The Arena Savoy Lecture is the jewel in the crown of the foodservice networking calendar, so as the leading foodservice agency, we were of course there in force. We were joined by our lovely clients from McCormick Flavour Solutions, official sponsors of the event, with their French’s Mustard and Frank’s Red Hot Sauces. The evening kicked-off with networking and bubbles (but of course) and the first talk of the evening, as Kate Nicholls, CEO of newly formed UKHospitality took to the stage to share what the merger of BHA and ALMR means for the industry. In a nutshell, the new trade body aims to ensure that the hospitality industry has a united and singular voice, which when you consider that the sector employs £2.9million people, accounts for 10% of UK employment, 6% of business and 5% of GDP, not to mention £130bn contribution to the economy (more than fashion and all the creative industries combined) and £40bn contribution to tax receipts, equal to the entire defence budget or the Brexit divorce bill, is a rather large voice indeed!
Kate made the point that to date, having different trade bodies had diluted our voice with the Government, who seem to have ‘heard but not listened’ to what is a hugely important sector. This has meant that it has not received the recognition or support it needs and deserves. She intends to change that. By matching UKHospitlaity’s agenda to the Government’s and demonstrating how the sector can help them achieve their goals she hopes to bring to bear her extensive lobbying experience to start working closer with Government to bring about positive change for the industry. By becoming more than the sum of its parts, Kate sees UKHospitality as a real force for change with its core objective to promote the sector. Along with this core driver, she sees the role of this new organisation to partner with other stakeholders and charities like Springboard, BBPA, People 1st and Tourism Alliance, to bring the industry closer and also sees a crucial role to help eliminate any unnecessary costs of doing business, helping to free up the industry to work more efficiently and deliver for the country’s economy. She also stressed the importance of working with the government to ensure the security of food supply post-Brexit, ensuring the cost of employment is proportionate and we have the labour pool we need, which will be a challenge with current demographics and Brexit. She acknowledges that political work should also be balanced with supporting member operators, by helping them share best practise and offering practical support, as the majority of the sector, circa 80% – 90% are SMEs. Her 2-3 year plan will, as she puts it, ensure Hospitality has a ‘grown up’ trade body which offers a single voice to deliver cut-through that will make a difference to this great sector.
After hearing Kate’s inspirational words it was time for more networking and a cheeky Frank’s Red Hot Bloody Mary prepared by Chris Cannon’s own fair hand. With friends and contacts aplenty the room was buzzing with chatter and the Bloody Mary’s went down a storm. No sooner had we drained our glasses than it was time to go back for round two; a keynote from Simon Townsend, CEO of Ei Group Plc and a fabulous three course dinner from the team at The Savoy.
Simon took to the stage to talk us through the dramatic changes that have been going on at Ei Group (previously known as Enterprise Inns). With 33 years in hospitality under his belt he knows a thing or two about the industry, having been a pub manager and in wine and spirit and free-trade sales until he joined the company in 1998. At that point they had 1,100 pubs and then went on a large scale acquisitions program taking on Whitbread, Courage and Grand Met sites, until in 2006 when he became COO they had 7,500 pubs on long leases and a £3.5bn debt bill. Then came 2007 and the smoking ban, followed by 2008’s financial crisis, recession and consolidation. In 2013 they were at a place where they had a platform for growth and were starting to deliver like-for-like growth (which hadn’t been the case since 2007). 2015 saw a bold new strategy to reimagine their business model which was felt to be too inflexible with their traditional leased and tenanted set-up. They had learnt a lot from the failures of pubs in their estate and moved to drive forward using a solid base of insight, demographic and location profiling and defined retail offers. They rewrote the rule book and created a business with four different models within it: Managed Houses, Managed Investment Joint Ventures, Commercial Property (free of tie or other business uses) and Tenanted and Leased Pubs. For every site they consider which route will be best before undertaking an internal competitive process where the different models pitch for the site.
So far it seems to be working and although the latest figures aren’t out as yet, they are on track to deliver: 350 commercial properties, 10/12 joint venture partners, like for like growth, a Cap Ex spend of £80m and £100m paid in debt in the next three years. The change has not be easy however, as it created huge discomfort in the business as all change does. It required massive modifications to the way they operate and their processes and systems across everything from procurement, communications and health and safety to human resources. There were of course mistakes along the way and lessons learnt, as Simon puts it “our business saw culture eating strategy for breakfast”. However, they worked hard to ensure their values were crystallised into real KPIs for each team and bonused on delivering against these to ensure everyone kept on-track. By communicating it, resourcing it, facilitating it and executing it – they made it happen. Simon’s dilemma – a CEO is supposed to ensure things are kept simple, but the direction Ei went in was far from simple. That said, it seems to be working and has, in his opinion, created a better business. As for the kind of suppliers they value, its all about category insight that can help them improve their business, which is where Booker has scored highly. They want to work with suppliers who offer insight and category knowledge tailored to their business and can work as a sustainable partner. Simon urged suppliers to think of their business as lots of defined businesses rather than one 4,500 site entity, as they have 12 customer defined segments, all categorised to create a portfolio of offers.
As with all operators there are always challenges and head-winds, be they food inflation (which thankfully looks to be flattening off), business rates (a huge issue for pubs as the model means they pay nearly four times their weighting), labour availability, competition and the unsustainable deep-cut promotions offered by those in trouble. But the big one….the ever evolving consumer behaviour which he sees as the greatest challenge to the business. The constant pressure of wondering what is around the corner is what keeps Simon up at night. But with a focus on insight and trends I’m sure Ei is as on top of things any anyone can be. However, with home delivery and Netflix keeping people housebound it has never been harder to drag them out, so creating an experience where the consumer feels like an individual is crucial. His parting call to suppliers; help us plug our knowledge gaps and keep us up to date with future trends in order to help grow our business and you’ll do well.
As Simon’s talk came to a close it left us with a lot to discuss over a wonderful meal. So as the conversation and the beautifully matched wine flowed and the charity draw was chosen (£1,250 to Springboard) the evening quickly flew by and soon it was time to hit the bar or head home. Well done to Lorraine and her team on another great event. We look forward to the Summer Event on Friday 13th July at Stationer’s Hall which sounds like it will be a fun one. For more information visit arena.org.uk