Polpo was a ground-breaking concept when the restaurant launched in Soho in 2009. Its design and food and beverage offer had been finely honed by co-founder Russell Norman, who had spent significant time in New York and Venice. His creation fused the scruffy bars he frequented in Manhattan’s Lower East Side with the food and wine he enjoyed in the back-street bacaris of Venice.

The stripped-back interiors, no-booking policy, cicchetti menu, keen pricing and unfussy wine offer hit the spot perfectly. Polpo was a runaway hit that went on to spawn a chain of venues, even though Norman never planned to build an empire. Along with business partner Richard Beatty, they made the rapidly expanding chain work by having a firm handle on all aspects of the business – including strict policies on expenditure and costs. Norman starred in fascinating television series The Restaurant Man, which revealed him to be a man of precision. To him, it was all about attention to detail.

However in 2016, Norman and Beatty handed Polpo’s day-to-day management to a new managing director, who brought in a team to handle the company’s growth. Then it all started to unravel. Standards and branding driven by the founders fell, accompanied by rocketing central overheads. Head office costs swiftly doubled, with fixed costs of about £1.2m per year. 

When this combined with the new team’s failure to drive growth, the business rapidly became unprofitable. It has been noticeable since Beatty returned to the business at the end of last year, he has reduced the company’s costs by £1m.

When mishandled, such central overheads can clearly be a killer. It was a similar story at Filmore & Union, which built its central capabilities, including head office and central kitchen, but found it too much for the underlying business to bear. While the group was profitable at unit level, the high central costs pushed the overall operation into a loss, which was a major contributor to its recent sale to Coffeesmiths Collective in a pre-pack administration. 

Such failings might be replicated in the increasingly competitive coffee bar market, where independents are coming under pressure. Coffeesmiths Collective is well positioned to pick off businesses unable to handle the tough task of building central operations to support expansionary aspirations.

Part of the handling of this sensitive, and crucial, aspect of a growing business is when to invest in central infrastructure. This week, London Union founder Jonathan Downey told Propel head office costs were too high for a company of its size and it would look to make better use of the resource by adding more food halls – potentially in Manchester.

Brewhouse & Kitchen has also invested in expanding its head office team and underlying systems ahead of what it expects to be a more challenging market but one that will be dynamic in terms of acquisitions. After a period of extraordinary growth, management felt it was time to step back and consolidate. Founders Simon Bunn and Kris Gumbrell will no doubt use their vast experience and knowledge to ensure this is handled with great care.

They will be well aware maintaining a balance between levels of investment in central infrastructure and having sufficient support centrally to cope with expansion is a tough challenge for any company. Any wrong steps can lead to what should be a successful, profitable business falling off a cliff.

I’d like to share my takeaways from the Global Restaurant Investment Forum (GRIF) London Briefing, which was held at Bala Baya last week.

Don’t get hung up on what you know: Thom Elliott, of Pizza Pilgrims, said there is an upside to inexperience – you don’t repeat the same mistakes as other operators as you’re forced to focus on how you could do it, rather than how you should do it. He said Pizza Pilgrims avoids making simple errors, such as asking waiters to pay for no-shows, by using his six-year-old as a sounding board – believing even she would know it wasn’t the right thing to do!

Let’s not kid ourselves the majority of staff are hospitality-lifers: The entrepreneur panel talked at length about the talent issue and how they are competing with each other for a shrinking pool of great people. There was a feeling the industry should accept it’s a stopgap for many on their career and focus on getting them to stay longer, concentrating on training, incentives and selling themselves as founders and leaders, not just brands. I particularly liked the view it’s important to thank people for choosing you, as any great team member could walk out and get another job in hours.

On trends: We heard the majority of innovation comes by way of evolution, not revolution, and we should be encouraged to look to other industries, not just our own. One hospitality business to watch is McDonald’s, with its recent Dynamic Yield acquisition. 

The biggest challenges: Industry expert Peter Backman said the major issues British operators forecast are the potential negative effect of reputational damage, funding, costs of occupation, overcapacity in the market place and delivery. 

Looking overseas for growth: For the first time at a GRIF event we heard British investors talk about encouraging operators to think internationally in their expansion plans. Clearly fuelled by the challenging domestic market and growth on the continent, we were told that rather than skipping Europe for the Middle East, many players were looking to western Europe. Amsterdam got a particularly large amount of airtime but the cynic in me believes this could be due to GRIF’s presence and a passionate, if not a little persistent, Dutch emcee!

Food that doesn’t destroy our future: Without doubt the plant-based movement has moved our industry. Almost every operator is embracing it in some way but our panel believed while this sector would continue to grow, meat production would remain a large part of a balanced diet for most and vital to effective farming ecosystems. We heard of soil management challenges and the need for operators to review the whole supply chain, with everyone taking responsibility for how food ends up on the plate. 

My view is food needs to move up the agenda while times are tough and it’s easy to ignore the bigger issues for the pressing financial pressures of today. It’s time to know your supply chain, take ownership and set a plan – Rome wasn’t built in a day. Panellist Gizzi Erskine is about to launch a website, The Sustainability Bible, which operators will be able to use to inform decisions.

Food market model: This trend is sweeping Europe, with one recent study citing 350 markets are currently under construction. A number of positives were highlighted, from providing great consumer choice to filling large spaces for developers. Others, however, spoke of potential saturation and the business model’s sustainability. 

Partners not pirates: Our growth option panellists were refreshingly honest about the challenges they face, talking of the infrastructure and investment required for growth. Picking the right international partners, whether in franchising or licensing, is vital for success or, as one panellist said: “Do your due diligence, drag out the dating and make sure you pick a partner, not a pirate.”

Bad site selection is the biggest risk: When asked the reasons why investments were least likely to work our investors told us the first was wrong site selection, bleeding cash too early, while the second revolved around overconfidence or the entrepreneur’s ego – never the investor, they insisted!

I’m not sure there’s a collective noun for food traders but give me a few minutes and I’ll come up with one. In the meantime, and I know it’s a big ask, bear with me as I share my sum knowledge of Woonerf, the Netherlands traffic-calming system. 

The local council describes Leonard Street in Shoreditch as “London’s most advanced shared street space yet”. The council has used Woonerf to transform Leonard Street from a black cab rat-run into a people-prioritised cobbled and granite public place. Kerbs have been removed, road markings and traffic signs minimised and, while they are still allowed, cars deprioritised. After a few initial close shaves, cars and people exist in near perfect harmony. 

Amid this environment of calm the council rented four spaces to food traders to erect gazebos and get cooking and selling – and by golly they’re doing terrific trade. At one stall last week I counted 36 people in the queue. For those of you thinking I’m over-egging the pudding to illustrate my Friday Opinion, visit my LinkedIn Page where I’ve posted the photo. You will count 36 people (37 if you assume there’s someone standing behind the tree).

To the nub of my article. I witnessed this snaking queue on the same day I read in Propel: “Monty’s Deli to shut Hoxton site after continued losses put business on brink.” While the four Leonard Street traders aren’t directly responsible for the demise of Monty’s, their effect on bricks-and-mortar eateries in the area is logically noticeable.

Go further east to St Katherine Dock, where excellent street food business Kerb took its market concept to the heart of the dock. The bricks-and-mortar eateries, which pay top-dollar rent, were left scratching their heads as trade was taken from under their noses. London has witnessed a palpable growth in food markets and halls and, to my mind, there’s no chance of it abating – in fact the opposite. 

Whitecross Street Market, Model Market in Lewisham, and Markets Halls with its Fulham and Victoria markets and forthcoming 800-seater food hall in a former BHS store in Oxford Street, to name a few. I also read in Propel that London Union, led by the irrepressible Jonathan Downey, is looking to Manchester as it prepares for expansion after reporting sparkling full-year Ebitda growth. In conclusion, things are looking rather rosy in the food market/food hall/gazebo trader sector.

Being a traditional bricks-and-mortar operator myself the gazebo traders concern me but, as none have pitched up overly close to a Remarkable Pub yet, I haven’t lost any sleep. Truth be known, I admire them. Who couldn’t admire the collective energy of young, innovative, imaginative, entrepreneur chefs producing good quality, good-value food in one vibrant place? 

I love their names too – Chubby Dumpling, Only Jerkin’, Lord Of The Wings and, my personal favourite, Luxury Flats – a stall specialising in stuffed hand-made flatbread. Brilliant. 

The other brilliant thing is the gazebo-trader business model versus that of traditional bricks-and-mortar businesses. Gazebo trading is low barrier to entry, relatively low risk and offers potentially high earnings, as witnessed in Leonard Street.

Of course the big boys lurk wherever there’s high-earning potential. Time Out is well and truly on the food wagon with markets in Lisbon, New York, Miami, Boston, Chicago, Montreal and Prague – and watch out standalone bricks-and-mortar operators in Lambeth when Time Out Food Hall Waterloo, with 500 seats across 32,500 square feet and 20-plus food traders, opens in 2021.

In conclusion, bricks-and-mortar businesses need to be on guard as the “cuckoo” of food traders (I told you I’d come up with a collective noun) could be pitching in your patch soon.

Time for Reform was the title of the government White Paper published in April 2000 that led to the Licensing Act 2003 (LA2003). In 2017, a House of Lords Select Committee reviewed the LA2003 and made several recommendations and observations, including the view it was a mistake to allow the formation of council licensing committees when licensing should have gone to planning. 

It stated: “The committee was shocked by some of the evidence it received on hearings before licensing committees. Decisions have been described as ‘something of a lottery’, ‘lacking formality’ and ‘indifferent’, with some ‘scandalous misuses’ of the powers of elected local councillors.”

The committee’s solution was to abolish licensing committees comprising councillors, merge licensing with planning, and take appeals from magistrates’ courts and give them to the planning inspectorate. I’ll return to this recommendation later.

Let me recount a recent personal experience. I was asked by a law firm to act as an expert witness in an application on behalf of a pub that opened at 10am to open at 8am instead. The applicant would have settled for a 9am extension, which another pub, 50 yards away, already had. The only “responsible authority” to object was Public Health, which objected on the grounds that granting the application would undermine the public safety objective of the LA2003. “Promoting public health” isn’t a licensing objective so the local director of public health had to smuggle in what was essentially a public health objection thinly disguised as a public safety objection. There was also an objection from a local rehab centre, which treats people who are drug and alcohol dependent.

I have to say the chairman of the three-councillor panel that heard the application was at pains to conduct the hearing in a structured and fair manner, at least by his own lights. Everyone got the opportunity to put their case, have their say and ask questions. This sounds fair and, if this had been a political debate in the council chamber, it would have been. But a licensing hearing is a quasi-judicial procedure in which representations from objectors should only be considered if they are “relevant representations”, which means they must address one or more of the licensing objectives. In this context, everyone “having their say” means “anyone can say anything”, and that’s the opposite of fairness and opens the door to prejudice.

On numerous occasions our solicitor had to point out the evidence given by public health and the rehab centre wasn’t about public safety but strayed into public health – not a “relevant” matter under the LA2003. A long, emotional testimony from the rehab centre’s representative about the problems of alcoholics would have brought a tear to a glass eye – but none of it was relevant. The problem is once these things have been said, even if the panel is told they must disregard them they have heard the words and are likely to have been prejudiced. It was also clear the council’s licensing policy was an attempt to create a health licensing objective through the back door, so we were doubly prejudiced.

The councillors were considering an objection raised by their own director of public health (annual salary £95,000), who was represented by an assistant borough solicitor, while the panel was advised by the borough solicitor, the assistant’s boss. Can you imagine a derby game between Liverpool and Everton in which all match officials are employed by Everton? No-one in the room was surprised when the decision went against the applicant.

What is the solution to this manifestly unfair and unsatisfactory situation? I’m not persuaded taking this from councillors and giving it to planning officials is the solution, although I think the two need to work more closely. Planning is about place making and licensing is about place managing. I think licensing applications should remain with councils unless a hearing is required to resolve objections. 

That hearing should take place in the magistrates’ court in front of licensing justices or a district judge. If our case had been handled in that way, I don’t believe any of the representations would have been accepted as relevant. I think rules of evidence could have been applied and the risk of prejudice substantially reduced. Councils, as “responsible authorities”, could still represent the views of residents. Much as I favour training for councillors hearing licensing cases, I think the problem is structural. A quasi-judicial hearing should be heard in a court, not a council chamber. It’s time for reform.