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Fri 23rd Sep 2022 - Friday Opinion
Subjects: Is prime minister Liz Truss a libertarian part two, biggest is not necessarily the best, keeping the restaurant revival afloat during cost-of-living crisis
Authors: Paul Chase, Glynn Davis, Chris Harris

Is prime minister Liz Truss a libertarian part two by Paul Chase

As I write, the government has just announced plans to cap the wholesale price of energy for businesses for the next six months. And this article was written before the new chancellor’s ‘fiscal event’, so will focus on Liz Truss’s attitude to the nanny state.
 
Public Health England was the mothership of the new public health movement, but its obsession with lifestyle measures to save us all from drunkenness, gluttony and sloth left it ill-prepared for an old-fashioned communicable disease pandemic, and covid-19 resulted in its demise, or at least its rebranding as the Office for Health Improvement and Disparities (OHID).
 
Civil servants at the OHID are said to be aghast at the new prime minister’s plans to scale back Boris Johnson’s misguided anti-obesity policies. It is expected that Truss will not only bring the nanny state project to a halt but might even turn it around by repealing the sugar tax, stopping the ban on buy-one-get-one-free (BOGOF) deals and end the requirement that bigger businesses must put calorie counts on menus. 
 
Truss has expressed the view that the public don’t want the government telling them what to eat. Well, amen to that! The Sugary Soft Drinks Industry Levy was introduced in April 2018 and has had no discernible impact on adult or child obesity but has cost consumers £1bn. This is the first nanny state measure that should go – along with banning BOGOF deals which many poorer families benefit from, even though the OHID mandarins disapprove of the kind of food they buy. 
 
Such measures would be a difficult sell in the middle of a cost-of-living crisis even if they achieved anything, which they don’t. A sugar tax has never reduced obesity anywhere – even the so-called successes of the measure in Mexico, where sales of such drinks fell after its introduction in 2014, have since seen obesity rates rocket to 36% as people’s desire to satisfy their sweet tooth was displaced elsewhere.
 
But proving your libertarian credentials means doing more than just upsetting the prod-noses of the nanny state, and if Truss is short of ideas, I’m here to help! Back in 2010, the government embarked on a ‘bonfire of the quangos’, but as usual, it fizzled out before it really got going. And it focused on the wrong targets – remember the attempt to abolish the personal licence and return to some localised patchwork quilt of training and qualification requirements? I’m proud of the fact that I played a leading role in successfully opposing that. The government should have taken the opportunity to abolish the Security Industry Authority (SIA), but it didn’t.
 
The SIA is a classic example of a quango having to invent things to do to justify its continued existence. From the beginning, it was supported by big security industry operators like Securicor and its successors, G4S, Securitas and OCS. They wanted to eliminate cheaper competition from smaller and medium sized rivals so they could kick the ball around among themselves. Door supervision got tagged on at the end. The current training requirement for door supervisors is six days – plus a requirement for a one-day Emergency First Aid at Work qualification. This has dramatically raised the cost of entry for people who want to work in the sector and is a big part of why we now have a shortage of door supervisors.
 
So, what should be done? The only legal requirements for manned guarding and CCTV operatives should be a short training course and a DBS check. There is no real need to licence them as such. After all, if supermarkets employ them directly, there is no licensing requirement. For door supervisors, there is a justification for a licensing system because of public safety concerns, but this doesn’t justify an overblown quango to administer it. 
 
A shorter training requirement that gets rid of much of the padding, plus a DBS check, could easily be administered by local licensing authorities, just as the personal and premises licence systems are. Reducing costs to business and taking down the barriers to employment, but without compromising on public safety, is what a libertarian PM should be doing. Oh, and I nearly forgot. Don’t introduce minimum unit pricing for alcohol – that doesn’t work either!
Paul Chase is director of Chase Consultancy and a leading industry commentator on alcohol and health
 

Biggest is not necessarily the best by Glynn Davis

Ahead of entering the new BrewDog bar in Waterloo, my expectations of it being busy were low as I knew the paint had only just dried on the place, and that it was of vast proportions. I underestimated both its size and the number of people guzzling beers and cocktails on this rainy Thursday in early September. I was, in fact, taken aback by the sheer number of people.
 
Having gone from a comparatively sedate concourse on Waterloo train station, it felt like I had entered a parallel universe of behemoth proportions, filled with crowds of people (some staggering around) and much noise. At around 27,000 square feet spread across two floors, I lost my friend twice in the space of half an hour as we wandered from bar to bar, passing an indoor slide, ice cream van, ten pin bowling alley, on-site brewery, podcast studio, meeting rooms, co-working space, coffee shop, florist and a secret cocktail bar which, needless to say, I failed to locate. 
 
It looked to be a rip-roaring success of a launch judging by my initial experience, but when I relayed this to one of the bar’s managers, he laughed and said it needed to be twice as busy to be profitable. I’ve no idea what it would be like with that number of customers inside the place, and I don’t intend to find out. 
 
It’s fair to say I’m no longer BrewDog’s target customer – either I’ve outgrown it, or it has outgrown me. I suspect it is the latter, judging by the vastness of BrewDog Waterloo. This new venue is the biggest pub in the UK and is yet another example of how the company likes to be top dog. But any drive to be the biggest can often lead to hubris. The pub usurps the JD Wetherspoon boozer, the Royal Victoria Pavilion in Ramsgate, that I visited during the summer, and although it undoubtedly felt vast – it measures a not insubstantial 11,000 square feet – it did not feel out of kilter with many other large Wetherspoon’s pubs I’ve visited in recent years as the company has increasingly focused on larger venues.
 
The new BrewDog certainly feels like a hefty step up in magnitude for the group, and I can’t help but wonder whether it represents the Waterloo for cavernous pubs. Are there enough people with a desire to frequent these massive (often impersonal) venues with any sort of regularity? Wethersoon’s is certainly finding it tough to get the pre-covid-19 volumes back in many of its venues. There are clearly a number of different factors at play – including the recessionary economic backdrop, the cost-of-living crisis, ongoing staff shortages, more consumers eating and drinking at home and the crippling level of utility charges.
 
Are we heading into a period when smaller venues take precedence over their larger compatriots? Interestingly, in the residential sector, the demand for smaller rental properties has been rising compared with a reduction in appetite for larger homes, according to Zoopla, which says a major factor is the cost of heating. Two-bedroom flats have seen inquiries jump to 35.5% from 29.8% in 2020 versus three-bedroom houses that have seen inquiries fall to 12.1% from 15.9%. The cost to heat these houses is around 40% more than for the flats.
 
Some evidence of a scaling back in space requirements can be seen in the hospitality industry, where the dining rooms of many QSR brands are being reduced in size – partly driven by more people choosing home delivery, click-and-collect and drive-thru options. Meanwhile, at the smarter end of the market, chef Alex Dilling has taken on the job of head chef at the Hotel Café Royal, with a reduced number of covers of only 34 and limiting booking times to between 7pm and 8:30pm in his dining room. He has expressed great relief that he does not have to fill 70 seats per night. 
 
He clearly would if he had a bigger venue that needed the volumes for the economics to stack up. This need to drive big numbers of people through large premises must be a concern for many operators, because on top of everything else right now, the shortages of employees looks to be a long-term scenario, and the astronomical cost of utilities is also predicted to be a multi-year phenomenon.
 
Against this backdrop, the growing number of independently owned micro-pubs that have emerged over recent years must be sitting slightly more comfortably, with their tiny footprints and minimal staffing requirements. BrewDog Waterloo has been described as 26,500 and 27,500 square feet in different media reports, which means the typical size of a micro-pub is the equivalent of a rounding error in the world of big bars. Where they are not in error is with their operating models during these tough times, when questions will start to be asked about the appeal and viability of the largest venues.
Glynn Davis is a leading commentator on retail trends
 

Keeping the restaurant revival afloat during cost-of-living crisis by Chris Harris

The past year has seen consumers making up for lost time when it comes to eating out, with the industry experiencing a boom as pubs and restaurants reopened. Cardlytics spend data across 24 million UK bank accounts showed that overall spend across the dining sector increased 22% between 2021 and 2022 as people looked to make the most of socialising post-covid.
 
Pubs and bars saw the largest spend increase of 12,031%, followed by casual dining restaurants (748%), coffee shops (63%) and quick service restaurants (40%). Despite this general uptick in eating out over the past year, total spend across the sector is still down when compared to pre-pandemic levels. In comparison to 2020, Cardlytics data shows that spend in 2022 is still down across casual dining (-15%), pubs and bars (-7%), coffee shops (-5%) and quick service restaurants (-2%).
 
As the cost-of-living reaches a crunch point and disposable income shrinks, hospitality is often the first in the firing line. Consumers will be making difficult choices to cut back their spending, meaning brands may face further hurdles in returning to pre-pandemic spend levels. Competition for customers is reaching a peak, and as consumers look to prioritise essentials like grocery shopping and energy bills over a meal or drink out, how can dining brands hold their market share? 
 
Invest in delivery options
Between 2020 and 2021, lockdowns drove an astronomic rise in spend across delivery platforms as customers had to experience their favourite foods from the comfort of home. Cardlytics spend data shows that delivery platforms saw a 110% rise in spend between 2020 and 2021. However, as restrictions lifted and customers sought to eat out rather than order in, these brands struggled to live up to their lockdown success, leading to a spending decline of 5% between 2021 and 2022.
 
But the tide is changing, with increasing numbers of customers looking to cut back spending on more ‘expensive’ meals out but still wanting to treat themselves to a ‘cheaper’ takeaway at home. Casual dining is already starting to see the impact of the cost-of-living and tighter budgets, with Cardlytics spend data showing that total spend fell 2% in the past six months compared to the previous six. Investing in delivery options will stand dining brands in good stead to capitalise on this shift, as prices creep up and consumers cut back on trips out.
 
Diversify your offer with cheaper, smaller items
During times of financial difficulty, consumers still want ways to treat themselves but with smaller, less extravagant items. This means people are more likely to turn to coffees and snacks rather than a full three-course meal. 
 
Brands should look to diversify their offer with smaller items or options, whether that be a lunchtime deal, a discounted menu or takeaway options at reduced prices. This will help to keep customers returning in the short term and show that the brand understands and can meet their new needs.
 
Invest in loyalty
As the cost of living continues to rise, we’re likely to see people shop and spend in savvier ways. Our recent consumer poll of 2,000 UK adults showed that 73% of consumers are planning to shop around more for the best deals. We’re already seeing the tangible impact of this at Cardlytics, with the number of dining offers activated through banking app reward programmes having grown by a staggering 784% between 2021 and 2022.
 
If dining brands want to retain customers in this difficult time, they need to tap into the deal-savvy customer base by offering tailored cashback and discounts to customers to engender more loyalty and spending. By utilising banking channels, brands can target customers by frequency and segment and firmly establish themselves as a favourite, and the go-to option for a treat during these difficult times.
Chris Harris is partnerships director and head of restaurants at digital advertising platform Cardlytics

 
 
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