Episode 6

Within Crisis Are The Seeds Of Opportunity, Charlie Gilkes, London’s Most Creative Hospitality Entrepreneur Speaks Out

In this episode, Charlie Gilkes gives his take on:

What personal attributes and attitudes he seeks when hiring new employees;
How the pandemic has ‘tested his mettle’ and the insights this has given him;
How Covid has provided the business time to reflect, simplify and try new ideas;
How adversity has brought the hospitality sector closer together;
The importance of the hospitality sector to the economy and the lack of Government support;
How the insurance sector has failed the UK hospitality sector;
Why a career in hospitality remains a fantastic career choice.

About my guest

Pre-Pandemic, Charlie Gilkes, co-founder of the Inception Group, a collection of some of London’s coolest, bars, restaurants was riding high. His 11 experiential venues were a magnet for sophisticated professionals seeking an alternative to an otherwise bland scene of identical looking venues offering much the same products and service.

Although his venues remain shuttered for now, Gilkes remains optimistic and given the strong brands he has created and his loyal customer base, he believes the Inception Group is well placed for when life begins to return to normal.

Transcript

[Chris]: Surely, one of the hardest business sectors of any in which to succeed is hospitality. Like the perfect cocktail, the ingredients have to be expertly mixed, a subtle blend of vibe, location, coolness, and clientele served with a very large slice of first-class service is needed to become noticed and noteworthy in London’s hugely competitive cocktail and bar and restaurant scene. The hospitality industry is of vital importance to the UK with 500,000 individuals employed in London alone.

In 2020 however, all that changed with the arrival of COVID, almost overnight, the effects were profound, and despite a brief interlude during the summer, hospitality venues remain shuttered for the foreseeable future. These measures are estimated to have cost the sector in excess of 50 billion pounds in lost sales in 2020 alone. Until the UK is vaccine rollout hits critical mass, closures are set to continue.

So, what does this mean for a sector so vital to the economic health of the United Kingdom? As an entrepreneur, how do you manage a crisis that effectively stopped your business from operating?

Joining me to discuss is a guest who certainly knows his mojitos from his martinis. In 2009, along with his business partner, Duncan Stirling, he co-founded the experiential hospitality company, The Inception Group, where he owns and operates 11 of London’s most innovative bars, clubs, and restaurants, including the Mr Fogg’s collection, Cahoots, Bunga Bunga, and Maggie’s. He’s a regular commentator on radio and TV. Most recently fighting the corner of the UK’s hospitality sector, currently struggling with coronavirus. He is, of course, Charlie Gilkes. Charlie, welcome.

[Charlie]: Hi, Chris. Thank you. What a year it’s been.

[Chris]: What a year it’s been. So, that the effect on your business has been profound, hasn’t it?

[Charlie]: Yeah, I mean, it’s been extraordinary, really. I think when you set up a business, you, of course, assess the risks and consider those. For us, I think a risk we considered was an awful terrorist attack like the one that happened in Borough Market a few years ago or slow down a recession like the one we saw in 2008.

[Chris]: Yeah.

[Charlie]: I think we never thought about a pandemic, which saw all of our venues close overnight and have severe restrictions for well over a year. That was just not a risk we were ever aware of, and I don’t think there were any businesses out there who had considered that. If they had, they were very, very good crystal ball gazers. It’s been an extraordinary year, and not just for our sector, but for so many, travel, aviation, retail, to name a few.

But it already started. We started getting some early signs, really. I mean, I was reading this morning that it’s a year ago since the BBC team travelled out to Wu Han in China with this sort of announcement of this contagious respiratory virus. I think at that time, like most people, we thought this was something contained to China and didn’t ever foresee it becoming a global pandemic. But we started getting almost a sort of canary in the coal mine really in February 2020.

Then we started having some large corporates council people who were travelling from all around the world to congregate for a conference and then come to our venues in the evening. Some, some large multinationals started, I think, restricting travel and therefore cancelling these conferences, and London was seen as the sort of focal point and a gathering place for people around the world. That was the sort of the first indication we really got that this was something that was going to affect us and affect us quite profoundly. But as things went on, it’s obviously got worse and worse.

[Chris]: Yeah. I mean, this is the stuff of Hollywood really, isn’t it? The pandemic.

[Charlie]: It is really, I mean, you sort of watch those films and still for me now, at times it feels like a horrible nightmare and doesn’t feel real. I can’t get used to walking around a deserted, almost apocalyptic feeling Central London and seeing everyone in face masks. That still just doesn’t feel even vaguely normal to me.

[Chris]: Right.

[Charlie]: It’s incredibly hard, and I think the fact that we’re having to talk about social distance. Actually, in London, I think we’ve all loved going to those busy bars and restaurants or sitting alongside counters, and those days feel a long, a long time ago right now.

[Chris]: Yeah.

[Charlie]: But I think it’s important not to focus too much on the past and to really focus on the future and have belief that those times will come again.

[Chris]: Yeah. Yeah. I mean, even before the pandemic, the sector was in some sort of flux, wasn’t it? There was a number of quite high-profile closures that you bucked the trend on all of that. What would you think? What’s your secret for success?

[Charlie]: I think we have been going now since 2009. I think we’ve always seen the importance of experience, and our mission statement is to create unique and memorable experiences. We wanted to be and create destination venues. We’ve always said, “The right postcode, the wrong streets,” and have compelling enough concept that people will travel to us.

So, I think creating unique spaces and unique places that are different and are worth travelling for has been really key. Whether it’s with a live entertainment at Bunga Bunga, or our cocktail bars, Mr Fogg’s or our underground theme tube station/bar, Cahoots. You come, and it’s an immersive world. It’s great escapism from day-to-day, and it’s something that people will talk about and now share on social media as an experience.

[Chris]: Sure.

[Charlie]: That has been front and centre of everything we’ve done. I think we always assess, is that an experience or not? That’s certainly helped us greatly know. We opened our first bar, Barts, a speakeasy with no street presence at all, back in February 2009. That was a time where the Lehman Brothers had gone under. There were those dreadful scenes of people emptying their desks around the city.

[Chris]: Yes.

[Charlie]: And 50 pubs and bars were closing a week in London alone at that time. It was probably the worst time ever to be setting up hospitality business. But again, it was something that stood out. And I actually remember we looked at the bar, and we looked at sort of all the bars that you could walk to within a five-minute journey of this location. It’s called Bart’s. It’s still going, celebrating at 12 years this year.

We looked at all the different venues in the area, and we printed out images of it. I think there were about 10 bars, and I stuck all the images onto one big piece of card. They all looked exactly the same. They were buying the same furniture from an Andy Thornton catalogue. They were using the same tealight candle holders, and nothing really stood out.

I think there’s this real trend that happens. People imitate; they don’t innovate. They say, “Well, that’s what a bar looks like, so we’re going to create another one in the mirror image of the one that’s there.” So, we really tried to do something very different, and what we created really, I think, stands out on the page, and felt very unique.

[Chris]: We’re all very distinctive brands, but I mean, running through everything is a consistency, isn’t it? In terms of operational excellence, customer service, all of those things. How do you instil that in a stable of quite diverse brands?

[Charlie]: I think we were very lucky. It’s a team effort. We’ve got a fantastic operations team, and I think a key mantra for us is the people who are colleagues and recruiting for attitude, training for skill. I think it’s a people business, and I think we will always made sure we hire people who–. Hospitality is as Danny Meyer, the great US restauranteur says, “It’s not a transaction, it’s a way you make people feel.” You can get service from a vending machine, and it’s much more than about getting drink from A to B. It’s about that experience, and it’s about how you relate to people.

So, I think having people front and centre who offer hospitality has just been absolutely key, and obviously, having good operational procedures is fundamental. But there are lots of hospitality businesses that have that, but to stand out, I think it’s having excellent people and creating unique concepts that aren’t run of the mill. I think we do that through lots of touchpoints from our décor in our drinks to the entertainment we offer, and really try and immerse people in all in the worlds we create.

[Chris]: Yeah. Yeah. I mean, you’ve had to make some very difficult decisions in 2020 and painful ones. I’m sure you’ve had your metal tested. Have you learnt anything about yourself in all of this?

[Charlie]: Yeah. I mean, it’s been horrendous, really. As I said, not in our worst nightmare did we ever foresee something like this. It was just not something that registered. So, we’ve been tested. Absolutely. I’ve learnt a huge amount, really. I think back in March of last year, I was still in shock, and probably if I’m honest, in denial. I think I’m very lucky. I’ve got a very good business partnership with Duncan. We’ve been business partners for 20 years before Inception Group. We had a promotions business.

[Chris]: Yeah.

[Charlie]: So, I think Duncan is a very good defensive player. I’m probably better as an offensive player, and I think we had to be very decisive. To begin with, it was purely just a cash crisis and managing cashflow and holding out for government decisions from furlough. I mean, to work through with landlords, but we’ve got a great CFO who’s helped us with this. Yeah, we’ve learnt a huge amount. I think it will clearly haunt us in many ways, this crisis, but I think we’ll come out more resilient and stronger for it.

[Chris]: How’s that? So, are there positive takeaways from this, then would you say? Have there been any?

[Charlie]: I think it’s certainly forced us. Very few companies have the ability to reset because when you’re a profitable business, as we were, and you’re open. Most of our businesses were open nearly every day of the year other than Christmas day. You don’t really have time to reflect and to try different things.

[Chris]: Right.

[Charlie]: So, I think, certainly, we’ve simplified things.

[Chris]: Yeah.

[Charlie]: Which I think is positive, and we’ve tried different things, which we wouldn’t have been brave enough to do and smaller menus and rather than opening Mr Fogg’s on a Saturday afternoon for a complex afternoon tea, we’re actually just have opened for cocktails and actually has been just as popular with cocktails. We wouldn’t have been brave enough to take away that afternoon tea. So, it’s forced us down a road, and certainly, there were some positives from it.

I think it’s brought the hospitality sector a lot closer together, us as a business closer together. But I think when we consider that the sector has really shown how resilient it is, but how fundamental it is, not just for the economy, but I think to the fabric of people’s lives.

[Chris]: Yep.

[Charlie]: I’ve certainly made some great contacts and some great friends within the sector that I didn’t know before.

[Chris]: Yeah.

[Charlie]: I think we’re all looking out for each other more than we were. I definitely don’t view other people in the sector as competitors anymore. I think we’re all comrades and colleagues, and I think that’s been a nice silver lining from it.

[Chris]: That’s positive right?

[Charlie]: Yeah. I think it has also shown the UK just how reliant we are on the sector. It’s the third-largest contributor in employees millions of people.

[Chris]: Yeah. You’ve taken on quite a high-profile role speaking regularly to the media about the effects of the pandemic on the sector. Do you think the governments, I mean, do you think they’ve listened to anything that the sector has said?

[Charlie]: I think so. I mean, yeah. I mean, I certainly, to begin with, kept quite quiet. We were just, to be honest with you, very busy and just trying to sort out our own affairs.

[Chris]: Sure.

[Charlie]: And make sense of it. But I think sort of from late Spring onwards last year, I did start sort of accepting invitations to talk about things when I felt that was something I wanted to say rather than just for the sake of it.

But at times, I think I’ve been very frustrated by some of the government policy. Clearly, right now, a lockdown is the only sensible decision, and I fundamentally accept the measures in place now need to be. I think there were times where I felt frustrated that central, well retail, not just the central, but all retail could remain open, and people piling on the streets and into shops in sort of throughout London and hospitality had been shocked.

I’ve also felt like the support is not proportionate to the restrictions placed on us. When you consider furlough actually is a cost to us. We still pay a national insurance and pension contributions, which is costing us tens of thousands a month with no revenue.

[Chris]: Yeah, yeah.

[Charlie]: We’re also some landlords have been great others, not so great. There is rent and service charge accumulating. There are lots of utility bills. There are lots of other fixed costs, annual contracts that you can’t get out of. So, every week we’re closed costs us tens of thousands of pounds, and the grants don’t even come close. They probably haven’t even covered 10% of that cost.

[Chris]: No.

[Charlie]: I felt frustrated because politicians, I think—I described it on the news the other day as them appearing like well-trained parrots. They repeat the same thing again and again and quite often don’t listen, but then I also do understand that the amount of money that has had to be ploughed in the economy is colossal. Even the other day, when it was 4.6 billion, the cost of those one-off grants, which is a huge amount of money.

[Chris]: Sure.

[Charlie]: But actually, given the scale of the closure, it doesn’t go very far. I think at times, the government has wasted money. You think 22 billion on track and trace, the equivalent of two aircraft carriers. The entire NHS budget. The amount of money that was spent on PPE early on. The business rates relief that was even given to supermarkets, many of which have done the right thing and handed that money back. You kind of appreciate the fact that it hasn’t—I think a lot of the support could have been more targeted. I think hospitality, even if you consider we have a nightclub, Maggie’s, and that would’ve been closed for a year soon. I’m sure it’ll be closed for well over a year. We haven’t really had enough support.

So, I think those are my frustrations. But we remain hopeful that the March budget will bring good news and that we can gradually recover. I think we want to, as a sector, lead the UK out of recession.

[Chris]: Sure, sure. The insurance sectors had a great pandemic in terms of reputation. The recent court case, has that moved the dial a little bit, do you think, for businesses that have been seeking an insurance claim?

[Charlie]: I think, yeah, the insurance industry has behaved absolutely despicably throughout this, the way they have tried to avoid paying out. There are many businesses for whom now it is too late.

[Chris]: Right, yeah. Yeah.

[Charlie]: Who were insured and who now have gone under. I think they are certainly the villains of this pandemic, and rightly so. I think it completely depends on the wording of your policy. We are, in our situation, getting legal clarity on it at the moment. I think it will help many. For others, it won’t, but they’re doing everything they can to get out of paying. But I think the fact that they were so dishonourable to, even at the last ruling, not pay and appeal it, which luckily the Supreme Courts have held up on the benefit of the insured.

But it’s incredibly sad to think businesses that didn’t need to go under who’ve been paying their dues and their insurance for business interruption haven’t had the coverage. They should be paying it and paying it immediately, and that’s why we all paid business interruption insurance for these sort of once in a generation sort of occurrences.

[Chris]: Sure. So, given everything that’s happened in the last year or so, do you think hospitality is still a fantastic career for someone leaving school or university who wants their first job, or they want to build a career like you did?

[Charlie]: I think it is. I mean, I think in the UK, sadly hospitality isn’t seen to be a career choice as much as it should be. I think it’s a phenomenal sector. It encompasses people and just creating great experiences, and it’s a fantastic foundation to learn, to run a business.

[Chris]: Yeah.

[Charlie]: I very much hope that—I think one of the big challenges we’re going to find post-Brexit is recruitment. I think it’s very worrying. I read The Financial Times over the weekend that 700,000 European nationals have left London since the onset of the pandemic.

[Chris]: Yeah.

[Charlie]: So, I think recruitment’s going to be the biggest challenge that the sector faces, and certainly, I hope that if we can’t sadly employ our European friends that we can start to encourage more Brits to join the sector. So, I hope that does happen.

[Chris]: Sure.

[Charlie]: I think hospitality has a bright future ahead of it. Clearly, it’s going to be a sector licking its wounds for some time yet as it slowly recovers, which hopefully will happen from sort of Q2 onwards this year.

[Chris]: But you’re optimistic for the future?

[Charlie]: I am. I think there was a lot of nonsense at the beginning about everyone’s going to continue sort of socialising on Zoom and virtually. I think that yes, these are great tools, and it’s working. Whilst through necessity, it’s been good, and probably there are work meetings that don’t have to happen face-to-face anymore and are more efficient over an online channel. But I think nothing replicates meeting people in the flesh and seeing friends and family in a bar or restaurant. I think people have never wanted to dance more. I think nightclubs, when they get going, are going to boom.

[Chris]: Yeah.

[Charlie]: There is talk of the roaring twenties, and I think that could well happen. I’m optimistic about a city like London too. I think there’s a lot of talk about London being over and Central London. This great city has survived a great fire and two World Wars, and I think we will get through this as well.

meIt’s not going to happen overnight.

[Chris]: Absolutely, and other pandemics that have been far worse.

[Charlie]: Exactly.

[Chris]: So, I think you’re right. I think London has a great energy and a great vibe, and I think it will continue to attract the brightest talent from wherever they are in the world.

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