JD Wetherspoon and coffee

18. October 2013 07:06

For me, the most significant piece of news this month has been the revelation that JD Wetherspoon is to offer limitless coffee refills between 8am and 2pm. It’s a direct thrust at the high street coffee operators who grab so many customers during breakfast, morning and lunchtime day-parts. The glaring price gap that already exists between Wetherspoon and the average high street coffee purveyor is being emphasised in proverbial bold. Coffee is a high-margin item but Wetherspoon clearly believes that it can sacrifice the margin on repeat cups to win extra footfall and spend across other menu items. As so often with Wetherspoon, there is little concern about the impact on margin in the short term, with the focus on driving sales. The same thinking applies to the decision to extend foodservice from 10pm to 11pm. It may well cost the company money in the short term – and the short term may be several years – but Wetherspoon has decided this is another area where it must set its stall out with an eye to the future.

Wetherspoon is looking to break and recreate consumer habits and become, over time, a more regular default choice. Breakfast itself is the best recent example of Wetherspoon taking short-term margin pain to create a long-term income stream. The last time I attended Wetherspoon’s results, at its Crosse Keys site in the City of London, in September, I counted around 50 people eating breakfast – and it may well be that this meal occasion is now profitable. But the company spent many years losing money at this stage of the day and even, uncharacteristically, lost its nerve on at least one occasion and recast estate-wide opening hours after a variable response.

Coffee itself has been a hit-and-miss journey. Coffee and tea is now the best-selling line within the JD Wetherspoon estate. But it has struggled over the years, as so many pub operators have, to settle upon a definitive offer. (I remember Dowe Egberts plastic filters sitting on top of cups at one stage.) A former board director once told me a few years ago that the company struggled to match the coffee quality of the high street coffee shop operators because it was unable to apply the same laser beam focus. In recent years, it has obtained a more consistent quality in partnership with Lavazza, and the coffee, although not as good as Fuller’s, for example, is of a very decent standard. I understand six managers a week get refresher training to maintain standards. Wetherspoon’s founder, Tim Martin, told me this week: “The essence of the comment about focus is right, but it is not a good enough excuse to not serve good quality coffee. I think our coffee quality now is the best we’ve sold, but coffee is like real ale – you’re only as good as your last cup.”

Offering free refills, albeit on a time-limited basis, opens up a hot beverage battleground. Free coffee refills have been the norm in many US restaurants for decades but have been rarely seen in the UK market. How long will it be before other operators feel compelled to follow suite? And the generosity behind free top-ups may well become a broader battleground. Harvester introduced self-serve soft drinks, alongside its unlimited salad bar, a few years ago. It cannot be long before many more operators add free items or unlimited items to their armoury in the battle to win value-conscious customers.

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Save our pubs - save the personal licence

14. October 2013 06:32

It may not have been absolutely perfect, but what is?

The 2003 Licensing Act brought, I believe, significant progress in giving us a sensible licensing regime. I'm particularly fond of the licensing objectives, which make a licensee's duties clear and transparent; and the separation of personal and premises licences makes it possible to be flexible around the latter, allowing a pub to respond to the demands of the local marketplace. It's not, for example, about having longer hours, but having the right hours, so the pub opens when customers want to use it and can close when they don't.

As you know, on the pretext of a fictional growth in alcohol-related disorder, the present government has sought to hedge this flexibility through the introduction of Early Morning Restriction Orders and giving more powers to challenge premises licences. And now, perversely, and in apparent contradiction to this toughening up, it wants to abolish personal licences to allow “local alternatives”.

This is nuts. And I'm honestly not saying that because the organisation I write this blog for obviously has a vested interest in providing the training by which people can gain those personal licences. I say it because it really is nuts.

The idea enshrined in the 2003 Act that before they could have a licence someone should pass a simple exam to demonstrate they understand the laws by which they are going to have to operate their business was a belated and welcome innovation.

It now seems an obvious thing to do. If not to our government, which apparently prefers a free-for-all that will take us back to an age of confusion and error. And it will probably cost more, too.

Perhaps worse than that, it will roll back the modest gains the pub industry has made in professionalising the role of the Publican. This is important, not just for questions of social responsibility, but for making sure that pubs adapt to a changing world and give people the kind of places with the standards they demand.

There is much still to do on this. There's a lot of unevenness out there. But at least the personal licence lays down some sort of a floor on the minimum we expect from a good licensee. And now the government wants to rip that floor up. They must be stopped.

Consultation on this closes November 7. For details on how to object, please follow this link.

 http://www.cpltraining.co.uk/news/NewsItem.aspx?id=c15a6e22-e087-4246-9470-f0be170d1361

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Wide-eyed, legless and singing about it

7. October 2013 04:48

For centuries, drinking and music-making have been intertwined social activities. I've just been reading an article by historian Mark Hailwood about 17th Century drinking songs, and they were songs not only to be sung while you were drinking, but tended to be about drinking, too. And they weren't exhortations on sobriety.

Last Wednesday, though, this close connection between two widespread human pursuits became a problem. The Independent reported that research by boffins at Liverpool John Moores University had revealed that in 2011 18.5% of chart songs contained references to alcohol, up from a mere 2.1% 20 years previously.

I'm not sure why this has happened. Perhaps lyricists have got bored with writing about illicit drugs in thinly veiled terms. Or perhaps it reflects a changing culture – young people are drinking less, and as that has happened having a drink has become less habitual and more about special occasions and important life events. This would make drink, and certain kinds of drinks, pertinent subject-matter for song writers.

Clearly, more research is required (I'm available for hire). But instead, the researchers jump to the ridiculous conclusion that these songs are acting as a kind of advertising, urging our impressionable young folk to get more drunk than they otherwise would.

If they're right, song lyrics must be a pretty rubbish sort of ad medium, since (as I've already said, but it takes a long time to sink in with some) young people are drinking less. They are, in fact, driving a continuing decline in UK alcohol consumption, down another 3.3% in 2012 according to latest stats from the British Beer & Pub Association.

Several factors are at play, including the probability that young people can't afford to drink like they used to. There's also evidence that drinking, and drug-taking in general, is going out of fashion.

There's a contradiction, though, in that the Big Night Out continues to play an important role in young people's lives, as it has since young people were invented some time in the 1950s.

The researchers single out Katy Perry's song ‘Last Friday Night’ as a particularly execrable example. It's about going out, getting drunk and falling into all kinds of scrapes, condensed into one night for artistic purposes. Unabashed, Ms Perry determines to do it over again next Friday night.

Good songs reflect reality, and they are also an opportunity to reflect on reality. ‘Last Friday Night’ tells a truth about young lives, and provides a means of getting to grips with the inherent contradictions. We've all said “never again” and “gone and done it again”, as Andy Fairweather-Low wrote in Wide-Eyed and Legless (1975).

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Human subjectivity, alcohol policies and the hanging kebab

1. October 2013 07:10

It's Monday lunch and the hanging kebabs are swinging through the Oast House, Living Ventures' new-ish pub in Manchester's Spinningfields office and retail complex. The Oast House occupies a real-life oast house that was shipped across from the Low Countries (i.e. I can't remember whether it was Belgium or the Netherlands) and was dropped like a chunk of weathered driftwood amid the soaring glass and steel.

But that's another story. Quite apart from the quality of the food, the value of a hanging kebab lies in the theatrical - the mere act of bringing these things to the table attracts positive attention. 

And there’s something else. This is ‘theatre of the audience participation’ kind, requiring you to complete the kitchen’s work by removing the meat from the skewer yourself.

Now, the last time I tried to eat a hanging kebab, at the St Mary’s Country Inn on Jersey, was a clumsy spectacle (belated apologies to all those within a radius of 10 feet). So, while tempted, I settled for a Scotch egg ploughman's. 

It turned out that this, too, required my participation, not only in cutting and composing the permutations of each mouthful (which I accept is a normal part of eating a ploughman’s) but in unscrewing the little jars of pickle (sweet and piccalilli). Which I achieved, you'll be relieved to hear, without making too much mess.

This contrasted starkly with the previous night's Indian restaurant, where I was asked whether I'd like the meat taken off the bones of my tandoori lamb chops. Why? I've ordered chops. I want chops.

The Oast House has been turning in some amazing figures, apparently, and I reckon diner participation is a big part of its success. Eating there is designed as an experience that goes beyond sustenance, nutrition and flavour. It recognises that rather than being mere passive consumers, people enjoy playing an active role in the creation of their meal.

This, it seems to me, tells us something fundamental about what it means to be a human being. And it’s something the public health lobby has missed.

Yes, I’ve finally got to the point, which is that you can’t predict how people will behave when ‘nudged’ by a particular policy; be it a pricing or an educational measure. You can’t assume that we’re passive consumers making rational choices according to objective determinants because there’s a recalcitrant urge within us to do our own thing, to play an active part, to change the rules of engagement as we go along.

So there.

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Street drinkers, super-strength bans and the balloon effect

23. September 2013 09:42

It’s the balloon effect. Squeeze one end and the other end expands; the air inside hasn’t gone away- it’s just moved.

I suspect it’s the same story with the apparent success of voluntary off-licence bans on super-strength beers and ciders. Pioneered by Ipswich, these bans have spread round the country like a contagion. Off Licence News reports that “… beers and ciders with an ABV of 6.5% and above could soon be a thing of the past in the off-trade”.

That would not be a good thing. Craft beers and ciders are frequently strong and they are playing an important role in developing the appreciation of beer and cider – crucially, not for their alcohol content but for their depth and complexity of flavour.

These are beers to be savoured and completely different to the real target of the bans. The words ‘baby’ and ‘bathwater’ spring to mind (if that isn’t encouraging under-age drinking). Beers above 7.5% ABV have also been hit by the higher duty band introduced for super-strength lagers and ‘industrial’ ciders.

It may be possible for a distinction to be made at retail level. After all, these bans are voluntary so the licensee can, presumably, continue to stock Belgian ales and the new breed of craft beers and ciders. Though they might well feel they need to check with their local authority and the police first. As I was saying a couple of weeks ago, there is pressure on these ‘volunteers’.

But what about the impact of these measures on the people we’re supposedly worried about: the street drinker? Surely the ban hasn’t caused them to stop drinking? Like the air in the balloon, it’s likely that the problem has simply been squeezed elsewhere. We don’t really know because there’s been no research into it, and as long as they’re getting the results they want, the authorities don’t really care.

Councils are bothered about street drinkers because they’re unaesthetic; they clutter the place up and, as the chap from Hastings Council told the OLN, they’re bad for the tourist trade. As long as they can stop them clumping in the more sensitive areas of town, councils are happy. Whether a ban on super-strength helps them with their drinking is immaterial, so goodness knows where the problem is going to bubble up next.

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Be careful what you wish for

23. September 2013 04:14

The Conservative-led coalition government is keen to reduce red tape and unnecessary administrative burdens on business. The decision to shelve minimum pricing and the ban on multi-buys in favour of the voluntary approach of the Responsibility Deal exemplifies this. In general, this is to be welcomed, but then, out of the blue, we have a consultation on the abolition of the personal licence.

The government has championed ‘localism’ as well as cutting red tape, and this proposal appears to touch both these policy bases. It may be that this has a superficial appeal to some in our sector, but be careful what you wish for.

Abolishing the personal licence begs the question “what will replace it?” The government’s answer is to gold-plate the role of the Designated Premises Supervisor (DPS) and make him or her the only person able to authorise alcohol sales in licensed premises. Whilst the government will retain control of criminality-check criteria and training standards, whether such checks and training take place in a given premises will depend on whether a licensing authority makes it a condition on the premises licence. Each licensing authority would have to evolve a policy for deciding what types of premises and categories of staff would require training and vetting – and this could include not just DPSs, but bar and counter staff as well. We could end up with a system like Scotland’s, where anyone involved in selling alcohol has to be trained in legal compliance.

It is curious, to say the least, that government would implement a desire to cut red tape and cost burdens at a national level in a way that opens the door to them being increased at local level. The training and licensing of persons was never meant to be targeted; it represents the minimum set of standards in respect of training and vetting that is consistent with protecting the public and promoting the licensing objectives. Over 550,000 people have gained the personal licence qualification since 2005, and let’s face it, this cascade of training and qualifications would never have been achieved but for the introduction of a qualifications-based licensing system.

Most premises have adopted a precautionary approach and ensure that they have more than one personal licence holder working on the premises, even though this isn’t a legal requirement. This has become spontaneously established as best practice by a sector that is conscious of the public scrutiny it receives. It seems bizarre for the government to create perverse incentives to reduce training and qualified supervision by enhancing the role of the DPS. The government has also mooted the possibility that there might have to be a fresh criminality check if the DPS is changed at a premise. This will take away one of the key flexibilities of the current system, whereby another personal licence holder can take over the role of DPS at short notice.

Licensing authorities already have the power to impose extra training conditions on premises licences and frequently do so at licensing reviews. Training in responsible alcohol retailing and drugs awareness are just two examples that come to mind. At the moment multiple operators have complete clarity on what training and criminality checks are required of their DPSs and other personal licence holders. If the government abolishes personal licences, operators will have to familiarise themselves with 400 individual licensing policies and keep up to date with revisions to them if they are to ensure legal compliance. Which is easier to administer – a coherent, national system or a pick-and-mix local option?

The personal licence system is one of the success stories of the Licensing Act 2003. The industry lobbied for the separation of the licensing of premises from the licensing of persons and it has worked well. I believe personal licences should be retained and the government should avoid the temptation to throw out necessary regulation along with unnecessary regulation. Babies and bath water come to mind.

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Booze-free bars and the water margin

16. September 2013 07:19

As the old definition of news goes, its ‘man-bites-dog’ that makes the headlines, and the phenomenon of alcohol-free bars has caught the media eye of late; most recently BBC Radio Four’s excellent Food Programme. Presenter Hardeep Singh Kohli rather over-egged this ‘revolution’, but it’s certainly an interesting development.

Among Kohli’s interviewees was the impressive Catherine Salway, the entrepreneur behind Redemption Bars; a couple of which have opened in London. The idea is that Redemption creates the buzz and atmosphere of a regular cocktail bar without alcoholic drinks – and without the lairy downside. Salway is appropriately sober in her assessment of the potential for Redemption - one for every city in the UK. Even including me-toos, the booze-free bar is going to occupy a tiny niche.

I have certain reservations about the concept. One is the name. Redemption has religious connotations that, unless she’s being disingenuous, are not part of Salway’s intentions. More seriously, I have a problem in that I can’t drink more than one soft drink consecutively. I’ll worry about what I’m going to do for a couple of hours. A good beer, in contrast, offers a greater depth and complexity that keeps the taste buds interested. If anyone has the soft drinks to convince me otherwise, I look forward to trying them.

Still, Salway makes good points. There’s her emphasis on service and quality, for instance, and the music. Get that right and you don’t need alcohol to create an atmosphere. It’s something good licensed operators already know, and it’s wrong to suggest that every pub and bar ends the night in alcohol-fuelled aggression - they are a diminishing minority.

The other point is around the range and presentation of soft drinks. This, too, has improved in pubs, though not enough for Hardeep Singh Kohli to notice, apparently. Shrewd licensees push soft drinks because of the higher profit margin, rather than ethical reasons, which is fine.

But there’s a danger. The inaptly named Freedrinks, which has just launched adult softie Zeo, is urging pubs to press customers who order a glass of tap water to pay for something more flavoursome. If, as it says, sales are being lost here, that should be addressed by better soft drinks display and range rather than a hard (so to speak) sell. The likelihood is, though, that the customer really does want a glass of tap water, and it’s in the broader commercial interest of the business to make them just as welcome as anyone else.

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Could Greene King knock Mitchells & Butlers off its perch?

13. September 2013 07:25

Mitchells & Butlers is the UK’s largest managed Pub Company by some distance with 1,600 pubs. But currently it’s struggling to lift like-for-likes sales above flat as it undergoes a root-and-branch cultural change set in motion by chairman Bob Ivell two years ago. Meanwhile, the UK’s second largest managed pub company, Greene King, reached a significant milestone last week when it opened its 1,000th managed site whilst consistently posting far better like-for-like sales growth than its Birmingham-based rival. Greene King has travelled a long way during the eight years it’s been led by current chief executive Rooney Anand. At the start of his tenure, the company had just 551 managed sites, quickly lifted the same year to 801 by the acquisition of Laurel Pub Company’s neighbourhood division. That year saw managed turnover up 50% to £495.9m. In the most recent full year, managed turnover rose 7.4% to £863m, which now accounts for 72% of total company sales. Greene King may still own a large tenanted division and brewing operation, but the last eight years have seen an ever greater focus on its managed pubs as the main engine of company growth. Indeed, last year’s managed division turnover was around £130m more than entire company turnover back in 2005.

Greene King’s progress has been underpinned by its south east geographic estate positioning. It’s also made a series of sound strategic acquisitions in the form of Cloverleaf, Realpubs, Hardys & Hansons, Belhaven and Capital Pub Company. The deal to buy the Loch Fyne restaurant business may not have been such a rip-roaring success but it will certainly have helped build the company’s food expertise. The company has also been helped by continuity of management. Whilst Mitchells & Butlers has zipped through four chief executives (including the temporary one) and countless chairman, Greene King has been a Manchester United-like model of stability. And with its key acquisitions, Greene King has been canny in retaining the services of former management wherever possible – Mark Derry, John Winder, Nick Pring and Malcolm Heap, for example – to ensure it absorbs the full benefit of their expertise. Anand is also a strong picker of talent – one of the unsung heroes of its managed outperformance has been Jonathan Webster who arrived at the company as part of the Hardys & Hansons acquisition.

Perhaps the most impressive part of Greene King’s managed division surge has been Hungry Horse. The brand was founded in 1996 but the company considered disbanding it between 2005 and 2007 when it had, in the company’s words, “lost its way”. The last five years has seen Greene King reinvent the brand and run with it in a way unmatched by Mitchells & Butlers with potential blockbuster mainstream brands Harvester and Toby Carvery. Greene King has doubled the size of the brand since 2008 when there were 96 Hungry Horses. The company now believes it can further double the size of Hungry Horse to at least 400 sites – and it has 114 pipeline sites identified. Hungry Horse revenue and profit has doubled in the last three years. It added 20 Hungry Horse sites in less than a year to reach the 200-site landmark earlier this year – Mitchells & Butlers hit the 200 mark with its Harvester brand last year but it was founded more than a decade earlier. More generally, the past half-decade has seen Greene King increase food sales by 75%. Overall, food sales are now £337m per annum and account for 40% of total managed sales.

The current rumoured sale of around 300 tenanted pubs is driven, no doubt, by the desire to accelerate the growth of its managed division. I hear other plans are in train to free cash to invest in managed pubs. For now, there remains a significant gap in the size and the quality of Greene King’s estate compared to Mitchells & Butlers. With food sales accounting for an average of 40% of managed pub turnover at Greene King, Mitchells & Butlers has a ten percentage points lead at circa 50%. Average pub size at Mitchells & Butlers is bigger too, although Greene King has grown average managed house Ebitda to a creditable £218,000 average. The Suffolk company is still some way behind M&B on a number of measures, but for now it is certainly outperforming it – and the notion that one day soon it might ascend to the top of the managed podium is no longer fanciful.

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Acting local: councils and alcohol policy

9. September 2013 06:31

News that Newcastle City Council, among others, has succeeded in getting a number of licensed premises to apply minimum pricing policies raises some interesting questions, not least about the relative weight of local - as against national - alcohol strategies.

While the government dithers and vacillates, councils have been getting on with the pragmatics of licensing, most notably in removing high strength beers and ciders from off-trade shelves. This, along with a version of minimum unit pricing, has been achieved by agreement with the operator.

Lurking behind the cosy deals, of course, is the threat that the council might find a reason to turn down or review the licence if the premises doesn’t comply. But more than that, operators are conscious that they need a good working relationship with the local authority and the police in order to carry on their business with the minimum of hassle.

There is a question, one for bigger legal brains than mine, about whether minimum pricing or a ban on certain drinks could be legitimately enforced. Competition laws will come into play and an authority will also have to prove that the measures are necessary to achieving the licensing objectives, premises by premises. This could be tricky, though it may be easier in Scotland where they have a public health objective on top of the other four.

So far, though, it’s happening voluntarily. It’s almost as if government policy-making, and all the attention and aggravation it attracts, is irrelevant. Licensing has always been a peculiar beast before the 2003 Act magistrates wielded massive power. Even within the fairly restrictive framework of the old licensing laws, they were key to the fast growth of the night-time economy from the mid-1990s, applying a liberal approach to new licence applications and hours extensions.

Councils today are arguably even more powerful than magistrates, and now they have responsibility for public health, too. There’s a danger that it goes to their heads; last year Westminster Council tried to make the Newman Arms in Fitzrovia serve drinks more slowly and remove tables from its dining area to ease congestion on the pavement outside. That was ridiculous by any standards, and Westminster backed down rather than test the extent of its powers.

But it was worrying that the licensees felt they had to oblige or face a licence review. That’s not partnership working, that’s trying it on. Genuine agreements with operators are fine. If local authorities start pushing people around, though, it could get messy.

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Good pub, bad pub

2. September 2013 06:24

Last Thursday was what my mum calls a “tin hat day” in the pub industry. Invective flew like grenades after the Good Pub Guide declared that over the next 12 months up to 4,000 pubs will go out of business. And not before time, according to Guide editors Alisdair Aird and Fiona Stapley: “These are the pubs at the bottom of the pecking order, the Bad Pubs, which still behave as if we are stuck in the 1980s; happy with indifferent food, drink, service and surroundings.”

Trenches were dug on either side of the argument. Roger Protz, editor of The Good Beer Guide, described his arch-rival’s view as “morally repugnant” and called for a public apology. Times columnist Giles Coren said Aird and Stapley were pussy-footing around and that all pubs should close.

There’s no doubt that the Good Pub Guide was looking for a sensational angle to get publicity for its new edition and that 4,000 figure seems wildly inflated since the closure rate is currently around a third of that, and is predicted to fall. And to say, as the editors do, that only bad pubs close is spurious since good pubs undoubtedly close - it’s just that they become bad pubs first. The question is, why do good pubs become bad pubs? And what, exactly, do we mean by a ‘bad pub’?

These are big questions - too big to answer here. But it does seem to me that, for all its protests, the Good Pub Guide has a relatively narrow definition of a “good pub”, which is certainly relative to the Good Beer Guide.

And it isn’t just about standards. The Good Pub Guide’s emphasis is undoubtedly on food, and on what are called ‘destination’ pubs. There’s nothing wrong with that - unless you start doing down pubs that don’t conform. And that was how many took the editors’ comments.
There are many pubs that won’t make it into the Good Pub Guide that are worth keeping. And not all of them are in the Good Beer Guide, either.

There is a principle to defend. The idea that there is such a thing as a pub that’s distinct from a restaurant or a bar. It doesn’t mean that pubs mustn’t change. Many pubs have adapted to changing circumstances while retaining a core ‘pubness’. It’s an elusive quality but you know it when you see it.

And while food has become essential for many, it’s not a panacea. Some businesses have overstretched themselves by trying to introduce a menu there is no market for, no chef for and no kitchen for.

It’s curious that the Good Pub Guide’s awards have a category for Unspoilt Pubs. So does that mean the rest of them have been spoilt?

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About the author

Phil Mellows

Phil Mellows is a freelance journalist and writer specialising in the UK pub industry and alcohol policy. For more information, and the Politics of Drinking blog, go to www.philmellows.com
You can also follow Phil on Twitter at www.twitter.com/philmellows

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