How was 2023 for you?
Raz Helalat: We had a great Q1 despite everyone saying that a recession was coming. That continued into Q2. Last summer wasn't quite what we expected, especially for our Brighton sites which are reliant on tourists and good weather.
Thom Elliot: We had the best January we ever had. In fact, I think it was the first January we turned a profit. Usually, it's difficult to sell pizza in January because people are trying to save money and get healthy. It was a bumper year for us up until August, then it suddenly got much tougher. We are currently flat on covers but up on like-for-likes due to inflation.
Mark Crowther: Our experience as a pub group was similar. In general pubs are a bit more stable in terms of sales than restaurants because it is a lower-ticket experience. But while our revenue has been okay converting it to bottom line has been tough.
Zeren Wilson: We're a new business in Sandgate near Folkestone, a wine bar and wine shop. It's the first time I have had my own place, previously I consulted, worked in restaurants and sold wine to restaurants. We have had a better year than we thought we would thanks to a great deal of support from the locals.
Clive Watson: The first half of 2023 was good. Summer was a bit soggy. But Christmas was good, we were around 25% up on last year largely because we had done a better job of planning for it. Overall, I would say ‘not bad could do better’. But we have just sold to Young’s so it’s no longer my problem. Joking aside, we are handing over something that is in a good state and also has momentum.
Ranjit Mathrani: Over Covid we lost five year’s worth of retained profits. We are a central London group. Our turnover pre-pandemic was £30m and EBITDA was 35%. We were one of the most profitable restaurant groups in the country. Our turnover is now around 1% above what we did pre-Covid but our EBITDA is now 10%. That tells you a lot about what has happened to this industry. Our labour costs have gone up by 25% and our energy costs have gone up four times. Our lunch business is 70% down on the pre-pandemic period.
Round the table
Marc Crowther, non-executive chairman, The Pub People
Thom Elliot, co-founder, Pizza Pilgrims
Razak Helalat, founder, Black Rock Restaurants
Sunny Hodge, founder, Diogenes the Dog and Aspen & Meursault
Ranjit Mathrani, chairman, MW Eat
Zoë Paskin, founder, Paskin & Associates
Georgie Pearlman, executive chairperson, Cubitt House
Dan Sharp, head of south, Boutinot
Richard Stringer, managing director, Portobello Pub Company
Clive Watson, co-founder and executive chairman, City Pub Group
Jack Wild, head of business development, Boutinot
Zeren Wilson, founder, John Dory
Do you welcome the new National Living Wage?
CW: I was disappointed. At the Conservative Party Conference they were saying £11 which seemed about right. I don't understand how the Government can say that it can’t afford to give a 5% increase to a nurse but is telling businesses they must give their staff an extra 10%.
TE: In principle I absolutely love it. It's nonsense to think that someone can live in London, where a lot of our restaurants are, for £10.40 an hour. The problem is tips. At some of our busier sites waiters are getting an additional £8 an hour in tips. That sounds good, but having waiters on £20 an hour potentially pushes up wages for the senior people within our restaurants that don’t get tips.
Zoë Paskin: We pay well. Largely our staff are paid above minimum wage as it stands now. When I saw the news I wrote to my FD and said it's ridiculous. Not because I don't think people should have more money but because it feels that it's all on us. There are so many things for us to mitigate now. Finding the bottom line is harder than ever.
RH: The problem is that due to this increase, everyone will want an uplift. It's not just people on low salaries or those who are paid hourly. All the people on salary will say 'where is my pay rise?'. Putting 10% on your total wage bill is mega.
RM: The whole concept of a minimum wage is a disgrace. In a market economy you should have supply and demand.
How are customer habits changing?
Georgia Pearlman: We're in a weird situation because the majority of our sites are in Zone 1. Sales are pretty good and our margins and GPs are good too. We are putting the rise in our costs back on our clients. Our prices will continue to go up. It would be a different situation if we were trading somewhere less prime, I'm sure.
Sunny Hodge: Our first wine bar Diogenes the Dog is in Elephant and Castle. It's not exactly Mayfair, at least not yet. Our other site (Aspen & Meursault) is in Battersea which has a very different demographic. Our sites are niche, we attract a lot of people from further afield who come for very curated boutique-type experiences with wine. As soon as you people start seeking you out rather than coming in simply as footfall you can start playing around with your offering a lot more.
What will 2024 bring?
RH: People will still want to go out and enjoy themselves especially when it comes to special occasions. If you have something unique enough they will come.
GP: We’re in a weird post-pandemic place where everyone seems to have this ‘I don’t care’ mentality. They don’t seem to care how much it costs, they just want to go out and have a good time with their friends and family having recently had the experience of being locked inside for two years.
RM: Independent businesses are going to close unless they have a unique product. Efficient, well-managed companies will take market share at the expense of these smaller operators. Chefs with 30 to 50 seat restaurants are also going to go out of business on the whole because of labour costs.
SH: We are looking to expand. Not because the climate is favourable, but because we need to keep efficiencies as they are. We have tried not to raise our prices. We have only gone up 3% over the past two years across the wine list and food menu. We have done that by importing direct and even making our own wine.
Where are wine prices going?
Jack Wild: A couple of our customers celebrated 20-year anniversaries last year. I asked them to look at what their wine prices were when they started out. If you take inflation out of the equation, diners pay less for wine in restaurants than they did 20 years ago. The problem is that guests have this perpetual idea that wine is too expensive. People will have thought that £3.50 for a glass of wine was too much 20 years ago.
Dan Sharp: We are selling more good quality entry point wines. People are trading through the list less, with the notable exception of rose and sparkling wines.
JW: As a business we have a choice. Trading wise, our volumes are steady versus last year. If we want to drive volume we can reduce quality. But we don’t want to do that. The big challenge for us is the cost of glass, transportation and borrowing.
RH: We have seen a dip in drinks spend over the past year whereas food has stayed roughly the same. We are now working very hard to increase drinks spend per head. Wine is great, you're making a good margin from simply opening a bottle. It’s very different to food, which requires lots of staff to make and serve it.
What wine trends should operators be aware of?
DS: Emerging regions include Eastern Europe and Asia. Wine lists are increasingly now more weighted to white than to red because of changing consumer preferences.
JW: People are drinking less wine. That's a problem for businesses that have traditionally made most of their margin from alcohol sales. It's the wine industry’s fault. People have put a lot of effort into making beer and spirits more accessible but that has not been the case with wine. To get people drinking more wine we need to follow the lead of craft beer in particular.
SH: Wine bars such as ours are at the forefront of changing perceptions about wine. We are very much on the front line. People are drinking less but they are often willing to spend more when they do. Increasingly, people are looking to buy products that they believe in, such as organic and biodynamic wines.
Top quality wine at unbeatable value
Since the 1980s Boutinot Wines’ philosophy has always been to deliver top quality wine at unbeatable value. Who are they you might ask? Working with 1,800 wines from 200+ producers across 23 countries delivering a massive 42 million bottles of wine to consumers in the UK each year, they are a bit of a trade secret and the trusted partners of niche restaurants and iconic bars as well as big on-trade names. The major difference between Boutinot and other distributors is that on top of world-class agency wines it also owns vineyards and produces directly in France, South Africa, England, New Zealand and Italy. Additionally, the “flying” winemaking team, including MWs and master blenders, work to bring in unique parcels from grape farmers that most distributors would never get access to. Now the secret is out it could be time for you to take a fresh look at your wine list and see just what Boutinot can do for you. Get in touch here.
