With each passing day the spread of coronavirus ramps up worries over its possible effect on a UK hospitality sector that’s already fragile in parts. In the past week the impact on the business community has intensified, while stock markets across the globe have experienced sharp declines with analysts warning the outbreak could wreak economic havoc on a scale not seen since 2008. Bank of England governor Mark Carney warned the UK would suffer an “economic hit” due to the spread of coronavirus. While he said it was too early to be certain of the extent of the impact, he recognised tourism was already being negatively affected. The general view at present is this could be recession inducing, not dramatically but enough to tip the economy. However, if coronavirus turns into a pandemic that will have a much more significant economic impact. 

Countries are stepping up efforts to contain the virus by banning travel, closing schools and postponing major sporting and business events. Last week the International Hospitality Investment Forum, due to take place in Berlin this month, was postponed because of coronavirus concerns. Sadly, it won’t be the last. Many companies are also amending or curbing travel plans, which is already starting to have a major impact on the hotel and travel concessions sectors. It seems this curb in travel plans is already having an impact, with footfall in London’s Chinatown said to have been down since the start of February. Companies that catered for a lot of corporate and tourist business in London are believed to have already seen like-for-like sales take a 20% hit during the past fortnight, and the feeling is this will only get worse.

Having flagged up the fact I was going to write about coronavirus, it wasn’t surprising in these nervous times to field calls from operators asking me not to scaremonger. It’s a fair point but if an operator hasn’t put a strategy in place for their business, staff and customers already I would be concerned. Plan for the worst and hope for the best, as they say. In November Wahaca showed the impact that association with a virus, in this case norovirus, can have on a brand. The business has yet to fully recover from and, with the virulent nature of coronavirus, it’s hard to see how it won’t have an impact on multiple businesses, a kind of reverse strength in numbers. 

It’s clear some companies are putting strategies in place such as boosting hygiene (more cleaning, deep cleaning, sanitisers) and updating internal and, in some cases, guest communications. In terms of internal communications, it might purely be a regular reminder of best practice and what to do if you feel unwell. Ultimately, there’s no greater importance than the health and safety of staff and customers, which should always be the guiding principle that drives strategy. JD Wetherspoon and Greggs have already said staff will be subject to regular statutory sick pay rules if they have to self-isolate. Wetherspoon, which has 45,000 employees, is treating the virus like any other illness. Under statutory sick pay rules, an employee isn’t paid for the first three days of absence and then only if they earn at least £118 a week. Strictly speaking, there’s no right to sick pay for anyone in self-isolation but arbitration service ACAS says it is “good practice” for employers to treat it as sick leave or agree for time to be taken as holiday. I’m sure other businesses will follow suit.

Carluccio’s chief executive Mark Jones told me he is meeting with his management team every 48 hours to discuss measured responses to the situation. He said: “First and foremost, we want to do everything to protect our staff and customers so we’ll follow government advice on how we do that, for example support employees on self-isolation. Secondly, we will model situations in travel hubs and enclosed shopping centres, for example, where we could see a huge drop in footfall that jeopardises trading. We would have to consider temporary closure in those circumstances and staff redeployment. The closure issue is two-fold, one because staff have self-isolated or their children are off school or public transport is down and the restaurant can’t function, or two, a town-based issue so footfall crashes and we can’t trade economically. During the storms we closed our Shrewsbury restaurant for one week, for example, not because we were underwater but because staff and customers couldn’t get into the city centre.”

Arguably one positive thing amid all this is the sector is battle-hardened from the perfect storm of negative headwinds and planning for Brexit, especially around supply issues where there now should be a deeper understanding. Jones said: “We have already taken steps to fully understand our supply chain vulnerabilities. We are reassured this isn’t an issue and isn’t likely to become one.” But what about the cost of closing one or multiple sites? Insurance, especially interpretation of “business interruption cover”, seems a grey area. The official advice is to check your policy wording. Standard policies may not include protection if your business suffers due to an outbreak of disease, regardless of circumstance.

Current advice from FSB Insurance Service is: “Check your policy or confer with your broker to see if you have business interruption cover in your commercial insurance policy. Business interruption insurance covers the income you lose after a disaster and often comes up when discussing terrorism cover. For example, after the London Bridge attack local businesses forced to close would have been able to claim for revenue lost under this clause. Once you have confirmed you have business interruption cover you will need to check whether you have an extension for ‘notifiable diseases’. If you have this in your policy wording you will need to contact your broker or insurer to confirm whether coronavirus is covered.” Earlier this week the government decided to register covid-19 as “notifiable”, allowing businesses to seek compensation if they are affected by the coronavirus. Businesses will need to check the terms and conditions of their insurance and make sure their insurance provider has updated their policy to include covid-19. As UKHospitality chief executive Kate Nicholls said: “This isn’t going to be a remedy for all businesses but should help some of those already feeling the strain.” If you don’t have business interruption cover you can ask your insurer to add it but they are within their rights to refuse or ask for an increased premium. Nonetheless, UKHospitality should be a key port of call for advice and is set to publish a regular coronavirus update.

Nicholls, who is constantly in touch with the government, gave a brief update on the situation at Propel’s Multi Club event yesterday, reminding everyone we are still in the “detain” phase of proceedings, although we may soon enter the “delay” stage. She was rightly keen to point out the “worst-case scenario” is 80% of the UK population could be infected with coronavirus at its peak, which could be during the next six to eight weeks, while a measured approach was required from everyone regarding the affect this would have on the sector. Government plans published this week suggest as many as one in five staff could be off sick at the same time if the coronavirus takes hold in the UK. If so, the government would quickly see the worrying impact losing 20% of staff would have on our sector – its immigration plans may have a similar effect.

People are already thinking of ways to minimise the short-term impact on the sector and proposing steps the government could take to support the leisure sector as the crisis unfolds. David Roberts, corporate partner, head of leisure at leading law firm CMS UK, wrote this week: “If the government is going to pass a ‘beast’ of a bill designed to put emergency powers and laws in place to ensure the least social and economic disruption to business from the virus, why not consider amending the Insolvency Act 1986 so businesses can invoke the legal protections afforded by the administration process without having to go into administration? It would be a kind of quasi, three-month pre-administration protection during which time banks and landlords could not enforce. Also, as restaurants, pubs, hotels, theatres and cinemas would face immediate revenue and cash flow cliffs, businesses would need to deal with massive short-term cash flow problems. Perhaps the government could stay NI/VAT/PAYE obligations during such a period? Maybe the government could ‘loan’ such funds to businesses that, once past the crisis, could be repaid? It would give businesses a better chance to protect themselves for, say, three months if the public deserts the sector on government health advice.”

I thought the government’s immigration plans, and its heavy handed and incorrect terminology around unskilled labour, was the last thing the sector needed as it entered a new year hoping for some positivity and certainty after three to four years of many struggling to keep their head above water. Unfortunately it could put a brake on expansion and investment plans as people assess what the full impact could be. There’s also the question of how any form of containment, if required, would have an impact on the delivery sector and gig economy. Of course the impact of coronavirus will be felt more on a personal level than a business one. It’s hoped the measures already being taken will mitigate its impact but in the short term more pain could be heading the sector’s way. Make sure you have the measures in place to protect your business for the long term.

The headlines around hospitality staff shortages in a post-EU Britain are stark, not helped by the dumbfounding decision of our ill-informed home secretary around minimum salary levels for migrants.

There’s no doubt migrant workers need to be an integral part of our labour mix in hospitality but for now, and probably for a more sustainable long-term position, we should consider the challenges around how you engage British workers in the sector.

In the discussion about engaging more British talent it seems two topics are heard the loudest – wages and motivation – with some suggesting British staff won’t get their hands dirty.

There’s a credible and well-researched article to be written on the pay question, helping young people to progress and earn big within a growing, entrepreneurial sector famed for its meritocratic credentials. Today, however, I’m going to concentrate on the question of Brits’ motivation and willingness to engage in our sector – a subject I feel few are talking about.

 

To say Brits don’t want to work in our sector is wrong – they do and they are. Perhaps not enough of them but in my experience of running hospitality businesses outside London, I find local labour forms a much greater percentage of the workforce than businesses in the capital. One example is our own venture, I am Doner, which is based in the north of England and has a workforce that’s 93% British.

In my career I’ve lived in five countries and worked in more than 30 for hospitality businesses of all kinds. One common theme runs through almost all the more economically developed countries – labour shortage and a perceived unwillingness of locals to work in hospitality. Last week I was in Poland and Ukraine. In Poland I was told the challenge is Poles don’t want to work in hospitality, forcing firms to use Ukrainian labour, while in Ukraine I heard Ukrainians don’t want to work in hospitality and its sector is looking to other nationalities. This may seem odd to many of you as, if we look at the pre-Brexit mix of labour in UK hospitality, many businesses would have been heavily reliant on Polish team members. Of the 3.7 million EU citizens living in the UK in 2018, almost one million of them were Polish, the single largest nationality.

One answer to that can be seen in pay levels, with workers migrating for better pay and seeking a higher standard of living. However, there’s another major factor at play – motivation. In 2018 a UK study of 400 businesses and industry bodies published results claiming EEA migrants were “more motivated, more flexible and show a consistently strong work ethic”.

This shouldn’t be unexpected. Migration studies have suggested migrants show an increased level of motivation driven by the challenges required to succeed in a new country. Interestingly, other studies suggest migrant students are more motivated to learn, with a key factor cited as being “driven by ambitious parents”. There’s a natural link to a willingness to work in hospitality as a way of learning a language quickly as you are talking to people all day, every day.

From a personal perspective I’ve felt this additional need to succeed as a migrant (or expat as we like to say when referencing Brits outside the UK) but have also witnessed the differences in expat motivation when living in Australia, where I can assure you the whole population isn’t made up of the vivacious, outgoing types we traditionally see working with us in the UK.

Many businesses have become accustomed to managing teams that feature a significant proportion of migrants. In fact many of the recruiting managers and those people leading teams may have come through the ranks having started this way. On a practical level, it’s important to understand differences need to be considered regarding management style. By nature, local labour will have more links to the area and a larger number of commitments so a blanket approach to rotas might not wash.

When it comes to managing people who may not be as motivated as you hope, sometimes it’s not their choice but simply not knowing differently or better. I grew up in two of the UK’s poorest areas and know first-hand how hard it can be to get people to think differently and see the positives. This takes consistent positive messaging but also requires clear boundaries and coaching people to self-motivate. In my home town most people don’t dine out much as children and restaurants can be daunting places – I see this each time I visit. The idea of working in a restaurant may feel unreachable in the first place as, let’s face it, it requires confidence to stand on a restaurant floor or work in a busy kitchen. However, I’ve also seen how positive it is when someone finds that self-confidence and motivation. It takes extra work but can be worth it. Through my work as an ambassador at Only A Pavement Away, I’ve seen focusing more on an individual’s needs and supporting those needs can pay dividends, creating team members who are loyal and willing to stay for the long term.

 

Returning to the challenges created by Brexit and compounded by the home secretary this week, I hope there’s a rethink as potentially much broader and longer-term effects surround such decisions. I have the privilege of working with hospitality companies in many European countries and it struck me this week that I do so while speaking English. Many of the people I work with overseas have worked in the UK at some point, taking what they have learned from our incredibly professional and developed hospitality sector home with them to drive professionalism in their country. It would be a shame to see our importance as a global leader in the hospitality sector decline. Here’s to hoping we see a turnaround in the immigration decision but, for the meantime, this article may have spurred you to consider working with more local labour – where available.

I am staying in a hotel in Jesmond, Newcastle, and had to sign a disclaimer when I arrived on where I had travelled recently, which brought the crisis home. How are operators, and indeed suppliers and agencies, dealing with the potential impact of the coronavirus on their businesses? They have many potential scenarios to consider. 

Team members are likely to be concerned about their own health as well as the well-being of their family here and abroad. There are many unknowns that could cause worry and distress. We all know the feeling of helplessness that can come with illness, how long it can take to get back on our feet and how it can dent our self-confidence and self-belief over time.

I think many will also be concerned about the impact of being unable to travel to work or earn money for reasons outside their control. If schools are forced to close, childcare could be an issue for a great number of families. For those who depend on overtime, tips or bonuses to pay for basic living, this will be a very worrying time.

As employers it’s critical we keep our teams informed on how to prepare, prevent and potentially cope with the disease on a regular, almost daily basis – without causing panic. The World Health Organisation and the NHS publish daily guidelines but it’s also useful to understand what worries your team most regarding the virus and what would help them through the situation.

Just as importantly we need to advise teams what might happen financially and reassure them regarding insurance, pay and benefits if our business is hit by lost revenue. We don’t always know what goes on in the private lives of those we work with and not everyone will want to talk about it, but understanding, compassion and kindness to those suffering any sort of anxiety will be key in the next few weeks and months. 

The impact of the virus could be felt by many people financially, especially those in other industries who rely on overtime, tips or bonuses. They will be worried too. Spending on luxuries such as a meal out could be placed on the back-burner for a while until uncertainly around potential income is sorted. 

Many are likely to minimise all but vital travel, cancel attendance at large events and avoid public places. I hear one company in our sector has stopped all its employees travelling into London for work purposes. They will work from home more. Delivery could be a blessing to more customers than ever.

The enormous amount of media hype is difficult to ignore. Of course some customers will carry on doing what they do regardless but for others the virus will start to affect their daily lives. 

It doesn’t need saying – this is an extraordinarily challenging time for the supply chain. Relationships built over time with great suppliers (Reynolds was quoted to me yesterday as being exemplary in its handling of crisis) will pay dividends in helping operators see their way through this. The impact on supply, quality, pricing and margins is unknown – but flexibility will be key.

Every day I’m hearing events in pubs, bars and restaurants have been cancelled and we’ve just had to cancel our own pub-marketing workshop planned for later this month. Of course cancelling events may be an over-reaction, but it is understandable. 

There’s no easy answer to recovering lost covers – I wish there was. Teams need to be reassured life will resume, customers will come back and sales will return. It’s just a matter of time and work can be carried out now to prepare for that. 

When I posted about the virus earlier this week, one respondent wrote: “In today’s information age the hyperbole doing the rounds from desktop experts gets distorted with every telling to present a doomsday scenario. While most people are smart enough to see some semblance of fact, there’s always the ‘what if’ so people stop casual dates, discretionary travel, ad-hoc cinema-going and put some extra tinned goods, rice and toilet paper in the trolley. If you times that by the population, we have recessionary behaviour and painful P&L. Then businesses add in masks, viral sanitisers and individually packaged goods and stop sharing items because the ‘what if’ restarts the cycle. I think it’s right to be afraid. This is going to hurt the industry, if not particularly the population (statistically speaking).”

As international tourism declines rapidly, domestic tourism may increase – I hope so.

It has been almost two years since I left my role at CGA to join the team at CPL – I’m clearly a huge fan of three-letter acronyms beginning with C.

Even though I’m relatively experienced in all things hospitality, moving from research and insights to learning and technology has been a steep but enjoyable learning curve.

With this in mind the theme of this piece is meant to be learning so I can pay lip service to all the obvious things I’ve learned in the past 24 months. But, if I were you, I’d be cynical and a little bored of a summary of my operational findings. After all, you’ve probably been through the same experience of people, product and process yourself.

 

Instead, I want to focus on some of the broader challenges I have noted and what we should take from them as a sector. I would never claim these are new to everyone but they have stood out for me as areas of opportunity.

 

Our colleagues at CGA have shown as part of the business leader survey that availability, engagement and retention of staff remain key to business success and the biggest challenge the sector faces is the skills shortage – particularly for chef roles.

If that’s the case, why don’t the people charged with filling these needs have a more central and prominent role in boardrooms? Clearly, there are many businesses in which this isn’t the case and there are many people-focused operations teams but we’re missing a trick by not having HR experts at the top of more businesses.

Integration continues to be a challenge and a buzz term for businesses across any sector. It was one of the biggest frustrations, according to the latest CGA Business Leaders research, with 50% of senior operators frustrated at the pace of integration. I share the frustration but speaking as a supplier that integrates and has data flowing both ways with many other businesses in the sector, it’s a challenge as the breadth of demand and potential for collaboration is so vast it becomes a balancing act.

That said, it’s a challenge all suppliers should take on, not only to fulfil the demands of mutual clients but also to innovate and find efficiencies and operational insights through innovative features and services.

 

That leads nicely to my next point – the untapped potential of people data and the “single team member view”. I spoke on a conference panel last year about integration and suppliers working collaboratively. The challenge was that all conversation around integration is focused on consumer-facing technology and sales and marketing tools, which was (and still is) crucial for business and a vital link to understanding consumer behaviour and driving sales.

If our most significant challenges are focused on our team members and their development and retention within our businesses, why aren’t we doing more to understand and help them?

 

This is a crucial point to our vision as a business to work collaboratively and utilise the vast volume of data to make more of all team members’ key touch points. This ranges from onboarding to developing career paths and promotions with data – albeit not in isolation – supporting and encouraging relevant learning activities along the way and each tailored to the individual.

This only becomes possible if we start to look at our team members with the same interest and intrigue we place on our consumers. Do that and we unlock more value, for the business and individual alike.

My penultimate point relates to some of the themes touched on above in that they only become possible if we genuinely take training and development seriously as a benefit, not merely a cost. Clearly training needs to have a clear return on investment – something else we’re working on supporting – but as I heard a managing director of one of our clients say this week: “I’m less concerned with the ROI, I just want to show we care.” This is great to hear and, among all the incredible examples of development across the sector, I think it’s something we should hear more of.

 

With an increasing focus on what can be perceived as more compliance and not top-line driving training activity – if you take a cynical view – such as wellness and well-being, hospitality businesses have to be bold enough to invest the time and resources to give their team members this support. It can’t just fall to the individual to self develop, especially with pressures around living wage dilution – something we know is being monitored closely with regard to unpaid training.

Improved service, after all, is the number-one growth opportunity for business leaders according to the CGA research. Is there another way to unlock this without more training?

 

Finally, irrespective of the challenges this sector faces in the coming 12 months, there’s passion, focus and initiative to overcome them. Just look at the work of Beers and Peers as an example of talent and spirit to prove this isn’t an unskilled industry as our government may think. We should all support initiatives such as these to demonstrate the opportunities our industry provides – both as operators and suppliers. Perhaps I didn’t need the past two years to tell me that, but it has certainly confirmed it.