My last article for Propel, published just two weeks ago, was titled “Putting covid in the rear-view mirror”. Well, that one aged well! So, now we have a new “variant of concern” dubbed Omicron. The very word sounds so similar to “ominous” that a conspiracy theorist might think that’s why it was chosen. The rational question is “should we be worried?” But of course, the BBC and much of the other mainstream media frame it as “how worried should we be?” Do we actually know, and what are the implications for the hospitality and licensed retail sectors of this new development?

I recall that the advent of the Delta variant, which replaced the Alpha variant as the dominant strain of covid, stoked similar fears and led the government to delay “Freedom Day” by a month until July. Between April and September this year we saw cases rise by 30% due to the advent of Delta, but deaths fall by nearly 80% as vaccines weakened the link between cases, hospitalisations, and deaths. Why would we think it will be any different with this new variant?

The World Health Organisation (WHO) seem increasingly convinced the Omicron variant is “super mild” and has not, so far, led to a jump in covid death rates anywhere in Southern Africa. Yesterday (Thursday, 2 December), the WHO called for countries to drop travel restrictions and end the mass hysteria, and instead be cautiously optimistic as reports coming out of South Africa suggest the Omicron variant is no more lethal than the Delta one, which it is likely to out-compete and replace. Most patients merely experience a severe headache, nausea, dizziness, and a high pulse rate. But a note of caution here: South Africa has a young population, and covid tends to be less severe in the younger demographic.

The Omicron variant was discovered by Dr Angelique Coetzee, chair of the South African Medical Association, and she called the response from many European countries, including the UK, as “just a hype”. South Africa’s health minister, Dr Joe Phaahla, added: “Our clinicians have not witnessed severe illness. Part of it may be because the majority of those infected are young people.” The WHO has urged countries across the world not to impose flight bans on southern African nations due to concerns over Omicron. Dr Catherine Smallwood, senior emergency officer at the WHO’s regional office for Europe, said: “These types of interventions are not sustainable.”

So, why are governments around the world reacting with such alarm and slamming the brakes on economic recovery by reintroducing restrictions? I have to say, the UK government’s restrictions have been largely tokenistic – extending the red list of countries on the fly list and reintroducing mask-wearing on public transport and in shops. Numerous supermarkets have made it clear they won’t be enforcing this requirement – citing abuse and violence against staff when they have done so in the past. But pubs, bars, nightclubs and restaurants have no such leeway because premises’ licences will be at risk if they refuse to enforce mask mandates. So far, this restriction has not been reintroduced into hospitality settings, and it would be a disaster if it were.

But the impact of the reintroduction of restrictions, along with alarm about the possibility of the Omicron variant escaping vaccine efficacy, has a knock-on effect as “Project Fear” kicks-in across the population. The cancellation of bookings for office parties with pubs, bars and restaurants are damaging the prospect of Christmas assisting the recovery of our sector from the pandemic. In schools, we see the cancellation of nativity plays and the reintroduction of mask wearing. All this adds to the chorus of voices from the shroud-waving zealots of public health calling for the immediate introduction of “Plan B” – amid warnings that even that may not be severe enough.

I understand the political pressure on our government to act – or face yet more accusations from the opposition about doing “too little, too late.” But viruses mutate, and we will never know the implications of each new mutation immediately. If we react every time by assuming the worst and reintroducing restrictions, then we will find ourselves trapped in a never-ending stop-go cycle that will generate huge anxiety and economic uncertainty. This will prove vastly damaging for investment and jobs throughout our sector and beyond.

I still think it is time to put covid in the rear-view mirror. We may have to wait a couple of weeks before we know the impact of Omicron on case numbers, vaccine-escape, and serious illness, but I believe cautious optimism is justified. The government must not give in to a media-led moral panic, but hold fast to their present course of mass vaccination and balancing the need for protecting against covid with the needs of the economy. We simply cannot afford another lockdown and another money-printing spree. The inflationary effects of the last one are only now beginning to feed through. The government needs to hold its nerve and reassert the principle that advisors are there to advise, but ministers must decide.

“There we were, now here we are, all this confusion, nothing’s the same to me.” Never lauded as a lyricist, Noel Gallagher didn’t do a bad job of distilling the emotion of the then nascent career of his band, Oasis, in one of his first songs, Columbia. I was reminded of these words at Propel’s Multi-Club Conference last month. Taking part in an end-of-day panel session, Terry Harrison, chief executive of Thai chain Busaba, pointed out: “It’s quite interesting being an operator and your problem is not sales, that is a weird situation to be in.” That situation has changed again. 

Over the past couple of months, the majority of businesses have stepped forward to say how well trading has gone since the sector reopened. There may have been a cooling off period a few weeks back, perhaps in line with further “Plan B” talk from the government, but it was looking towards the Christmas period with cautious optimism. The shorthand before last weekend was the lack of big corporate bookings was being replaced in part by smaller groups going out more and increasing spend. For the first time in a long time, the sector was bullish. Many operators would have had good cause to be so, but I expect some were still in denial, looking for the festive season to paper over cracks that are too wide and deep for them to admit. 

And that fear is rising again. The sector has been wanting to look ahead, but there has always been a sense of looking over its shoulder for anything that might harm the fragile nature of the recovery. News of a new variant, coupled with an address to the nation from the prime minister and national media speculation, sent a chill through the sector. Last weekend, with just three cases of the new variant present in the UK, Boris Johnson set new restrictions on travel, isolation for Omicron cases and compulsory face masks in shops and on public transport. A green light was given for hysteria to ensue, without any evidence yet the new variant would pose any serious threat. Mixed government messaging, topped by Jennies Harries, the head of the UK Health Security Agency, suggesting “being careful, not socialising when we don’t particularly need to”, sadly felt like an echo of Johnson’s call for the public to avoid pubs and restaurants last March. The rug was, if not immediately pulled from under the sector, given a firm tug. Unsurprisingly a sharp rise in cancellations has followed, much to the anger, dismay and frustration of everyone across the industry.

We have now had almost a week of mixed messages about whether people should socialise or not, cancel parties or not and the hospitality sector, alongside the travel industry, is on the front-line feeling the effects of that indecision. The fear is the damage is already done, and now can’t be clawed back. You could argue it is a difficult situation for the government, but we have been through this before with Delta and the previous variants so you would have thought it would be a little bit more prepared for what may or may not happen in terms of scenarios and planning. As Patrick Dardis, Young’s chief executive, opined earlier this week, what happened to “following the science”? Sector representatives have stepped into the breach to plead for some calm and reasoning across the national media. And let’s hope it plugs some of the damage caused and further cancellations can be brought back to being a trickle. An alternative view put forward by chef Gary Usher is to now leave it, aware that by highlighting the situation it may cause further harm. 

We have been here before of course, but how many will have a robust balance sheet to survive even a slightly watered-down festive season. Let alone the mental fortitude. As Tim Martin, founder of JD Wetherspoon, warned last month: “The danger is that once you have a precedent for shutting pubs for medical reasons, how are you sure that won’t happen again. It will give people pause on whether you start your own business, or whether you invest.” When restrictions were lifted earlier this year, Rekom UK chief executive Peter Marks suggested consumers would fit into three camps – those that would go out, celebrate their freedom, and continue to do so; those that would be more tentative; and those that would not come out at all. It is hoped the consumers in the first camp will not flinch in the coming weeks – even doubling down on going out if they believe further post-Christmas restrictions are on the cards. The key will be how many of those that were tentative in the first place continue to feel safe enough to stay out. For many the cork is already out of the bottle when it comes to their personal freedom, and even England's chief medical officer Chris Whitty has expressed concerns whether it can be put back in and the public would again countenance further restrictions, let alone another, God forbid, lockdown. Many operators will have factored in bumps in the road, the problem is, with uncertainty now seeping in, none will know how big this bump could be.

And it is not like the sector hasn’t got other things to worry about. In a nod to Monty Python’s “what have the Romans ever done for us” sketch, one operator said: “I am fairly optimistic on what is happening, apart from issues around labour, inflation, the supply chain…” Speaking on the same panel as Harrison, serial sector investor Luke Johnson said the two biggest challenges are labour – “availability, skill levels, churn and rising wages” – and general inflation. Matt Snell, chief executive at Gusto, added: “Trading is good, but general inflation, whether that is around commoditised products or the labour market, is worrying. Those inflationary costs are putting pressure on us, and I think that will continue to impact the industry in the new year. Two years ago, we talked about a shortage of Perspex screens. This year it was gas for outside heaters, next year it could be everything!”

The fight for talent has become ferocious too. As Snell points out: “You cannot pull the rug on 30% of the labour market for an industry and expect it to not buckle under that. As a business, we are leaving thousands and thousands of pounds on the table every single week, whether that be through capping bookings, stopping walk-ins or closing restaurants. That is something we wouldn’t have contemplated two years ago. We are finding it is in the suburbs where it is particularly hard to recruit, especially back-of-house. That skilled labour market is particularly painful, and what it is creating is desperation, so operators are paying more and more, and therefore there is a fight for talent out there. Unless there is some help coming, I don’t know where that ends.” Phil Urban, chief executive of Mitchells & Butlers, told me last week the company would back itself to mitigate cost increases, but the difference in its current financial year would be utility costs. And while many operators have returned to the expansion trail, how will they balance mitigating these costs with finding capex for new sites and refurbishing existing estates? 

As The Restaurant Group chief executive Andy Hornby points out: “Consumers want to be in environments where they are having fun socialising again, and that place has been looked after.” Hornby believes the sector will face a fundamental shift next April, and this, in turn, will impact how companies invest in their estates. He said: “From 1 April the last bit of VAT support goes, the rent moratorium ends, and most will have to increase their wages when the net living wage changes. That is going to be a pretty fundamental shift for the whole sector, so you have to put your capex where you are most sure it is going to benefit from.” Hornby also warned cost pressures from the supply chain next year could be “very intense”, but that it will be “more of a financial issue rather than getting hold of the product”.

On top of this is the constant scramble to get supplies to make sure demand is met. More than one operator I have spoken to recently has talked about having to go to a third or fourth option when it comes to getting supplies ready for the next few weeks. After 20 months in the trenches, the sector is battle hardened, but the fight against exhaustion continues, whether that is your own, your management teams’ or those on the front-lines. The words might and could are now beginning to dominate conversations/reports around possible avenues the government may need to go down this winter or what the new variant or rising cases could lead to. Thankfully hospitality has not been included so far, and the government has said we will know more in three weeks. But with speculation already rife, it already feels like this will be a very long three weeks.

It is the last thing a fragile industry needs or deserves. A lot is riding on trading momentum continuing up to and through the festive season, before six months that could bring what will hopefully be the final phase in what I am sure we will look back on as the “great reset” or perhaps the more sombre “great reckoning” of the sector. As Luke Johnson pointed out: “There are big opportunities out there, the consumer has £200bn to spend, which they haven’t spent on holidays and what have you. Staycationing is a more pronounced thing than it was, and demand is strong because people want to get out and celebrate again.” Here’s hoping that comes to pass. The fear is the government’s hand will start moving further toward the handbrake and in doing so consumer confidence will fall even more. Perhaps this will blow over, and the media hype around this new variant will subside as quickly as it has been whipped up. Perhaps if “Plan B” has to be brought in, it will be left until January, a month, if it had to, the sector would give up to save the rest of the year. Whether it would get any further government support is another question entirely. But here we are again, in limbo, hoping for the best, fearing for the worst. I guess, as always, we will just have to grit our teeth and roll with it.

The last few days, on top of the last 20 months, have again highlighted the fragility of the UK’s hospitality sector. News of yet another new variant has sent another chill through the industry, one that was doing a good job of getting back on its feet. However, if nothing else, the pandemic has emphasised the resilience of the sector and its ability to evolve and innovate, and I am confident operators will rise to these current challenges with the same determination they have shown before. 

It is in this light that I viewed the latest Propel Multi-Site Database, which we are proud to be associated with. It highlights the continued vibrancy of the market and the companies that are shining examples of the sector’s resilience. We can see from the database that the key trends that were present pre-pandemic have accelerated, while the need for businesses to be built and developed on strong foundations has never been more prevalent. It has also highlighted that with the right offer and support, growth opportunities remain. 

This latest database contained 54 new companies, bringing the total number of businesses listed up to 2,206. The 369 sites run by those 54 new additions means the entire database has reached a whopping 61,745 sites. What we find in those thousands of businesses is several key trends, with numerous companies positioned in the experiential, sustainability and vegan camps. We expect these trends to continue into 2022, especially as they increasingly become part of mainstream consumers’ repertoire.

Over the course of the last 20 months, we have seen the likes of Roxy Leisure, Boom Battle Bar, Lane7, Flight Club and Puttshack increase their presence across the UK. We have also seen new experiential concepts such as the indoor virtual clay pigeon shooting experience Clays and the virtual cricket format Sixes enter the market. With consumers craving more social interaction, reconnecting with friends and work colleagues after months of being locked down, this part of the market is expected to boom next year. More new entries are expected – our client London bar group Barworks recently announced it had partnered with “healthy urban social sport concept” Happy Padel with the aim of securing its debut UK site. 

When it comes to sustainability, the sector is aware that it needs to keep pace with changing government regulation, but also with public expectation. Thankfully, the sector had already started on its own sustainability journey pre-pandemic and is ready, despite the continuing challenges facing it, to step up the pace in this area. We have been working with chef Chantelle Nicholson, who will open Apricity – a new restaurant with sustainability at its core – in Mayfair’s Duke Street next year. Well-known for championing veg-forward sustainable cooking, Nicholson’s approach at Apricity will be no different. She and head chef Eve Seemann have created a menu centred around hyper-seasonal, sustainable produce from small-scale farmers and locally foraged ingredients, with a zero-waste approach to cooking. This approach is fast becoming the expected norm, especially for future generations of consumers. 

The focus on sustainability has gone hand-in-hand with the growth of plant-based concepts, from Neat Burger to Clean Kitchen Club and another of our clients, Stem & Glory. All three have recently raised funds to back their further expansion, highlighting a clear demand from consumers for delicious, sustainable protein alternatives that fit easily into their modern lifestyles. In October, vegan concept Stem & Glory secured its third site, at London’s Broadgate, with a view to opening next April. It will be a second site in the capital for the plant-based business following the opening of its Barts Square restaurant in 2019, made possible by £600,000 in crowdfunding. The brand, which has a zero-carbon philosophy, now has plans to expand into other major cities into the UK and beyond.

Whether it’s a more established business like Barworks, new entrants like Clays or fledgling concepts like Stem & Glory, all need to work off a strong foundation. The life of a business founder can be very lonely, and none would have previously faced the challenges the covid crisis has thrown up, or continues to do so. Embracing new systems, more efficient ways of working and the ability to delegate while being in the eye of the storm is a challenge in itself. The key is not to believe all this needs to be faced alone – whether that’s by talking to peers, or experts like us, about ways to better navigate through starting a new business or keeping the momentum behind an existing one. The stronger the starting foundations, the better chance of success. 

Some years ago, the organisation of a birthday drink at The Lamb pub in Lamb’s Conduit Street in London for a group of around ten friends was a carefree process, simply involving me telling them to turn up at the allotted time. I’ve a feeling that replicating the event today would be less easy-going and require me to book some tables.

This is exactly what most people seemed to have done on an early evening visit to The Lamb on a recent Saturday. One group secured two tables, even though half of the party had not turned up one hour into the booking, and we asked to ‘borrow’ part of the table until their late friends eventually (maybe) put in an appearance. The impression was that they had over-booked just in case.

My assumption had been that a quick drop into the pub before dinner at the nearby Noble Rot would be no problem, because even if the place was busy, a table would be freed up at some point and we’d make a grab for it – as you do. This was not going to be the case, because we found each departing party was only leaving to be usurped by an incoming booked group on that particular table.

It’s clear that the sensible ones on this occasion had the foresight to book, which I understand, but in a wet-led pub where very little food is being served it takes away the relaxed drop-in characteristic that is a key differentiator between pubs and restaurants. Many pubs in London are becoming almost like restaurants in requiring a booking, otherwise the chances of getting a table have become severely diminished.

On one late afternoon visit to the Cask Pub & Kitchen in Pimlico I was met with an empty pub and a card on each table indicating the time the tables were booked. Some of these were two hours away, so no problem for me on this occasion, but there would, in due course, be the same table-hopping as encountered at The Lamb. This scenario is being played out at many pubs.

The first-come, first-seated/served element is being removed from the pub, and there is a great risk because more people will get dragged into booking tables just in case they make a visit to a venue. Multiple bookings at various pubs are clearly the way to go as this will enable drinkers to secure themselves a table however their evening pans out, and thereby cover all eventualities.

It won’t take much for pubs to look like train carriages on the main line services, where booked tickets automatically come with a free reservation. Many people assign little value to their booked seat and instead sit in a preferable spot on the train, and many people will have taken another train entirely.

While such a laissez-faire approach to reserved seats on trains is not a particular problem, this freewheeling approach to reservations presents a massive headache for the restaurant industry. It continues to face issues with no-shows, people booking multiple venues and other thoughtless behaviour. Research from Zonal and CGA found the hospitality industry is losing an incredible £17.6bn per year from no-shows. As many as 14% of people admitted they had not turned up for their reservation.

Clearly the financial downsides for restaurants having no-shows is markedly more acute than for pubs, but I’d still argue that the move towards boozers filled with booked tables will ultimately lead to growing numbers of people feeling that the serendipitous dropping into the pub is no longer a good idea, and the once-valuable walk-in drinker will be a thing of the past for pub operators.

Yes, I fully understand that much of the table booking activity is down to policies introduced because of covid-19, and this had been a sensible move when track and trace was in place. But today, those pubs that are predominantly wet-led I’d suggest need to tread carefully with their table booking procedures. It just might be alienating more customers, like me, than it is benefiting.