“The market is going to continue to provide windows and opportunities for quality companies to get out,” said Seth Rubin, head of equity capital markets at Stifel. “I don’t think any one deal or one data point is going to open the floodgates, but a lot of issuers are taking a much more constructive and proactive view towards the public market, whether that’s for later this year or 2024.”

Sadly, Rubin was not talking about the UK market, but what is now appearing to be a more bullish investor market in the US, including for restaurant companies. The catalyst has been the recent initial public offering (IPO) of the Cava Group. The circa 235-strong business, which is seen as the Mediterranean version of Chipotle, went public in the US last month and currently has a market cap of circa $4.24bn (£3.32bn).

More restaurant businesses in the US are now expected to follow, including Panera Bread Co and Fogo de Chao. The US market for IPOs looks like it’s finally coming back to life after 18 months of deathly quiet. There are some caveats. Cava is yet to make a profit, and some have pointed out the group was priced to grow faster than the aforementioned Chipotle did in its first decade of trading. But the IPO brought attention back to the restaurant industry across the pond – positive attention at that. 

You can understand why leaders of listed sector companies over here may be looking wistfully across at what is happening in the US. When was the last time investors over here were bullish about consumer-facing stocks, let alone hospitality ones? Some of the UK hospitality sectors’ biggest success stories are currently faced with depressed share prices. The investor seems determined to keep The Restaurant Group (TRG) down, despite owning arguably this generation’s best eating-out brand in Wagamama.

It is almost like TRG is still being penalised for buying it, despite doing a good job of continuing the high standards that brand had set. Next week, Loungers will announce its preliminary results for the year ended 16 April 2023. Going on past performance, we can expect opening targets (25-plus this year) to be matched and like-for-like sales to be market leading. From 222.5p in March, its share price finds itself currently around the 185p mark. The business IPO-ed four years ago at £2 a share and is now 85% bigger.

Now, this isn’t me burying my head in the sand, as I’m well aware of the challenges the sector is facing, has faced and could be about to face. But it seems that we (and investors) may have forgotten that in among the maelstrom, some sector businesses are actually doing well. It may be harder work, and it may not be translating all the way through to the bottom line, but many have learned how to operate in this volatile environment and are not just surviving.

After many years of seeing headlines around the death of the British pub, we are now faced with increasing bylines and articles writing off the casual dining sector. It is not dying – it is changing, as it always must – and those that haven’t, or can’t, will invariably fall by the wayside. If anything, the government support over the past few years has kept many going longer. The problem, it seems, is that the majority of the investment community has written off the whole sector just because of the failure of a few tired brands and certain locations. 

As has been the case over the past few years, there is a sense that a forward-thinking investment firm with a long-term view could be making hay and acquiring some of the best businesses in the sector that previously would be out of reach. A closer look at the sector would also show that innovation continues at a pace and that there remains a number of businesses still investing in new sites and talent – and not just in the quick service restaurant/franchise categories.

Mission Mars, Pho, Heartwood Inns (White Brasserie), Pizza Pilgrims, Inception Group, Mowgli, Giggling Squid – all investing, growing and remaining optimistic about the future. Yes, it remains tough, and yes, there is no wriggle room around the standards required just to stand still. But let’s not forget how good the sector is. If we don’t beat the drum for it, no one else will. It has been stunned, but it is far from dead.

Returning to Florence recently for a short break with my post-GCSE daughter involved a much-anticipated revisit to Il Santo Bevitore, where we had previously dined in 2016. It seems perennially rammed from the moment its doors swing open at 7.30pm, and although many of the diners seem to be tourists, the food more than sufficiently stacks up to warrant a meal in its welcoming candlelit interior.

 

What I remember most from my first visit was my main course of octopus, which I still reference as one of my all-time favourite dishes to the ongoing disinterest of my family. But on returning to the restaurant, I think my recollections of the octopus had probably been burnished by the real stand-out aspect of the restaurant – its exemplary level of service. For a very busy venue, there is a comforting feeling that the team are on top of everything. There were, understandably, some slight delays in the flow of the service, but I felt fully relaxed and confident that nothing would go amiss.

 

The next time I’m in Florence, I’ll be back again to Il Sante Bevitore, not for the octopus or any other dish but for the quality of the service. When all factors are considered, it is this people factor that is the key ingredient that prompts return visits to hospitality businesses of all descriptions. It’s what makes you become a regular, however irregular that might be – every five-plus years for me and Il Santo Bevitore.

 

The desire to constantly visit new places has meant I’ve rarely become a regular of any restaurants or bars, but there have been standouts I’ve often gone to reasonably regularly. Often, it has been because I’ve wanted to support them and chew the fat with the team rather than necessarily having the need for another cappuccino or the thirst of a pint of beer.

 

This was the case with one particular local coffee bar – among the myriad options in my part of town – that always drew me in because of its owner. I cannot even remember the name of the place because my children called him “the Italian man”, and so the conversation would go: “Let’s go to the Italian man for a coffee and some slices of black pepper Pecarino.”   

 

I’d sometimes visit with a view to reading my newspaper or some work papers but would invariably be dragged into the conversation by “the Italian man” (don’t ask me his name). This seemed the case with pretty much every other visitor too – we were all attracted to the charismatic front man. Sadly, his front-of-house expertise did not extend to the back-of-house management requirements, and the shutters sadly came down. We have all become the diaspora of the Italian man, now spread among many inferior coffee bars.

 

Another regular venue over the past five years has been the Great Northern Railway Tavern, which has had one of the best beer selections in the country. It was the latest imports from the US or some rare cask from the latest hip craft brewery that frequently sucked me in, or so I thought. But now, I’m not so sure. With a change of landlady and supporting team, I’m coming around to thinking that it was the people and not the beer that was the element that drew me in at times when I wasn’t in the least bit thirsty. I’ve not been in for a while.

 

Developing a rich people culture across a large hospitality business is tough, but if it can be achieved, then the results can be valuable indeed. I recall a conversation with the Dishoom founders some years back when they recalled a sticky early period when things were misfiring. They deployed a strategy wholly focused on their employees, with the theory that if they gave them everything they needed and were happy in their roles, then this would transfer on to the customers and all the other (financial) metrics would fall into place. It worked, and it is not just the iconic bacon naan rolls that keep people returning to the queues outside the doors of the growing number of Dishoom restaurants.

 

Bill’s looks to be taking a leaf out of the Dishoom playbook with its recent application of non-financial goals on the business. It has had its difficulties over recent years, and to address this, Tom James, managing director of Bill’s, says for the first time in his 28 years in the industry, he ditched the use of economic metrics and instead set goals based on what he calls the fundaments of hospitality. This involves ensuring every interaction between the team and guests, suppliers and colleagues contributes to an ultimately happy experience. Needless to say, this has helped the company surpass all financial expectations and achieve its best ever net promoter score and mystery guest results.

 

It’s hardly rocket science to suggest that it’s the people that make the difference in hospitality, but maybe during these times when ingredient costs, wages, rentals, business rates and other economic imperatives have taken over the narrative, it might be a good idea to put the spotlight back on people.

We’ve come a long way from Kaliber. The announcement from Guinness this week that it’s going to spend €25m on quadrupling production capacity for its 0.0% stout is yet another sign that this time around, low and no-alcohol drinks are a category that every licensed operator should be taking seriously.

KAM Media’s recent report on the customer perspective, put together in conjunction with alcohol-free lager Lucky Saint, provided more evidence that “low and no” should no longer be seen as a distress purchase for drivers and pregnant women, nor as a niche product for people who don’t drink. It’s moving into the mainstream as consumers of all ages look to cut back on the booze.

Another new report on the category, from Euromonitor, announces “a new era of mindful drinking, sober curiosity and dry venues and events”. 

This is happening not just thanks to deeper social trends towards leading healthier lifestyles, but because improved production technology means these drinks taste better than they have before and, crucially for the licensed trade, can stand up as a proper drink alongside alcoholic beer, wine and spirits.

And it’s also true that global brewers have identified “low and no” as a way of boosting their profits in a beer market in long-term decline. Which has thrown certain sections of the public health community into something of a quandary. They should, of course, be welcoming the fact that “low and no” is becoming a real alternative to alcohol – and many of them do.

There are some, though, that smell a rat, arguing that the big breweries, by introducing non-alcoholic variants of their main brands, are surreptitiously circumventing the restrictions on marketing drink. It’s asserted their ulterior motive in spending tens of millions on “low and no” beers is to lure young people into the lair of demon alcohol.

You’ll hear talk of “normalisation”, the prospect that such products could be made available in every setting so we fail to notice that drink is “no ordinary commodity”. There have been complaints that banners advertising Guinness 0.0% have appeared in full view of our corruptible youth, introducing them to a brand they would otherwise be blissfully ignorant about.

As early as 2019, Habib Kadiri, research and information officer at the Institute of Alcohol Studies (IAS), wrote that we “risk slipping into a marketing environment so toxic that even an alcohol-free childhood is not free from the influence of alcohol”. The IAS is at the extreme of the argument, of course. More moderate voices, though, still worry that marketing an alcohol-free variant will incidentally promote the alcoholic brand.

“Low and no” beers are at a critical moment, on the verge, you feel, of breaking into full acceptance. The KAM Media report suggests there is still a stigma attaching to them consumers, and a big-name brand could help to reassure them it’s okay not to drink full strength all the time.

Also key to the future of this market is getting them on draught, making them more like proper beer that will sit comfortably in a round. Most pub and bar operators are still waiting for some sort of critical sales mass before they commit a tap, and there are quality concerns to be satisfied but, acknowledging the progress made by Lucky Saint in this, it’s the major brewers that are most likely to make the difference.

If that comes off, the rewards for the brewing industry lie in the profits that can be made from “low and no” beer. Once the investment has been made in research and development, equipment and marketing, there is huge potential. That’s why the big brewers are principally interested in selling “low and no” beer for their own sake, not for a possible impact on full-strength brands.

We must weigh that opportunity against any risk to children, of course, but that risk seems vanishingly small. Teenagers are increasingly shunning alcohol. A study published in Drug & Alcohol Review last week set out to better understand exactly how that’s happening by interviewing 12 to 19-year-olds in England about their drinking and comparing it with an older cohort.

Thanks in part to off-trade campaigns against under-age purchasing, barely any of the teenagers bought their own alcohol to drink in the park, as used to be the case. Instead, they drank within a supervised family setting, “seeing this as positive and normative” in contrast to the “morally suspect” habits of the previous generation.

It suggests young people are acutely conscious of what they do and why they do it, and unlikely to be gulled into bad drinking behaviours by an advert for a 0.0% beer.