Back in June, I was chatting to Mark Derry, the Brasserie Bar Co boss, about surviving the pandemic. It seems a long time ago now, given how much has happened since, but the other day I happened to glance back at my notes from our conversation, and one thing he said to me turned out to be particularly prescient.
While acknowledging that much of the coronavirus fallout up to that point had been in businesses that were already struggling when the virus first hit, he opined that given the myriad restrictions and other pressures faced by the pub and restaurant industry, it was inevitable that eventually many previously successful and solid businesses would hit the buffers.
Even Brasserie Bar Co, despite entering the crisis with EBITDA up 30% year-on-year and growing “on every matrix” was not immune, he added. Then after running through a long list of things that were eating away at the company’s foundations, he declared: “I’m hoping to hell we can get through this and hopefully without some forced administration.”
Well, the good news is that as of today, the Brasserie Blanc and White Brasserie operator, is still an insolvency-free zone, but – just as Derry predicted - many other previously successful businesses have been through some form of insolvency or otherwise painful restructuring, be it a CVA, administration, debt-for-equity swap or sale, or frequently a combination thereof. In that category I would place the likes of Azzurri Group, Pret A Manger, Itsu, Caffè Nero, Côte, Wasabi and Yo!
One by-product of all this is that the stigma associated with going through a CVA or administration has to a great extent dissipated. Such a process would once have hung over a company like the black cross painted on the doors of victims of the Black Death. But with so many businesses going through such a process due to the dreaded coronavirus crisis it has become a pretty standard way to ensure the future of a company, enabling it to shed uneconomic sites or excessive debt – or both.
In many ways, it has become a bit like Chapter 11 bankruptcy protection in the US, which is regarded as a standard way for a company to deal with its creditors rather than an evil disease akin to the plague.
A few days ago I did an interview with Richard Caring, the entrepreneur behind Bill’s and The Ivy Collection, and he made clear in no uncertain terms his disdain of the way the government has handled the pandemic as it pertains to the hospitality industry.
There has been no shortage of industry heavyweights lining up to have a pop at Boris & Co, of course, but the main thrust of Caring’s argument is a worth repeating. He criticised the government’s strategy of imposing blanket restrictions without thought for the large numbers of businesses unnecessarily caught by them.
He cited the 10pm curfew as an example, although at time of writing the chancellor Rishi Sunak had confirmed that the curfew was under review and highly likely to be scrapped. It is a point well made though. Does a Michelin-starred restaurant of a neighbourhood café need to be made subject to the same rules as a city centre boozer in a busy circuit?
Despite being badly hit by the pandemic, the flamboyant tycoon recognises he is in the privileged position of having been able to make a “substantial equity injection” into his business to keep it going. And when the pall of gloom hanging over the industry is eventually lifted by a vaccine, Caring is ready to return to the expansion trail.
He says he has 34 sites in the pipeline, including sites in the US, Greece and Paris, although 30 are on hold for now. But it is clear that his inherent desire to keep expanding remains undimmed: “We’re looking at expanding the Scott’s brand, the Sexy Fish brand and the Ivy Asia brand. We’re also looking at putting two new brands out there.”
What about the search for a new site for Le Caprice? “We’re still looking.”
One notable aspect of the pandemic has been the hugely impressive response from industry trade bodies. I have commented in this column before about the remarkable efforts of Kate Nicholls at UKHospitality, in particular, while the likes of the British Beer & Pub Association and the Night Time Industries Association to name but two have also put in sterling efforts.
I am starting to query whether there is a danger of overkill, however. I fully appreciate the need to keep the pressure up on government to ensure the industry’s desperate straits stay at the forefront of ministerial thoughts. But is bombarding government, the media and the public with constant pleas for support really going to continue to be effective?
The previous steady stream of pronouncements has turned into a torrent of press releases, statements and open letters, the common theme being the urgent need for support to prevent a bloodbath of unit closures and job losses. When there’s something new to say, fair enough, but hammering away with a similar refrain creates a danger of message-weariness.
I don’t want to sound critical, but as a journalist who has been covering the impact of coronavirus on the hospitality sector almost every day since March, a fresh message is key to keeping people fully engaged.
Dominic Walsh: Even successful companies have hit the buffers
Back in June, I was chatting to Mark Derry, the Brasserie Bar Co boss, about surviving the pandemic. It seems a long time ago now, given how much has happened since, but the other day I happened to glance back at my notes from our conversation, and one thing he said to me turned out to be particularly prescient. While acknowledging that much of the coronavirus fallout up to that point had been in businesses that were already struggling when the virus first hit, he opined that given the myriad restrictions and other pressures faced by the pub and restaurant industry, it was inevitable that eventually many previously successful and solid businesses would hit the buffers.