As the UK’s on-trade starts to put the final lick of paint on its preparations of finally re-opening bars, restaurants, pubs and hotels inside next week, industry leaders have shared both their excitement at the demand there is amongst customers to enjoy a night in hospitality from next Monday, but also their fears that for many it will only be putting some Polyfilla on cracks that are too big to fix overnight. Richard Siddle reports on the last month’s London Wine Fair on-trade debate.
CGA Strategy’s Charlie Mitchell, Enotria&Coe’s Ants Rixon, pub entrepreneur Heath Ball of the Red Lion & Sun in Highgate and Xavier Rousset MS , co-owner of a number of London outlets including Cabotte, Blandford Comptoir and Trade shared their views on the on-trade re-opening.
(You can watch the full London Wine Fair debate below)
“There’s a pent-up demand that should play through to a positive next few months. We could be in for something of a summer of celebration… people have been really missing our sector, ” is how CGA’s research and insight director, Charlie Mitchell, kicked off the recent London Wine Fair on-trade leaders debate as part of its Welcome Back digital fair.
Demand that has seen extraordinary sales in the opening weeks since pubs, bars and restaurants were able to re-open outdoors from April 12 – with 44% of adults visiting at least one on-trade outlet between April 12-19, even in average weather, with on average people going out twice in that vital first week.
Like-for-like sales in the third week of re-opening outside were actually only down by 21% compared to the same period in 2019 when hospitality was fully open which was better than CGA expected.
CGA’s own figures show drinks sales have been up across most categories, particularly amongst what it calls “celebratory drinks like cocktails and shots”. Wine has also been a strong performer, and perhaps not surprisingly customers have also been happy to order plenty of Champagne and sparkling wine as they celebrate being able to meet up with friends again, says Mitchell.
Encouragingly for the next stage of the re-opening of the on-trade CGA’s consumer tracking data shows that two thirds of potential customers are happy to “live in the moment” on the back of Covid-19 and make the most of the chance to go out with over half saying “they will go out every opportunity” once things are back to so-called normal.
This is backed up the data from the April 12 re-opening which saw the number of people going out in hospitality was up 10 percentage points on the July re-opening in 2020 after the first national lockdown.
Heath Ball, who in London runs the Red Lion & Sun in Highgate, and Wenlock Arms in Hackney and then has Lockhart Taven and the Anchor Tap in Sussex, says quite simply “it’s been hectic”.
“Demand is unprecedented, we are fielding about 200 phone calls a day for bookings which we just can’t keep up with. People are coming back and they’re spending heavily, especially on premium—the fine wine list is taking a beating. There’s a lot of people with a lot of money. So trade has been hectic. How long that his going to last we don’t know, but it’s been pretty full on.”
He added: “People who have been working through lockdown have got a lot of disposable income. They just want to drink good wine, eat good food and have a good time. The average spend per bottle is crazy. There is a lot of FU money out there.”
All of which adds up to around £80 per head spend at his Red Lion & Sun pub. “That’s ferocious. That is much more than we would normally do.”
Xavier Rousset MS said his Greenwich Kitchen venue near the O2 had its best week of trading in seven years during the first week of re-opening, with its second best week coming the week after. on the back of outdoor trading, with the average spend up by 10% to 15%. “Everyone is letting go a bit,” he said. Whilst normally they might order one bottle for £80, many are ordering two bottles of £100 wines. Demand has slowed down a little since, so is hopeful May 17 will result in a further surge in trading.
Ants Rixon managing director at Enotria Winecellars, said there had been a clear switch in demand towards more premium products with sales of its wine to trade below £8 down, but up above that price point. Enotria has seen strong sales for Champagne, English sparkling and people looking to order “Reserva rather than Crianza” style options.
“We are very, very positive about what is happening and that all our customers are bouncing back as well,” he said.
For a major distributor of the size and scale of Enotria&Co it’s also about getting “the ship” back up and running again and it will take some time more before it gets a full picture of what is really happening in the trade as the majority of its customers won’t be opening until May 17 at the earliest – around 40% of its customers are currently back trading. But the good news is it’s “really excited about the next couple of weeks” where there are “crazy volumes forecast.”
May 17 relief
The leaders on the panel will be relieved this week with the news that the planned May 17 re-opening date for indoor hospitality is now going ahead. It still, though, only leaves them a week to get everything fully in place with Ball saying it had been so hard to plan too far ahead as we have been through so many stop, starts of the on-trade over the last year.
“There’s no point in budgeting or planning too far ahead at the moment. You just have to be quick on your feet,” he said.
These weeks, though, are “crucial” said Rixon at Enotria as more operators start to re-open, the sector as a whole needs to keep that demand high in order to allow the supply chain to fully function around the country.
Particularly the number of national pub groups and hotel chains that have not opened yet. How they come back will be vital for the sector as a whole, and clearly major distributors such as E&C. Which, in turn, does put pressure back on those distributors to make sure their systems, re-ordering processes, logistics, down to re-training drivers is all back up and running.
“It’s exciting to see but it also feels quite chaotic at times. We can’t hide that. The great thing there is a real camaraderie about it. This is not about competition, this is about the excitement of the trade returning,” he said.
Ball says the level of demand is going to test operators and things are moving so fast it is hard to “budget” and “plan” – “you’ve just got to be quick on your feet”. “If you are sitting there writing forecasts then you are just wasting your time. You’ve just got to look at ever day and then every week and plan as much as you can within that. I wouldn’t waste my time planning the summer as we could have something tomorrow that could change us again.”
Rousset agreed and said just because we have had a good few weeks since re-opening it does not mean it is going to be the case for the next three months. It’s the same with how he is working with his food and drinks suppliers where it is slowly building up stock levels. “But we are not going crazy either.”
Key is being flexible
He is also looking at more flexible ways he can work with his suppliers where he might take stock in but only pay when it sells. “I am looking to be creative. But very much day to day, week by week.” Which also applies to his own staff and using the flexi furlough scheme to be able to bring in staff on a daily basis based on what is happening with the weather and demand.
“As an industry we have been extremely creative and resilient. We knew we were before, but now it is more than ever,” he added. “Being creative is very much part of being a restaurateur.”
Rousset is also quick to praise his suppliers and how “amazing” they have been in supporting him throughout the crisis. “It was a rocky ride for everyone.”
In fact such has been the response from his suppliers he does not think they could have done more in the way they have behaved. “They have been as flexible as possible with payment, with stock. We are all in it together.”
Ball said it has also been a case of him supporting those suppliers – both food and drink – that have been with him throughout. “I have not trimmed suppliers, I have just trimmed my menu and the options I have from those suppliers. I have been able to pay everyone up to date throughout.”
Equally for E&C it has been about being as open and adaptable to its customers as possible, said Rixon. “There is no set rule here. We have to have some confidence that people are going to be able to pay us.”
It is also having to be the same with the producers it is working with and the amount of wine it can bring in. “We have had incredible support from brand owners and suppliers, and we hope, and we think we have replicated that out to our customers as well,” he added.
The panel was split in terms of what impact Covid and uncertainty is going to have on wine lists going forward. Ball said he had actually “gone the other way” and put more wines on his lists and looked to make the most of offering his customers some different wines and plenty of choice.
As Rousset is running effetely wine driven restaurants then his lists are his “USP” and he can’t afford to lose that. But he is also being pragmatic and running tighter, more focused lists that he will keep for the next three to four months that can help keep the cash flow running through his business. Then it the second half of the year he will be in a position to order more.
It also means, though, his staff have to work harder with a more limited wine offer, where they need to plan and manage the lists more carefully.
Rixon admitted it is going to be a “juggle” for distributors like E&C being able to have enough stock to cater for all their customers, many of whom will now have slightly different ways of trading. “But it’s quite a good fun juggle” and makes you use more portfolio better.
A much bigger issue is staff. Both now and particularly down the line. Covid-19, the subsequent lockdowns and then the impact of Brexit, particularly on EU staff, has proved to be a double whammy that the on-trade sector is now going to have to face.
Both Ball and Rousset are extremely worried about what it will mean for on-trade operators. Ball said the issue is not just the lack of staff around, but the lack of quality, trained, hospitality staff to hire. “All the experienced staff have disappeared. I think a lot of operators are going to struggle. It’s going to be a real blood bath out there.”
Rousset said the situation is particularly dire amongst sommeliers. “It’s terrible. I have lost a lot of my senior team going back to France and Italy and Spain. The third lockdown kind of killed them. They were patient for the first and second lockdowns but then they were asking why I am here in London?”
He says he must get asked every day by other restaurants if there are sommeliers available. “If you give me 50 sommeliers I could give them a job with the friends I have in the trade tomorrow.”
The big concern is that there are not the skilled staff coming through to replace them and that most of his workforce comes from Europe, which is not going to get any better with Brexit. As a result he is looking to close his restaurants one day a week just to cope with the shortage in staff and managing his costs better.
All of this is being shown in CGA research too, said Mitchell. “We’re seeing shortages really coming back as a big concern across the sector.” Ball agreed: “There’s going to be a lot of operators struggling out there for staff… it’s going to be painful.”
Outdoor dinning and drinking has also seen the return of digital menus and QR-based ordering. This is here to stay for many venues, said Mitchell. “There’s been a massive change in how consumers are ordering – it’s a whole new path to purchase,” said Mitchell. Ball was let sure. He said his customers, particularly at the Red Lion & Sun, still want to pick up a paper menu and see a full list in one go and be able to discuss their order face to face with himself or his staff.
What is different, though, for both Ball and Rousset is people’s willingness to book well in advance. The penny has dropped that to get a table you have to book well in advance and that is the big difference both have seen since April 12. People happy to book a table in a garden or on a concourse.
Looking ahead to the summer then CGA believes there are lots of reasons to be positive if the government goes ahead with its June 21 unlocking of the whole country in terms of social distancing and the rule of six. For a start there is the usual bounce we can expect from the European Football Championships.
Ball said the pressure will be on operators to keep that offer different and exciting. It was party why he had invested in a frozen margarita machine that also produces espresso martinis, that now sits proudly outside the Red Lion & Sun. Ideal for a refreshing drinks, but great for Instagram too. “We’re seeing a lot more people drinking cocktails – people want a bit of fun and theatre.”
The public, as a whole, are also clearly far more confident about going out than they were last summer, thanks to the success of the vaccine rollout and also the safe experiences they have already had going into hospitality thanks to all the measures the sector has taken. Mitchell says consumer response since April 12 is that their experience was actually better than they were expecting which also bodes well for the future months.
That confidence was also there with our panel – but with notes of caution. Rousset said he was certainly confident that sales will be strong over the next six months, his big concern is having enough staff to deliver and maximise them.
Best case scenario for Rixon at Enotria will be in a position to have a normal Christmas, but also appreciates it will “take that long” for the trade to recover, said Rixon. “A long summer followed by an early Christmas,” is what he is hoping for.
For Mitchell it is hard to look much further ahead than May 17 and June 21 and the two key dates for the on-trade being back fully open.
The final world fell to Ball who simply hoped the on-trade will be able to “get back open” and they will be left alone to do so. “Let us do what we do best and make people happy.”
- The London Wine Fair’s new digital edition takes place next week between May 17-19 where importers and producers are looking to set up online meetings and send out samples to buyers in advance. You can also take part in a full seminar, masterclass programme. For full details and how to sign up click here.
- The Buyer’s Richard Siddle will be running the Discovery Zone sessions at the show. Which includes the following sessions:
- May 17, 11am: How the wine industry can take real action to drive and promote diversity & inclusion.
- May 17, 2pm: Sustainability: what steps is the wine industry taking and needs to take to on sustainability and the environment.
- May 18, 2pm: How to get the most out of the boom in direct to consumer sales and rise of e-commerce.
- May 19, 11am: How to recruit and retain the best talent in the wine, drinks and hospitality setors.
- May 19, 2pm: How to succeed in a digital first post-Covid world.