HOME / KNOWLEDGE / Social Distancing With… Hannah Vernon, Urban Leisure Group
Social Distancing With… Hannah Vernon, Urban Leisure Group
A neighbourhood bar and restaurant in queens park and west Hampstead serving breakfast, lunch, dinner and Sunday roasts inspired by great British produce.
The latest in our series of quick-fire client interviews, Jeffreys Henry LLP speaks to Hannah Vernon of Urban Leisure Group.
The Urban Leisure Group is an independent group of 9 premier pubs and bars across London, including The Alice House in Queens Park and West Hampstead, The Elgin in Maida Vale, Ask for Janice in Farringdon, Heist Bank in Paddington, and Coin Laundry in Exmouth Market. Each venue has a unique personality, design and menu but all focus on sustainable, seasonal products & relaxed, knowledgeable service.
Hannah discusses how the second lockdown and tier restrictions impacted ULG’s performance, how government guidance for the hospitality industry has been unclear and the ways in which ULG have adapted their business model to the changing times.
Hosted by Jeffreys Henry LLP and interviewed by Nikhita Sagar & Bhimal Hira. Published December 2020.
HOW HAS THE URBAN LEISURE GROUP PERFORMED SO FAR THIS YEAR?
We’ve averaged about 50% of normal trade levels, ranging between 30-70% LFL depending on the offer in the venue and the location of the business. For instance, our Paddington venue is heavily reliant on office trade and tourism which has been hit really hard this year with everyone working from home and restrictions on travel. However, many of our other venues which we consider to be in neighborhood areas have actually done quite well, at least better than I thought they would under the circumstances. Tier 1 restrictions didn’t affect our trading levels too badly and we were doing pretty well. We saw another dip in trade with Tier 2 restrictions and we really felt the ban on mixed households and the 10pm service cap.
GOVERNMENT RESTRICTIONS HAVE PUT PRESSURE PARTICULARLY ON VENUES THAT SERVE ALCOHOL – HOW HAVE YOU DEALT WITH THIS?
The challenges we faced have not just been related to restrictions placed upon us, it has also been about the delivery of those restrictions. There has been poor communication from the government, with unclear and overly convoluted, confusing guidance. There were times when we were struggling to find consistent information with different sources saying different things, so trying to narrow that down to create clear guidance for our teams was tough. We also found that often critical information was provided too late, which put pressure on us to actually deliver that effectively in a short space of time.
Our bars are wet led. We like people standing at the bars, we like people standing outside, we like big groups of people visiting, drinking and having fun, and that can’t happen under the current conditions. Our trading space has reduced by around 50%, so it is simple math. If you take 50% of someone’s business away, particularly in the hospitality industry and the model crumbles, so everybody needs to be looking to look at how they operate.
People are social creatures so policing the guidance in-house has been challenging. Striking the right balance between following the rules, but also maintaining a hospitable and welcoming environment has been quite hard. Also, people have different ideas of what safety means to them, so it’s about understanding their needs too, and trying to balance that from one customer who isn’t too fussed about being careful, to another who doesn’t want to touch anything. Striking the right balance to make sure everyone is happy has been difficult but we’ve become pretty good at it.
In our industry, reading body language and facial expressions helps us understand our customer’s needs, which is difficult when we’re are wearing face coverings. The first point of contact with a customer is important – we’ve got really good at smiling with our eyes. Recently it seems like people have become a little desensitised to the situation, but keeping our customers safe is as important as delivering great quality food, drinks and service, so we have to play our A game at all times.
In terms of action taken to try to maintain our businesses under the conditions, we’ve negotiated with our contractors and suppliers to try to reduce overheads, we’ve supported our teams with good and open communication in order to keep people informed and we’ve focused on planning and dissemination of clear and simple compliance instruction so that the team know what they’re doing and how they’re doing it; any confusion in a situation like this will create problems. We’ve also remained agile – we move rapidly with changing restrictions.
Sadly, we’ve had to reduce our headcount a little bit. We’ve been fortunate enough to have avoided mass layoffs and redundancies, but as the labour line is one of the biggest costs to a company, we’ve have needed to pair back on working hours to some extent. We’ve pushed our teams a little harder, but we work with them collaboratively. We’ve tweaked our service models where instead of having everyone behind a bar, we now have a host and a floor team in place. In some venues we’ve been able to reduce man-hours because we’re able to work more efficiently with reduced menus and less customers. In contrast, in some venues the wage cost has increased as we’ve had to put more people on the floor to accommodate table service.
IT’S REFRESHING TO SEE THAT YOU’RE ADJUSTING YOUR BUSINESS MODEL RATHER THAN JUST RELYING ON GOVERNMENT SUPPORT…
In any situation one must be versatile.
If somebody strips away 50% of your business, but you operate in the same way relying only on government support, you’re going to be in an awful lot of trouble on the other side. It’s been a good opportunity for us to take a look at our service models and how we operate in general; what can we do differently to improve not just for now but for the future? I’m hoping we go back to some form of pre-COVID normality.
DO YOU THINK THE GOVERNMENT SHOULD BE DOING MORE TO SUPPORT BUSINESSES IN THE HOSPITALITY INDUSTRY?
I think they’ve done quite a lot for the industry so far, however, I think the government really need to consider extending non-contributory furlough until at least the end of March, possibly even the end of July, restriction levels dependent. Hospitality is a huge employer in the UK and affects so many industries up and down the supply chain and it’s important that those businesses remain viable and are in a position to thrive next year.
One of the biggest ongoing issues is fixed rent. Being able to renegotiate deals with landlords and having the government support us would be ideal, for example something as simple as being able to recover rent payments based off of pro-rata revenue vs the previous year so that the landlords don’t miss out either or a percentage of profit-based system could also be effective. Fixed rents will become more problematic next year once the support schemes begin to slow down.
I think the 10pm curfew should also be reviewed. I understand the intent behind it but what I’ve actually witnessed is people coming out, drinking more and earlier. I think this might have actually made things worse in terms of increasing transmission of the virus. People only have a small window to drink so they’ll do so to a greater extent, which also then creates a rush hour once venues have closed.
THE CHRISTMAS PERIOD IS A CRUCIAL TIME FOR PUBS AND BARS – HOW DO YOU EXPECT YOUR VENUES TO PERFORM OVER THIS PERIOD?
This is a difficult one. I can speculate and say that I assume we’ll be put into Tier 2 at the beginning of December – what this will mean in terms of the new restrictions is hard to predict. If it means that households can’t mix and only families will be going out together, this will be a challenge.
Christmas delivers a huge portion of our business each year. Our revenue peaks in December and it is a shame that we’re going to lose that peak. In terms of what it will actually look like, I’m hoping that we’re able to sustain similar levels to what we were seeing towards the end of October, hopefully with a natural increase due to the time of the year. As a company, we’re 100% confident that we’ll get through this.
WHAT ARE YOUR VIEWS ON EXPANSION?
Many businesses have been forced to close so there is greater opportunity to acquire leases at the moment, this has been one of the very sad impacts of COVID restrictions. Again, a side effect to this is that unemployment has increased; there are more highly skilled folks looking for work so recruiting is much easier than it was this time last year.
Scaling up and growing our business is important for us, this is definitely in our plans over the coming years. However, we’re very aware that we firstly need to be sure that everything we’re doing right now is correct. We don’t want to scale up until we’ve nailed the way that we work. If the right opportunity came along, I’m sure we’d jump on it, but our priority right now is keeping the business in survival mode, building solid foundations and carefully planning a way to grow ULG.
WHERE DO YOU SEE THE FUTURE OF THE HOSPITALITY SECTOR?
We live and work in a 24-hour society, especially in London meaning people’s leisure time is precious and limited. Current restrictions have resulted in a reduction in folks being able socialise impulsively, we have to be more considerate when deciding who to spend our time with and where to spend it.
I do believe that 2-3 years down the line and when COVID restrictions are a thing of the past, that we will return to some sort of normality. However, I believe that the biggest challenge to businesses is being able to survive the next 6 months.
I also believe that any business that gets through to the other side will see a significant change in the way that people consume anything in the leisure sector. I think delivery, click and collect and pay at table will remain imbedded as part of our service culture because it’s quick and convenient and customers are becoming used to it.
I believe that there are two areas of the industry that will flourish in the coming years. Firstly, those that are great value and low contact. Places where you can sit down, expect quality, value with the ability to order and pay at the table will definitely flourish. Secondly, I think that premium brands with interesting, unique experiences and premium products will also thrive. I feel that those that are trying to stick to the old service-heavy model may struggle a little bit, that’s assuming that they can sustain themselves until restrictions are lifted.
Between 1 April 2021 and 31 March 2023, companies can claim a super-deduction in the form of first year relief of 130% on qualifying plant and machinery additions. This means a company spending £100,000 on qualifying assets would have £130,000 deducted against its taxable profits, resulting in a tax saving of £24,700 per £100,000 of expenditure.
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