless and dated traditional restaurant concepts will find themselves under yet further pressure in 2014 – not just from branded rival restaurants but from the broader food offering emanating from the higher quality pub chains.

To see what Christie + Co has to say about the pub and restaurant sectors, visit www.christiebusinessoutlook.com where you can read Business Outlook 2014 and download a video revealing our thoughts on the pub (and other) sectors.
Neil Morgan is director and head of pubs, Christie + Co

Restaurants, South African-style by Ann Elliott

I am in South Africa on holiday at the moment and just wanted to write about eating out over here and one place in particular – Babylonstoren (www.babylonstoren.com). This was the first place we headed to when we came back out here a few days ago. It is totally peaceful, restorative, joyful and beautiful. On a warm summer’s day it makes your heart sing.

As it says on its website: “Babylonstoren is one of the oldest Cape Dutch farms. It has a fruit and vegetable garden of beauty and diversity, unique accommodation, fine food and a sense of wellbeing.” I am sure there must be places like this in the UK and if there are I would love to know about them.

The heart of the farm is its amazing organic fruit garden and a tour around it, with its exuberant and enthusiastic head gardener, is an experience all of its own. She gets you to taste, smell and feel the flowers and plants as she walks you around her beloved garden followed by her waddling dog. You lie on the luxurious camomile lawn, drink fresh water from water lily leaves, follow the ducks and ducklings around the gravel paths and rub fresh lavender leaves to release their fantastic fragrance. It’s a totally holistic approach to a visitor experience. After the tour you can sit in the old greenhouse and drink rose and apple infused tea and let the sun filter through the trees on to your face. All of this for 60p.

We had lunch then in Babel – the farm’s restaurant. I had to almost beg for a table but they found me on the tour and told me they could fit us in. We shared their three salads between four of us – green, red and yellow. The red salad included slow roasted tomatoes, strawberries, beetroot, radish and red onion. The yellow one had a Carpaccio of pineapple topped with grilled and fresh sweetcorn, fresh butternut granadilla and then carrots with a citrus, cinnamon and medjool date dressing. The green salad included crunchy summer heirloom peas, apple, pear, asparagus and avocado with a pea and mint ice cream and a Parma ham dressing.

Our mains included grilled lightly smoked Franschhoek trout, chargrilled fillet on the bone, grilled double lamb cutlets with a Babylonstoren chardonnay sauce and a cauliflower sandwich with gorgonzola, fresh pear sticks and toasted macadamia nuts. We resisted the desserts, which included ‘sweet and spicy’, ‘bitter sweet’, ‘sour and savoury’ and ‘umami’ – next time. It was truly delightful – helped by looking out over their hillside vineyards. They also have a farm shop selling bread they make themselves, wine from the estate and their own cook book.

Whilst I think Babylonstoren is rather special, there are many, many vineyards over here that have developed outstanding restaurants. These include Overture at Hidden Valley, R310 at Delaire Graff, The Cellars-Hohenort Hotel, Rust en Vrede Wine Estate’s restaurant, the restaurant at Tokara Winery, Towerbosch @ Knorhoek Wine Farm, Jordan restaurant at the Jordan wine estate and the wonderful 1682 at Steenberg vineyards.

The other stunning place to visit is Vergelegen, which has a great restaurant, a winery, shop, tasting room and the most amazing gardens divided into 17 different areas. This also includes a restored house showing the history of slavery in the area – it’s just the best way to spend a day.

These restaurants have all made the most of their land, their resources and their access to skills. They have created fabulous environments with outstanding ambiances – many of the restaurants take your breath away when you go in for the first time. They have designed outside spaces that maximise their views of awe-inspiring scenery. The service is generally really good and, on occasions, absolutely awesome. Sometimes I have had to fight really hard to book tables but they have all been worth it

Could we replicate this in the UK? Well, the weather notwithstanding, yes we could. Frazer Thompson at English Wines is heading this way and I look forward to visiting his estate and seeing the final results. It’s a growing market out here and long may it continue – I would love to see it flourish in the UK.
Ann Elliott is chief executive of leading sector marketing and public relations agency Elliotts – www.elliottsagency.com

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