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Morning Briefing for pub, restaurant and food wervice operators

Fri 5th Jul 2024 - Friday Opinion
Subjects: The change election, the impact of Euro 2024 on UK hospitality – a closer look, a pub and a man back from the dead
Authors: Kate Nicholls, Mark Bentley, Phil Mellows

The change election by Kate Nicholls

It was dubbed the change election, and there has been quite a change. Whether you’re bleary-eyed after pulling an election all-nighter or digesting the results over your mid-morning coffee, it’s impossible not to recognise that this new Labour government, with a significant majority, represents a major shift for the country and hospitality. 
 
A new prime minister, with a large mandate, will begin appointing his cabinet and our relentless work campaigning on your behalf steps up a notch, once again, to ensure that we capitalise fully on the opportunities a fresh new government can bring.
 
Fortunately, we have been fostering a close relationship with the Labour Party for many years already. We’ve been having detailed policy discussions with Angela Rayner, Rachel Reeves and Jonathan Reynolds, all major figures in opposition and now set for leading roles in the cabinet. 
 
Just a few weeks ago, Sir Keir Starmer addressed our summer conference in a video message in which he recognised the importance of our sector as one that creates places where people want to live, work and invest. That recognition extended into policy commitments, with UKHospitality securing two key pledges in the Labour manifesto.
 
We were delighted to see a promise to replace the broken business rates system and reduce the burden on hospitality businesses, which pay three times their fair share of rates as a proportion of turnover. With a cliff-edge looming in April, when relief is set to end and rates due to increase, this needs to be addressed in the first 100 days. This can be done easily through the introduction of a permanently reduced multiplier for hospitality and tourism, at a rate of 30p in the pound. 
 
The second is the commitment to reform the apprenticeship levy. Introducing more flexibility, through the planned growth and skills levy, would transform the way we are able to invest in skills. Crucially, levy reform would free up funds to permanently rollout our skills pilot scheme, which we successfully ran with the Department for Work and Pensions and training partners, to help people currently out of work into jobs in hospitality.
 
We’ve seen Labour speak about hospitality as one of the key foundations of the everyday economy and now we need to see it deliver on these commitments – and quick. Because from the humble pub to luxury hotel; from school dinners to Michelin-starred dining; from mini golf to theme parks and everything in between, hospitality lies at the heart of our communities right, across the UK. 
 
We generate more than £140bn in turnover, raise £54bn in tax receipts – funding vital public services – and support more than 3.5 million jobs. Our value is in the life we bring to our high streets, the vital services we offer in rural villages and in the spaces we create where the lonely can come to find company, families gather to celebrate and friends come together for a catch-up.
 
That’s why it’s so important to back hospitality. With the right support, as a sector, we can grow by 6% each year for the next five years and create half a million new jobs. And with the economy showing signs of improvement and consumer confidence growing, that sector growth can help keep the country on the road to economic recovery.
 
But we need the right conditions to do that, and we’ve set out how the government can achieve this, in addition to our asks on rates and levy reform. Within the first 100 weeks, we need to see reduced employer national insurance contributions to help sector businesses with their staffing costs. To help drive net zero, green investment in the sector needs to be better supported, for example, through the introduction of investment credits. 
 
In this parliamentary term, planning reform needs to take place to allow the sector to invest, grow and regenerate our towns and cities. Too often, expansion plans are curtailed by arcane and arduous planning laws. Finally, there needs to be movement on VAT. We know the benefits a lower rate can deliver through increased demand, higher footfall and lower prices, and it would crucially make us competitive again with our European neighbours. 
 
And so, our work continues on your behalf. We look forward to hearing over the coming days confirmation of the new cabinet and we will be getting in front of all the key secretaries of state to impress upon them the importance of hospitality to the economy, our communities and the country. So, at the end of a change election, let’s hope the new government moves quickly to fulfil its promises to hospitality businesses and build that environment to help us grow. 
Kate Nicholls is chief executive of UKHospitality

The impact of Euro 2024 on UK hospitality – a closer look by Mark Bentley

Tomorrow (Saturday, 6 July) is all set to be a bumper sales day for pubs and bars, featuring international rugby, Wimbledon, Formula 1 and England’s Euro 2024 quarter-final versus Switzerland. There couldn’t be a much better sporting line-up to encourage people to visit pubs and bars, benefitting from the atmosphere and camaraderie that makes pubs such an unbeatable place when it comes to watching live sport.
 
Hospitality Data Insights (HDI) is tracking the performance of Euro 2024 using our card spending data, which tracks the spending of 10.2 million people day-by-day, venue-by-venue, across 160,000 individual UK hospitality venues. Our latest data covers sales up to Tuesday, 25 June, the day of England’s final group match against Slovenia. It’s been fascinating to see how the hospitality sector has performed during Euro 2024 compared with the weeks leading up to the tournament, with our analysis of the opening two weeks showing that pubs and bars are getting stronger and stronger as the tournament progresses.
 
In the opening week, delivery was the biggest winner, with its year-on-year sales growth outperforming its performance over the previous 12 weeks by 5.0 percentage points. Delivery has consistently been one of the best performing sectors of the UK hospitality market, so to step up its performance was an impressive feat. However, as we’ve progressed deeper into the tournament, pubs and bars have well and truly come into their own, with sales in like-for-like outlets returning to year-on-year growth and the uplifts getting bigger and bigger on England matchdays – from approximately 20% in their opening game to more than 40% for their final group game. 
 
Pubs and bars have seen a circa 4% improvement in their year-on-year performance during Euro 2024 compared with the previous 12 weeks, with the numbers looking even stronger than this when branded pub restaurants are excluded. Digging into the numbers, the importance of the home nations game is clear to see, with pubs and bars sector typically seeing 10-15% year-on-year growth on home nations matchdays, but 3-5% declines on “other” matchdays. Ultimately, it’s the home nations matches and those that really mean something that are the key trading days, so it’s critically important that England now kick-on and take full advantage of the opportunity they have from being on the favourable side of the draw.
 
Winning market share is a perennial challenge for businesses, and in the context of the UK hospitality sector, Euro 2024 has clearly provided a much-needed boost to pubs and bars, with their share up to 30.2% during the tournament versus 29.4% in the previous 12 weeks. However, it’s worth remembering that hospitality businesses are not just competing with other hospitality businesses when it comes to capturing share of consumers’ discretionary incomes. This point was brought home this week with a supermarket advert hitting the headlines for leading with: “It’s hard to see the screen in the pub. Stay in with two pizzas and four beers, now £5.” It’s long been the case that pubs need to deliver value for experience, and it’s days like Saturday when pubs absolutely come into their own and deliver an experience that can never be replicated at home.
 
Let’s hope England replicate the performance trend of pubs and bars so far, raising their game and rounding off a bumper “Super Saturday”. One thing’s for certain, you can’t beat the atmosphere and experience of being in a pub on days like this – the highs and lows, the banter, the excitement when a goal is scored and the shared experiences. Let’s get down to the pub and cheer England on. Pizza deals will still be available throughout the year, but occasions like this don’t come around very often!
Mark Bentley is business development director of HDI, provider of card spending insight and pricing data to the UK hospitality sector. He is a former category management controller at Molson Coors Beverage company and a qualified beer sommelier

A pub and a man back from the dead by Phil Mellows

The things people do for music. I’ve never been to Glastonbury, on account of a morbid fear of tents, but I watch it on the telly and marvel at the thousands of people there, living a few days out of time, and all for the music, most of it in time.
 
A week earlier, I was invited to a more modest afternoon affair at a local pub, the Greys in Brighton, to hear an old music man from the States. I suppose there were only a couple of dozen in the audience, but each of them was absorbed in the moment – a special moment, since this was the gig that nearly didn’t happen.
 
You’ve probably never heard of Bob Cheevers. Born in Memphis, Tennessee, his career began in the early days of rock and roll before taking him to the west coast, where he joined the singer-songwriter scene there. At one point, he shared a manager with Neil Young, but while Young went on to become a legendary star, Cheevers slipped into the background, still writing and playing and making a living somehow, but known only to enthusiasts of what later fell into the genre of Americana.
 
Then, two years ago, he contracted sepsis and found himself lying in a bed on the ninth floor of a hospital, contemplating jumping out of the window to bring a swift end to his suffering. But he had a dream to play one last tour, so he fought back, and there he was in front of me in the pub, just turned 80, straggling grey hair and beard, and a face that told of a hard life well lived.
 
His songs, with a bluesy feel, tell his stories – half of them true, he says, but without saying which half. One mentions the Greys, which he first played at 20 years ago when, like many artists who perform there, he fell in love with the place – its intimacy, its informality, the engagement with an attentive, knowledgeable audience.
 
Though a tiny venue, it was a must for his farewell tour, made possible by promoter Paul Adsett, a regular at the Greys. Over the years, he’s invited countless American acts over, putting them up in his home, and they all adore playing his local – which, like Cheevers, also nearly didn’t survive. 
 
In 2017, Ei Group, which owned it at the time, put it on the market. Regulars feared for its future and launched a campaign to buy it themselves. I offered my help as someone who knew a little about the trade and had contacts at the pub company. And, to be honest, I was also interested in understanding how community ownership worked at close quarters.
 
Save the Greys was impressively well-organised and enthusiastic, with talent and a balance of skills on board. It also had the support of groups such as the Plunkett Foundation and grant-awarding bodies. We still found it tough to raise enough cash for even a small pub, though. Simply having the “right to buy” is among the least of the demands those who want to secure the future of their local.
 
When it came to the crunch, in a dramatic final few hours, we were outbid by a mysterious pub operator from Northampton, some 130 miles away. 
 
Through a combination of luck and a little knowledge, I worked out it was the Hanna brothers, who ran the Lamplighter, a lovely local in the backstreets of the city. My hopeful guess was that the Greys would be safe in their hands.
 
And so it proved. I dodged a bullet there as had the Hannas not turned up, I might now be consumed with all the challenges of running a pub and making enough profit to keep it alive instead of scribbling a few lines about hospitality for an industry newsletter. It’s much easier to write about it than do it.
 
More importantly, the Greys has survived. As one campaigner at the Cheevers gig – suddenly struck by what seemed, six-and-a-half years ago, to be an unlikely outcome – blurted out to me: “It’s still here!”
 
And I think Save the Greys can claim to have played a part in its rescue, demonstrating to a potential buyer, better qualified to run a pub than us, that there were local people who cared about it enough that it could be a viable commercial proposition.
 
But pubs are more than businesses. Small, intimate venues like the Greys bring something to live music that Glastonbury, with all its fabulous theatre, could never provide. Something that added a deeply meaningful human moment to Cheevers’ life, and to all who were lucky enough to catch him on that last gig.
Phil Mellows is a freelance journalist

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