The most universal challenge for UK businesses, regardless of where they are located or the sector in which they are based, is that finding skilled staff is incredibly difficult. It’s not a new problem. Skills have been on the agenda for at least a generation, but in some ways, we are facing a unique employment crunch.

 

A complex mix of an ageing society, immigration policy, the end of free movement of people and the after-effects of the pandemic means that competition for a tight labour market is getting hotter, with layers of complication and expense in the system. The result is an economy struggling to move ahead.

 

So it’s no surprise that the newly installed Labour government has made the skills agenda a key element of its first 100 days. At least two of the government’s five missions rely on getting this right: creating the fastest growth in the G7 and breaking down the barriers to opportunity. Neither are realistic without an approach to skills that provides accessible pathways to training for the next generation workforce.

 

There’s some high politics in the fact the prime minister spoke alongside the secretary of state for education to announce the new Skills England this week – a body launched to bring together key partners to meet the skills needs of the next decade across the UK – because these missions are held centrally – this is a powerful, interventionist Downing Street.

 

But there’s a lot of practical policy here, too. Skills England will be formed from the bones of the Institute for Apprenticeships and Technical Education and has the responsibility for creating a new list of levy-funded training that matches the needs of employers. So far, so good.

 

In private conversation, the government has given a bit more detail. The aim is a mix of flexible and modular in-work training, functional education for core skills like English and maths, and pre-apprenticeship training to launch careers. Can that plan work? There are four exam questions that the hospitality industry can set it to achieve success.

 

First, to simplify the system. The job is to streamline thousands of qualifications to a number closer to 200 in the post-16 system with routes at levels 1 and 2 into entry level job roles for highly accessible industries such as hospitality, and with routes at level 3 and beyond enabling progression in a sector that has unique opportunities for social mobility. A complex system is a material barrier for employers to navigate around the day job, and just as importantly, for many young people who are finding their feet and trying to work out their futures.

 

Second, to make sure that the flexible approach allows people who are in work to keep developing their essential employment skills and management capabilities, and crucially, invest in technical skills across the breadth of job roles that hospitality offers.

 

Third, to make sure that communities can come together to choose the skills they need locally – employers, colleges, councils and others need mechanisms to identify what skills are needed for the local economy. Skills England can play a role to ensure that national employers work with the primary authority principle to avoid costly duplication.

 

Fourth is to make sure that the start of work or the beginning of careers is as simple as possible. In hospitality’s case, that means a universal entry standard that is portable, valued by employers and links to an apprenticeship as their career develops.

 

UKHospitality has been working with the Department for Work and Pensions, the Springboard charity and other stakeholders over the past year to design this universal entry standard “passport” to get people into work. This hospitality skills passport would also fit the bill for those just starting work as the pre-apprenticeship skills element of the new growth and skills levy, with apprenticeships as the direction of travel.

 

If the government gets these four exam questions right, it will have genuinely created nationwide entry points for the next generation workforce. 

Pareto is an Italian restaurant that has refined its menu so that it now only sells the best selling 20% of its dishes. It has completely abandoned the other 80% of options that made up the cumbersome lesser-selling long tail.

 

Actually, I’ve just made this up, and Pareto is, in fact, a principle that most people will know as the 80/20 rule. This states that roughly 80% of consequences come from 20% of causes. Within business management, this is often simply translated as 80% of sales coming from 20% of customers, but it applies in so many other examples too. 

 

So, what if a hospitality business was run on the basis of adhering to this principle wherever possible? Professor David Tyrrall, visiting professor at Staffordshire University, has investigated this business phenomenon in the brewing and pubs sector. He was instrumental in the introduction of small brewers’ relief (SBR) when he and colleague, professor Geoff Pugh, did some analysis for Gordon Brown and the treasury. SBR went on to fuel the craft beer revolution of the past 20 years. 

 

When Tyrrall first came across the principle, he was studying the oil industry, where he found that 20% of the stock being held accounted for 80% of the value and concluded that it would be sensible for a business to manage this valuable 20% much more carefully and ensure there were never any out-of-stocks in these lines. More recently, he has been looking at the 80/20 rule and its role in the hospitality sector, where it could be applicable to ingredients that are essential to the core best-selling drinks and dishes.

 

Recent work by Tyrrall for the Society of Independent Brewers and Associates found that a mere four or five of the hop varieties used in beer by its members in the UK account for 80% of production, so questions could be asked about the myriad other varieties that represent only 20% of output. Is it worth the effort for the minimal financial returns? 

 

Over recent years, brewers have found themselves occupied by the trend of cask beer sales falling while keg has been on the increase. Over this same period, there has also been a shift from beer in the off-trade moving from bottles to cans. But maybe the sector should not be too concerned about the way it splits, because cask and keg combined has consistently accounted for 80% of sales, while bottles and cans combined has generated the other 20%. Maybe the question they should be asking is whether it is worth the effort of dealing with packaged beer if it represents only 20% of sales and the margins are much lower than for draught.

 

Tyrrall also found that beer within the 3.5% to 4.5% ABV band accounted for approaching 80% of sales, so is it worth producing all those many other beers with strengths up and down the scale? Surely it is sensible to concentrate on the sweet spot. The same argument could be presented to pubs – why not just stock a range of these most appealing strength beers?

 

So, let’s turn back to consider our fake Italian restaurant, Pareto. At Wagamama, I’m reliably informed that the Katsu curry dish has historically accounted for as much as 40% of orders, and that the top handful of dishes has represented as much as 80% of sales, so what is the argument for continuing with the long tail of lesser-selling dishes on its menu? There would certainly be the opportunity for fewer chefs, reduced complexity in the prep, and reduction in potential waste from less popular dishes. So far, so good.

 

However, while a focus on the top 20% of an operation’s activities can clearly make sense, there are some obvious factors that would deter companies from pursuing such a Pareto-led strategy. What kind of business is comfortable stripping out innovation and relying solely on its existing proposition and the accompanying steady sales patterns? 

 

Also, abandoning the treadmill of constantly developing new products could lead to the view that too many cooks are literally focused on the same broth. Whole management levels could be done away with as cheaper and more junior staff are trained to make the same 20% of dishes. 

 

On the plus side, the business will be incredibly efficient and run in the most cost-effective manner, which is very valuable in tough economic times when operating costs and overheads are under the microscope. And those 20% of dishes will be consistently and excellently made in all outlets as all the effort goes into perfecting them. 

 

However, despite the efficiency gains that operating to the 80/20 principle can undoubtedly bring, the idea of a hospitality industry that is totally bereft of innovation and unwilling to take commercial risks is a tad worrying for a gastro-explorer such as myself. While I’m sufficiently curious to make a visit, I’m unlikely to be a regular visitor to the Pareto restaurant.

I recently had the most marvellous dinner debate with a few senior restaurant owners. There were five of us at the table, which allowed for a single, engaging conversation that covered a vast array of topics.

 

We started with discussions on working with private equity and ended up pondering how many more pizza concepts the UK could handle. The debate was fascinating, sometimes argumentative, but always informative. We all walked away feeling more energised and clearer on certain issues than we had been before.

 

This experience reminded me of the importance of spending time with industry peers to debate both pressing and not-so-pressing issues. It’s crucial to find ways to improve our future together, and I feel very lucky that my job allows me to talk to people frequently.

 

I find that I am given the opportunity to listen more often than most, which really is invaluable in an industry like ours. I get to hear and better understand different experiences of those around me. And, as someone who is both a supplier and an operator, I also hope that I can relate to challenges more easily than others. 

 

One of my reflections after the dinner was why the pub and restaurant industries seem so far apart. I don’t see them as fundamentally different. I often argue that my own village pub has a higher percentage of food sales (70%, for those interested) than the average restaurant. We serve less alcohol because someone is always driving.

 

I concluded, perhaps incorrectly, that the biggest difference between the two industries is scale and finance. The restaurant sector seems more focused on rapid scaling and has a higher level of ambition than the pub sector. Consequently, it needs more financing, with private equity often backing these businesses.

 

One might conclude that private equity has also fuelled this need for growth. To achieve a threefold return in five years, you have to grow quickly. As a result, the types of people and the necessities of the business model create very different landscapes.

I recently attended a business leaders forum for high-growth companies. Richard Harpin, who chaired the session, asked an intriguing question: who was an accidental business founder and who was a purposeful one? Who had wanted to do it since they were young, and who just stumbled into it?

I was fascinated to learn that about two-thirds had always wanted to do it. I was one of those who stumbled into it. There must be a different personality type at play here, but I’m not sure what it is, especially since he mentioned that the best leaders have low ego (not sure where I stand on that either!)

This leads to the question of how we define success. Oisin Rogers, founder of The Devonshire, defines success as having one amazing business. One of the worst questions people ask at conferences is how many sites you have. I hate that question, but I still ask it myself. Should we be asking how many sites you have and how many you want? Should we be asking how much money you make, or is that too personal? Should we be asking what success looks like for you and how you will get there? Or should we simply be asking how much you enjoy it?

One of the five attendees was an operations manager for a chain of restaurants. We spent a lot of time debating whether he wanted to go out on his own and what was stopping him. Friends of his had done well, and he really wanted to, but wasn’t quite brave enough – yet.

Maybe he will be like me and become an accidental business founder. And, like his friends, he might start in pubs, not restaurants. By the way, the consensus on private equity was clear: avoid it if you can. Sure, it presents incredible opportunities, but the relentless pursuit of growth isn’t for everyone. Many of us simply aren’t wired that way.

As for our thoughts on pizza, we agreed it has lasting appeal. It’s a versatile vehicle for a variety of flavours and has the distinct benefit of being challenging to replicate perfectly at home. So, gather your group of five, enjoy a hearty meal and, like me, emerge with renewed energy and passion.