Inside Track by Mark Stretton
It’s a cheery old time. The smoking ban and the weather have turned this summer into a damp squib, albeit a fug-free one. The ban is nowhere near as concerning as the weather, which has prompted talk of the worst summer trading at pubs for 20 years. It has also hit the casual dining market as many companies have invested in terraces in recent years to cater for outside demand. Operators speak of an absence of the feel-good factor and a somewhat subdued consumer. It is of course relative, but it is not the summer that was assumed in budgets at the turn of the year. Nightclubs and home-delivery groups are predictably in the minority in reporting unseasonably strong trading. In addition, everything that we would rather not see going up has gone up (interest rates, food costs, energy bills etc) and everything one would want to see on the up is heading south (share prices, drinks volumes and possibly footfall). On top of this, the global “credit crunch” is feeding through into the sector. Deals in this climate are difficult – and transaction multiples have inevitably peaked. Analysts predict that with this sea change and in the absence of deals, success will come back down to organic growth and the ability to innovate. On the latter point, some seasoned operators have suggested to me that there has been a discernible drop in innovation levels across the sector. I’m not so sure. There may be less new emerging formats but there are still plenty of hot urban concepts that are expanding apace, such as Carluccio’s, Gaucho, Giraffe, GBK, Le Pain, Loch Fyne, Ping Pong, Strada, Wagamama and YO! Sushi. Of the potential emerging players, the ones to watch include Benugo, Bodean’s, Canteen, Chop’d, Leon and Vapiano. Anything serial entrepreneur Alan Yau does is interesting – he’s bringing Princi, the premium Milanese bakery and pizzeria concept to the UK, in concert with its founders. And the team that built Strada, led by Andy Bassadone, has just unveiled a new French brasserie format called Cote, in Wimbledon Village. Go see. In the pub and bar market, the hot concepts may be less obvious but this part of the market is full of great entrepreneurial operators like Steve Wilkins, Jonathan Downey, Rupert Clevely and the Peach guys – Lee Cash and Hamish Stoddart. Ultimate Leisure is taking Living Room back on the expansion road and Laurel continues to expand Slug and Lettuce apace. Mitchells & Butlers is innovating in the blue-collar market with Cornerstone and is also thought to be working on a new family food concept – an obvious gap in its portfolio. My colleague Paul Charity recently spent some time with Orchid Group and came away extremely impressed with the development work underway across its 270-strong business. Innovation has always been a key focus for M&C Report and it is something we will be reporting on increasingly in the coming months, from the big corporates down to the niche players. As the old adage goes, necessity is the mother of all invention, and whether you believe that innovation levels have dropped or not, it may be that these slightly more challenging times will see everyone cranking up the creativity.

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