CEO Circle #2: Hospitality and Retail
The second, and final, CEO Circle of 2020 had hospitality and retail at its heart. Given the battering that both industries have experienced over the last year, we felt it was fitting that we got a group together to share experiences, learnings and hopes for the New Year.
Hosting the discussion was Martin Williams, CEO of Rare Restaurants (Guacho, M) and proud new owner of an army of robotic Champagne waiters (more on that later…). Participants included restaurant owners and retailers with enterprises ranging from sustainable clothing to multi-site regional food service outlets, all with the staggering impact of COVID-19 in common.
To open the conversation, participants were asked for their most pressing business concern, and the answer was unanimous: uncertainty. Whether it was the lack of ability to plan, doubt over consumer spending ability or landlord expectations, unpredictability was keeping our CEOs up at night.
As landlord negotiations were a universal sticking point for both retailers and hospitality venues, the discussion took off there. Most at the table had managed to secure some rent relief, at least during lockdown months, and in many cases CEOs highlighted that landlords had been very helpful – even the PLCs and pension funds. It was clear that landlords were doing as much as they could to keep spaces occupied, and if you were willing to communicate with them, you stood a good chance of getting a deal.
Ideal at the moment are short lets or the addition of ‘Covid-clauses’ to tenancy agreements, either as early break clauses or on a turnover basis. A key agreement around the table was that landlord-tenant relationships had been broken up to this point, with rents reaching unsustainable levels. The pandemic has created an opportunity to redress this balance: it was now in the hands of the innovative to seize the opportunity.
One CEO had made an early start here, signing an unconventional multi-site deal on a joint venture basis, some sites as 50/50 partnerships and others revenue-percentage rents (aim for sub 10%). This had helped his business to become part of the bigger picture for his landlord, who had started to see the value of a more equal partnership.
A Permanent Change?
The point was raised that it wasn’t only landlords that were more approachable at the moment: city centres had never been ‘so malleable and friendly.’ Huge opportunities for the adventurous could lie in using pop-ups at struggling locations, like train-stations or city centre kiosks. Many CEOs reported a new found appetite from landlords to collaborate and partner more, and this may lead to a permanent shift in the nature of the tenant-landlord relationship.
The group was somewhat divided on whether ‘WFH’ was a permanent change in behaviour, and in particular whether the City and West End of London in particular will ever return to ‘normal’. For the opportunistic, there are an abundance of deals to be done there today.
However, it’s a different story in the rest of the UK and for London suburbs, where CEOs had seen strong demand and were finding it tough to find or negotiate reasonable rents on new outlets.
One significant plus for city centres, however, is that it’s getting clearer that big businesses will want their p`ople back. Even if the commuter’s working week becomes shorter, venues will be boosted by increased demand on those days people do commute, and with fewer competing outlets, the survivors can still expect to trade strongly.
To finish, the group came full circle to tackle their own fears: how can we cope with this level of uncertainty as a retailer or restauranteur? ‘Manage upwards,’ was the first response. Cover your basics with the 3 Cs: cash, contingency, communication. Once you have cash in the bank, a contingency plan in place and have communicated with your stakeholders, you can do the real stuff, like engaging with your customers.
Get everyone, your team and customers, to buy into your vision and values. For staff, give them a sense of purpose along with communication and uplifting events or activities. One upside again for the survivors of this crisis is that there will be a pool of exceptional talent looking to join your team in the coming months, so it’s a great time to hire.
For the customer, keep up a narrative – really use your database to update and inform your audience. Some of our retail CEOs found huge value in building a regular social media presence, filled with diverting, relevant content. This, in one case, had the unexpected benefit of preserving sales that were otherwise lost on the shop floor and enabled the business to build an enviable ‘omni-channel’ presence.
Key also for those that can afford to: invest strategically. Think about spending on your outside spaces – Gaucho has had enormous success with their outdoor dinner pods, which are both safe and exciting. And this brings us back to Martin’s robot champagne waiters…They may be a novelty, but during times like these it’s the fun, engaging businesses that get noticed. And what could be safer than a non-human waiter?
Finally, in true All Together fashion, the group called for optimism. There’s no doubt that it’s been an awful year, but CEOs felt they had a personal responsibility to positively bring their industries back. There was acknowledgement that their own behaviour, as leaders, affected others’ perceptions and their own mental well being too – so look to the possibilities being presented, and if the old world had flaws, correct them in the new.