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Rebooting the on-trade

Published:  22 March, 2021

With reopening now in sight, Andrew Catchpole joined leading operators to discover what learnings from the past 12 months could help the recovery of their businesses.

With restaurants, bars and hotels facing unprecedented challenges when the hospitality sector begins to reopen this spring into summer, Harpers and Trade Hospitality App teamed up to bring together top operators for our Building Back Better: Rebooting the On-Trade for 2021 webinar.

Planned as an insightful session designed to help the on-trade navigate the road ahead, our panel of industry leaders – with refreshing transparency – shared their thoughts and strategies for taking their businesses forward. With every pound to count at a time when all will have to operate on limited, profit-diminishing numbers of covers, the aim was to explore how best to maximise custom and boost profitability.

First, though, Des Gunewardena, CEO of D&D London, sized up the bigger picture, slamming the UK government for its apparent lack of understanding of the depth of the crisis facing hospitality operators. And this on the day of the news that restaurant and pub gardens could open no earlier than 12 April for outside service, with possible indoor reopening no earlier than 17 May.

“We are not going to be able to open until the middle of May, which seems absolutely amazingly late given where we are with vaccines and so on,” he said. Gunewardena continued by saying he had “very strong feelings” about government support, with the various relief rolled out during the first lockdown (grants, business rates relief, furlough, etc) giving the generally misconstrued idea that it had backed the industry well.

“To be blunt, compared with other countries where we trade, such as the US (New York) and France (Paris), especially during the second wave, it has been absolutely shockingly bad and we’ve been banging on about this, but it just seems to fall on deaf ears.”

He said for every month D&D London’s venues are closed, the company bleeds £1.5m – losing more money when closed than it makes when open, a “massive killer for us”, while also highlighting that smaller operators, without significant financial backing, are in a very parlous state.

Gunewardena called for discussion to reopen on job retention scheme grants, a solution to the moratorium ending on rents, and an answer to furious ongoing lobbying on extension of business rates, VAT and other relief for the trade.

This discussion took place just before the UK Budget and it does seem that Chancellor Rishi Sunak has listened to and addressed at least some of the ongoing concerns and calls for support from the hospitality industry (for more details, see our last minute budget analysis, p6-7).

Having covered the overarching issues, discussion swung to what operators can do to help maximise revenues during the staged reopening, and to help buffer against possibly inevitable further setbacks along the way.

Karan Gokani, director of family owned and run Hoppers and JKS Restaurants, said the company had successfully opened a large venue in the King’s Cross area of London, just a month ahead of the first lockdown. Initially, he said, “there was no revenue stream, we were just chasing our tail, not knowing what was happening”, and “all of us expected [the crisis] to be a lot shorter”.

Second wave

However, as it became apparent – even during the summer months – that a second wave and possible long disruption could become the norm, the company realised in a now familiar story that tapping into additional revenue streams would be crucial to help it survive. “We looked at reopening delivery and fortunately we already had created and tweaked a good delivery model from our Soho restaurant, and we had designed the site at King’s Cross to be able to do deliveries as part of its business model, so we were able to quickly shift resource to focusing on that segment,” said Gokani.

Although saying the site has been doing “good numbers”, Gokani is the first to admit that takings have been “a drop in the ocean” compared with what a fully open site would be delivering – more was needed to help diminish the losses.

A Sri Lankan heritage family, Gokani and his siblings also launched Cash & Kari, a tongue-in-cheek named service that went beyond delivering home cooking kits, including “things like curry powders, spices, ethnic ingredients” to tap into the booming quality home cooking scene.

Cash & Kari has done well. But Gokani’s advice to all that have or are considering pivoting towards new revenue streams is they should take time, plan it properly and do it well if it is to have longevity and represent a serious opportunity into the future.

“This will definitely remain part of our business going forward, so I think retail is here to stay, in some form or other. We’ve seen a massive demand – yes there will be a correction once restaurants can fully open, but kits will become more of a celebration occasion and there will still be demand.”

Gokani said that, as with many others, there has been a streamlining of team operations, but as hospitality re-emerges the work needs to be done now to revive team spirit, to “get the camaraderie back up and running, to build the confidence of the teams back up” and ensure that returning customers are reassured by the best possible experience any given venue can deliver.

Adam Handling, chef-proprietor of the Handling Restaurant Group, elaborated further on approaching new revenue streams, using his own high-end delivery service as an example of how to tailor an offer to a target market. “We initially thought we’d sit it out and didn’t realise how long London would be shut down for, and I thought my food doesn’t travel, so I wasn’t interested in doing home delivery,” said Handling.

However, with bills continuing to flood in and “zero support from landlords, with 10 sites across London – a real kick in the teeth, we had to create something”, so he created Hame.

Matching quality

The idea was simple, if rather more difficult to execute well – Handling was insistent that his home delivery service should match the quality expected in his restaurants. The upshot was that, via a QR code, home cooks could cook along with Handling, ingredients to hand. And the service has been such a hit that it now generates “just under half a million quid” a month.

“As a restaurant group it’s been phenomenal – I pay all my rent, I pay all my bills, I pay all my staff and I still have a positive EBITDA”, said Handling.

The trick, he said, was to design a menu where the quality was high, but the ingredients kept to a minimum, “family styled”, with the result that the operation will now be moving into its own building and be a continuation of his restaurant group.

Turning to the drinks side, Steve Pineau, co-owner of the Brighton-based L’Atelier du Vin wine bars, stressed how much more operators could do to maximise revenues from this sometimes overlooked side of the business. For Pineau, this also meant staying in touch with customers regularly and ensuring they continued to be part of the extended ‘family’ supporting his brand.

“We always did tastings, and we wanted to stay in touch with our customers, so we found a way to [do them online]. It’s been good, the last one we had 1,000 people and we are also now doing cocktail tastings,” said Pineau. “We don’t do food in our places, so the only way to survive was to do something online, to do tastings, and we have a few more tastings coming this month.”

Broader benefits

In addition to helping pay rent and staff, Pineau explained he quickly realised the broader benefits that such activity could deliver longer term.

“We’re going to keep doing it when we reopen, because its not just a good source of money, I think there is a market for it, and it keeps us in people’s minds, so its good for marketing our business.”

Looking ahead, also on the drinks offer side, Vagabond’s Stephen Finch gave his view on what would change post-pandemic and what would remain largely the same as before. “I think everybody is going to be in the same boat as us, with the various lockdowns we had to streamline the drinks menu as well as the food menu – fewer things, focus on getting the volume up,” said Finch.

He added that also meant a focus on higher margin items, but suggested this would be a temporary thing once greater normality returned.

Finch predicted “a charge back” to drinks lists that make both staff and customers excited, although with the caveat that Brexit could make flexible, more esoteric lists harder to manage in terms of order deliveries.

He also suggested the hybrid on and off-trade business model would continue to do well, being “inherently higher margin than a traditional drinks retailing model”, with add-ons, such as home tasting flights and cocktail kits likely to remain in the mix. “We do these little wine flights, with mini-bottles, trying to give the Vagabond experience at home, and they are absolutely flying out of the door, and we are building a whole subscription service around that, which is going to be really transformational.”

A final word from Finch on the lessons the trade could draw from the pandemic restrictions concerned productivity. Pre-Covid, he “thought we were doing petty well”, but in having to meet the extra demands for socially distanced and Covid-safe service, there were lessons that could be leveraged for the future, in terms of labour costs, other operating efficiencies, managing the balance sheet, inventory and much else besides.

The full webinar can be found on Harpers Wine & Spirit’s YouTube channel.