When I woke to the sound of the business bulletin on Radio 4’s Today programme last week and heard Tesco chief executive Dave Lewis announcing the purchase of Booker it seemed liked a top move and one I would have seen coming if I’d been a little cleverer. After all it was only a fortnight ago the new Waitrose managing director Rob Collins said he did not believe he was running a supermarket but the company was going to be increasingly operating as a food and foodservice retailer. His ambition is to be the best foodservice retailer.

 

Evidence of this subtle shift can be seen at the refurbished Waitrose store in London’s Barbican that has had its regular retail product mix reduced in order to make way for “The Kitchen” – a serious foodservice counter that has in-store chefs creating freshly-cooked dishes to satisfy its customers' appetites from breakfast right through to dinner. Collins had spotted this as a clear trend in the US market where food retailers have increasingly been adding in dining areas and significant food-to-go offers, which represent a strong growth area within the food industry.

 

There is clear evidence we are going down exactly this same route in the UK, with out-of-home food sales expected to grow by 3.9% this year and 3.7% in 2018 to take it to £57.6bn, according to The NPD Group. The food-to-go element of this accounts for about 35% of the total figure. These are clearly very attractive sums not only for Waitrose but also for its much bigger rival Tesco. It’s not it hadn’t already seen the juicy opportunity here because Tesco had attempted to muscle in on the out-of-home market through its previous chief executive who bought Giraffe, Harris + Hoole and Emporium Bakery and inserted them into a number of Tesco’s larger supermarkets.

 

This experiment largely failed and much of the grocer’s activity in this area has been reversed. The Booker deal is its return to the out-of-home market but from a much more intelligent angle it seems. With its proposed £3.7bn acquisition (Lewis called it a merger, which is clearly ridiculous when you consider Tesco has a market cap of £17bn), Tesco taps into all the main growth areas of the food sector, which all make its core superstore sales growth figures look rather pedestrian.

 

For starters, there is the exposure it will have to various restaurant chains including Byron, Wagamama, Loch Fyne and Carluccio’s. Tesco has tried its hand running branded eateries and having failed with that one the clever alternative is to get access to this part of the food market by selling ingredients and other foodstuffs to existing restaurant brands.

 

Tesco also gains access to the convenience store sector since Booker sells £3.1bn of goods to 5,500 stores including those badged as Londis, Budgens, Premier and Family Shopper, which are often owned by independent operators. It also has a contract with Marks & Spencer among many other such supply deals. Much of the growth in this part of the market is being driven by shoppers’ rapid move away from undertaking the wretched regular weekly shopping mission. This has partly been driven by the internet and the increasing appetite of customers for home delivery.

 

By bringing together the reach of Booker into thousands of convenience stores and restaurants, and the Tesco delivery infrastructure (that includes its own fleet of vans) as well as its mature “click and collect” operation, the combined entity will have some powerful capabilities. The purchase of Giraffe was heralded as a potentially impactful deal on the foodservice industry – wrongly so we now know – but even the most ardent supporters of that deal would surely agree it pales somewhat with what could be possibly leveraged from the Booker acquisition.

 

The opportunities for Tesco in the foodservice market are myriad and although it is Lewis as the acquirer who is gaining the publicity (good and bad) from the deal at this stage the fact is the secret weapon in the mix is likely to be Booker chief executive Charles Wilson, who could be lauded further down the line. Such are his capabilities that Collins’ desire for Waitrose to be the best foodservice retailer could prove to be a bigger challenge than he had anticipated when he outlined his plans in the new year. That is unless, of course, the Competition and Markets Authority scuppers the deal.

 

The biggest challenge we face as operators in the hospitality sector is persuading people our jobs offer a viable long-term career option. In my view, the phrase “part-time bar job” is still far too prevalent. A large number of people fall into in this sector, as I did myself. I started working life as a plumber, then worked behind bars in a number of different businesses, including this one, before moving into a management role.

At Be At One we take people development incredibly seriously. We see ourselves as upskilling the industry – a number of former bartenders have gone on to set up their own businesses in London and beyond. Indeed, our three founders began life behind the bar before joining forces and setting up the business almost 19 years ago.

We spend an industry-leading £6,000 per person training our bartenders over the course of an intensive nine-week programme. Few other companies offer such comprehensive training, which is fully paid for the duration. We are only interested in employing people who have the right attitude and personality who want a career in bartending. In return they learn a life skill that is completely transferable, and teaches them valuable lessons in customer service, selling and communication.

We know this spend makes a positive difference to our business and serves as the best possible marketing we can do. Results from our annual guest survey, completed by more than 5,000 customers, tell us the great cocktails, friendly service and party atmosphere are the top reasons people visit our bars.

During the training, and once they start working behind the bar, we expect our bartenders to adhere to our golden “5-60-30” rule – that is absolutely fundamental to everything we do. It’s about making guests feel comfortable as soon as they arrive in the venue – hosting them as you would in your own home. Our bartenders should make eye contact and speak to guests within five seconds of them arriving at the bar, make their cocktail within 60 seconds so they aren’t waiting for their drink, and finally return their change to them within 30 seconds.

More than half our workforce is made up of non-British workers. That’s not a deliberate strategy on our part but certainly brings an interesting dynamic to our business. Bartending is hard work, but can be incredibly rewarding. Generally speaking, our non-British employees have a genuine passion to give our guests the very best service and hospitality possible and that focus rubs off on others.

Recruitment is tough for any hospitality business and any restrictions on access to foreign labour as part of a post-Brexit deal would prove hugely challenging. So as a business we are committed to retaining our talented and hard-working employees. We’re starting from a position of strength – our staff turnover rate is already lower than the industry average. We believe that’s because everyone in the business – from behind the bar to the directors – is completely focused on bartending. We are a fair employer, our pay rates are competitive, we offer opportunities to progress and regularly listen to our teams.

But we can improve. To that end, we have just appointed our first head of retention, with a specific focus on spending more time with our staff and finding out their aspirations and goals. Later this year we’ll be introducing a new scheme that focuses our employees on three key personal development goals to keep them moving forward in their careers with us. This new role will also provide assistance to those employees who are new to working life, particularly those from overseas, and may need some help when it comes to issues such as finding appropriate and affordable accommodation and managing bills and travel costs.

Of course, having an element of natural staff turnover is healthy for any business as it brings fresh ideas and energy. But the hospitality sector really does need to tackle the high levels of churn it currently experiences otherwise we will be forever playing catch-up. As an industry, we need to publicly shout about our successes much more. We all know there are pockets of great work taking place and many companies run some truly innovative people development schemes. I’ve sat in lots of conferences where executives from companies operating in other sectors have championed their focus on customer service, but when you walk into their venues the talk doesn’t match the reality.

Pubs and bars offer some truly memorable experiences and I challenge anyone to go into one of our bars and not have a great time. And that is purely down to the personality, skill and passion of the people we recruit and train.

 

While chatting in Paris with Paul and Tory Chantler from FrogPubs (I came here with HGEM’s Sally Whelan to look at the eating out scene, I must admit the food hall at Galerie Lafayette has been the highlight so far), one topic of conversation was Deliveroo. We talked about its potential stranglehold on our sector particularly as operators seek to boost sales and profit in the challenging year ahead and our conversation covered a number of areas:

 

While Deliveroo might appear to be willing to drop to 20% commission (or perhaps even lower) at the start of an arrangement, there seem to be instances of it asking for increases in this percentage once the arrangement is up and running. This undoubtedly leaves the operator in something of a dilemma. Can the deal still make money if the commission moves from 20% to 26%? What if, when Deliveroo is more firmly embedded in the business, it comes back and demands an even higher commission? And if the deal does end up at 30% how does an operator make money on lower percentage menu items? It might be ok still for pizza brands where margins can reach 85% but it causes problems on more protein-based dishes where margins might be closer to 65%.

 

One operator I know, working in one of its kitchens with his team, asked the Deliveroo driver (who didn’t recognise him as the managing director of the business) if he liked the brand. The driver said: “No – I much prefer Domino’s.” As you can imagine, this did not go down well. The operator had spent years developing the brand with his team – all singing off the same branded hymn sheet and yet one of the people responsible for delivering the brand face-to-face to customers, did not. To the operator, his brand was at risk and he did not want it in the hands of someone it didn’t know or trust. The relationship with his customers had to come before his relationship with Deliveroo. Taking a sales and profit risk, he stopped working with Deliveroo.

 

Very few products (and certainly not chips) are robust enough to withstand a journey on a bike, being carried into the house and then the wait in a takeaway box while the customer opens the beers, sorts out the television and gets everyone together. Nor will that product look or taste as good as it does in a restaurant. Some operators I speak to just don’t want their brand quality put at risk. It’s been too hard fought for.

 

Paul Chantler was negotiating with Deliveroo when it arbitrarily wanted to increase his commission from 22% to 26%, when it emailed him out of the blue one evening saying it was turning off its service. Imagine the situation at site level when suddenly the Deliveroo screens went dead before Paul had a chance to talk to the managers and his teams. This is not good at any level. What happens too when Deliveroo decides it wants to sell someone else’s product rather than yours even though the customer might have ordered yours because the margins are higher? What happens if it wants to produce and sell its own product? Who knows? Other brands I know just do not want power transferred from them to Deliveroo because too much control is out of their hands and they are then at Deliveroo’s mercy whatever it decides to do.

 

It’s an interesting dilemma for operators – control and quality versus sales and profit. Some jump one way but others are increasingly thinking the risk is most definitely not worth it.