Draft House founder Charlie McVeigh asks what’s stopping the UK from producing global hospitality brands
On a morning in August I decided not to go to the market. There was a colossal amount of faff going on in the heat. A small child had bumped its head and was crying. Teens, fresh from the clubs, were being coaxed with increasing shrillness back to consciousness. Semi-functioning adults were already wrestling with their moral compasses regarding rosé and the seemingly ever-earlier need for it.
Waving my phone importantly and pleading the need to deal with a high-level matter, I slunk away from these attempts to bring order to chaos, assuming the position on a far-away lounger in deep shade but with a view of the pool and a deepening blue sky. Not soon enough, the hubbub died down and all was quiet. The crickets sawed away, the pool filter burbled, and I slept.
In my dreams, a colossus bestrode the globe. I could tell it was a dream, because somehow this happy giant was a British hospitality company that ruled the world. Ant-like, executives from McDonald’s, Yum! Brands and Starbucks swarmed around this mighty figure. The giant’s lips moved from time to time and out came ominous pronouncements in a Dick van Dyke cockney accent. One day it said: “I think actually we have underplayed and underleveraged the scale that we have in this company. I actually think we’re just recognising the power of what scale can be to us.” On another: “In the fight for market share some will succeed, and some won’t. We intend to keep this company on the winning side.”
I awoke with a start. The pool man from Porlock had interrupted my reverie. But the dream stayed with me. Some amateur Freudian dream analysis connected an article I’d been reading on global quick service restaurants (and yes, the giant’s quotes are from Yum! and McDonald’s) with my deep-seated belief we Brits can and should create global hospitality brands.
What’s stopping us?
We have some extraordinarily powerful and profitable national brands. And in Nando’s and Pret (among others) we have exciting, nascent worldwide players. But at the risk of getting my head removed, I’d say there are a number of assumptions in our collective industry mindset which are holding us back:
– Investors and managers are focused on building a business in the UK, and then exiting.
– The world outside the UK is viewed as too different. British brands are unlikely to work outside of a British context. Investing outside the UK is seen as fraught with risk. It seems less crazy to go to Bristol than it does to go to Paris.
– As we are a parochial sector, there is very little international experience in national brands. Executives at global (read American) brands tend to stay with global brands.
– We feel inferior to established global brands. Confronted with the colossal scale of McDonald’s and Yum! and their ability to make strategic investments in, say, artificial intelligence or delivery – we despair.
– With our local headwinds (yawn) we are hardly in a position to start allocating precious capital abroad when we need to shore up the balance sheet at home.
– We have little appetite for and may even have a collective fear of franchising. Many (most?) of the global hospitality brands have expanded through franchise, both at home and abroad.
So what might our UK giant look like?
Obviously, it will start with a highly-profitable brand, which speaks to the aspirational global consumer and whose operation and culture is eminently scalable and transferable. Backers need deep pockets and experience of international success. Management also needs a deep international track record from the top down and a buccaneering spirit that will relish rolling with the punches that will inevitably come.
But the big one for me seems to be a profound understanding and long experience of franchising. I’d argue a truly global brand needs to be built from the ground up with franchising in mind. Your franchise partners at home and abroad will be a colossal pain in the neck, but they will also be your local scouts and ambassadors – and they will bring the capital for expansion. The relationship will often be fraught (look at Domino’s) – after all by its very nature the interests of franchisor and franchisee can never be perfectly aligned.
There seems to be little love in the UK for franchising. Outside of transport hubs very few UK brands have embraced it. But the discipline of codifying and continually evolving what makes your business successful for customers, staff and shareholders can also be transformational for the performance of company-owned sites. Look at Leon, which never looked back once it opened Kings Cross as a franchise site and is now bucking the trend by expanding both nationally and internationally through key partnerships, again in the majority with a focus on transport hubs. Now I also read Chiktopia, the new chicken brand backed by Mark Lilley, Rooney Anand and Richard Morris among others, plans to launch a handful of company-owned outlets before moving to a franchise-led expansion model. Will John Vincent, Lilley and Morris build our first truly global hospitality brands? Phew, feels like rosé o’clock!