Shamil Thakrar, co-founder of the Indian restaurant group Dishoom, “can’t stand” serving delivery food.
“I thought what we did was get you in and serve you to the best of our abilities,” he said. “Delivery felt like the opposite of that.”
But as lockdowns have dragged on, Dishoom has done a volte-face. The company has opened six delivery-only “dark” kitchens in London and another in Brighton. It has also hired 50 new chefs to service takeaway demand. “I’m beginning to think . . . we do have a business here,” Mr Thakrar admitted.
The pandemic has exacted a heavy toll on the UK’s 24,400 restaurants, which have either been forced to close or operate under strict restrictions for most of the year.
Sales across the sector were 30 per cent down on last year’s before the second lockdown came into force on November 5 according to research firm CGA. Since then, only those offering takeaway services have been able to trade.
Thousands of operators across the sector have signed up with one or several of the three dominant delivery platforms — Deliveroo, Uber Eats and Just Eat — in order to salvage demand. But not all have done so enthusiastically, with growing complaints that high commissions taken by the apps make it difficult to make money from delivery alone.
Since the first lockdown in March, surging use of delivery apps has been sustained. Deliveroo said that since the second set of national restrictions came in at the start of the month more than 1,400 new restaurants had signed up.
Uber Eats reported a 150 per cent jump in UK deliveries year-on-year in the three months to September. The group’s service now covers 75 per cent of the UK population, up from 50 per cent at the start of the year. Just Eat, the UK market leader by order volumes, said it processed 17m transactions in October, up from 10m in January 2019.
“For restaurants, there is no longer a question mark over food delivery the way there was at the beginning of the year,” said Toussaint Wattinne, general manager of Uber Eats UK.
While the first lockdown brought widespread disruption to food delivery apps when some of their biggest restaurants went offline altogether, many food businesses went into the second lockdown much better prepared.
Andy Hornby, chief executive of The Restaurant Group, which owns the Wagamama chain, said that delivery sales had doubled under lockdown and he expected them to be more than a third of Wagamama’s revenues next year, up from around 25 per cent over the summer.
But commission rates for Deliveroo and Uber Eats are typically about 30 per cent, depending on the kind of order or certain discounts that have been offered to restaurants this year. (Just Eat charges a lower commission at roughly 14 per cent, because most restaurants deliver orders themselves instead of using the larger fleet of couriers that Uber and Deliveroo provide.)
That means for many smaller cash-strapped businesses, delivery apps extract a heavy toll.
“If you think you are going to make money with Deliveroo or Uber Eats it is not going to happen,” said Felipe Preece, whose initiative Under One Kitchen helps restaurant owners to make food for several different brands out of their kitchens in order to reduce costs.
Instead, as customers become used to ordering meals online, restaurateurs have begun to seek alternatives that charge less or offer more tailored services — or create their own.
“There is massive disruption coming to the Ubers and Deliveroos of the world,” said Salima Vellani, founder of Kbox Global, which runs several online-only restaurant brands targeting delivery apps from inside hotels, pubs and other underutilised kitchens. “There are so many [new] players coming into that space right now.”
One is Supper, which caters to high end London establishments such as the Harrods Dining Hall and Nobu. Its revenues have increased to some £15m this year, up 700 per cent on pre-Covid levels.
Another is Slerp, which connects restaurants to couriers at a commission rate of 7.5 per cent. Slerp’s founder JP Then started the service in 2016 to manage online orders at his London-based mini-chain Crosstown Doughnuts. After opening it to other restaurants a year ago, Slerp has signed up more than 500 locations, including high-street sushi chain Itsu and the Savoy hotel restaurant.
But Crosstown — like many other Slerp restaurants — also remains on Deliveroo. Mr Then regards Slerp as “complementary”, allowing restaurants to take back control and develop a direct relationship with customers. “It didn’t really make sense as an operator to put all our eggs in one basket,” he said.
But other restaurateurs are shunning shared platforms and striking out alone.
Harry Niazi, owner of Olley’s, a fish restaurant in south London, said that he was still using Deliveroo and Uber Eats for now but this month set up his own app and is “poaching” drivers from the big companies as they come to pick up food.
Olley’s will pay drivers a £5 flat fee to serve a two-mile radius, he said, arguing that this would enable him to drop menu prices that he had increased to cover the delivery aggregators’ rates.
Restaurateurs’ complaints are not confined to fees. Despite assurances from Deliveroo and Uber that they work closely with restaurants to ensure just-in-time pick-ups and careful delivery, some still find couriers who slide pizza boxes sideways under their arms or eat customer orders.
Charlie Mellor, owner of The Laughing Heart in Hackney, co-founded the London-based delivery service Big Night during the first lockdown after receiving so many complaints that he feared customers would not want to return to his restaurant. The Big Night app has surpassed its £100,000 crowdfunding target by 273 per cent and is onboarding restaurants as fast as its eight-strong team allows.
Despite their rapid growth, few suggest these niche start ups will challenge the big delivery apps, which have become one-stop shops for virtually any kind of takeaway food as well as groceries.
The big platforms have lowered their fees in some instances to attract restaurants at a time when the hospitality industry has been left with little choice but to go online. During the second lockdown, Uber and Deliveroo both waived restaurant fees if customers picked up the food themselves.
“The fees that we charge are absolutely essential for us to be able to operate, in a safe and reliable way,” said Uber’s Mr Wattinne, “and to enable restaurants and kitchens to keep hiring across the UK”.
Deliveroo says it offers extra support to independent restaurants, such as promoting them more prominently within its app and lowering sign-up fees. Some restaurants are also able to negotiate lower commissions, for instance if they agree to list exclusively on Deliveroo, or if the app maker expects them to attract a large number of new customers or orders.
Mr Thakrar said he would continue working with Deliveroo as long as it made people want to visit his restaurants. “If your memory of Dishoom is a bad one, we should stop.”
China’s leaders focus on post-Covid economy at annual meeting
China’s National People’s Congress, the country’s annual rubber-stamp parliament session, will convene on Friday for a meeting set to focus on a problem many other countries wished they had: how to rein in an economy that has rebounded from the coronavirus pandemic.
“There have been intense discussions about monetary and fiscal policy,” said Wang Jun at the China Center for International Economic Exchange, a government think-tank in Beijing. “The primary goal is to stabilise leverage, but if policy [tightening] goes too far too quickly it may have a negative impact on financial markets as well as the real economy.”
The NPC will run for about a week and is typically a forum where previously agreed measures and policy objectives are formally approved. Last year’s session, however, was dominated by Chinese president Xi Jinping’s surprise announcement of a stringent national security law for Hong Kong after the city was rocked by anti-government protests in 2019.
The gathering also provides the biggest stage of the year for Xi to project his unchallenged grip on both the government and the Chinese Communist party as he prepares for an unprecedented third term in power in late 2022.
China’s post-Covid recovery contrasts starkly with the situation in the US, where the pandemic has claimed the lives of more than 500,000 Americans and President Joe Biden is pushing Congress to pass a $1.9tn economic stimulus package.
Guo Shuqing, one of China’s most powerful financial regulators, warned this week about the dangers of “extremely loose monetary policies” in the US and other pandemic-wracked economies, saying the measures could cause “too much fluctuation” in Chinese financial markets.
He added that China’s property market was still afflicted by “relatively large bubbles” and suggested lending rates would “rebound” this year. Guo, who heads the banking regulator and is also the most senior party official at China’s central bank, pronounced late last year that the real estate sector was the country’s “greatest grey rhino in terms of financial risk”.
Guo’s comments sparked a sell-off on regional markets, illustrating the difficult balance he and other financial officials must attempt to strike. Stimulus measures rolled out by Chinese president Xi Jinping’s administration early last year helped spur investment but also propelled debt levels in the world’s second-largest economy to about 270 per cent of GDP.
“While the leadership feels confident about the economy’s trajectory, there is still a lot of uncertainty,” said Andrew Polk at Trivium, a Beijing-based consultancy. “Authorities need to find a way to unleash consumption and pick up slack from industrial production and real estate investment.”
Shuang Ding, chief China economist at Standard Chartered in Hong Kong, said Beijing was likely to reduce its budget deficit to 3 per cent of GDP, down from 3.6 per cent last year. But he also forecast the Chinese economy would grow at least 6 per cent year on year, with “substantial room for outperformance”, and create 11m jobs.
“The most pressing economic issues are how to withdraw from last year’s expansionary fiscal policy and how to increase consumption,” said Jia Jinjing, an economics professor at Renmin University in Beijing. “The central deficit budget will be lower than last year but still above 3 per cent. We cannot rely too much on increased debt to spur consumption.”
NPC delegates will also formally pass the party’s 14th five-year economic plan, which is focused on achieving “self-reliance” in a number of critical technology sectors as well as ambitious environmental goals, including reaching peak carbon dioxide emissions by 2030 and net-zero emissions by 2060.
The NPC session in 2020 was delayed for almost three months by the pandemic and fixated on the imposition of the national security law on Hong Kong.
This year, it is likely to approve measures that will further reduce the pro-democracy camp’s representation in the city’s legislature. It is also expected to unveil rules consolidating Beijing’s hold on an already pro-establishment “election committee” that chooses Hong Kong’s chief executive.
Dozens of Hong Kong democracy activists, including publisher Jimmy Lai and jailed student leader Joshua Wong, have been charged with alleged offences of the security law. In a speech last month, Xia Baolong, head of the Chinese government office responsible for Hong Kong, singled out Lai and Wong as “extremely vile anti-China elements”.
“There doesn’t seem to be any end to the crackdown,” said Willy Lam, a China politics expert at the Chinese University of Hong Kong. “Xi has made up his mind to snuff out Hong Kong’s opposition movement altogether. For ordinary people, Beijing will insist on ‘patriotic education’ in the schools and media.”
A Chinese academic who advises Beijing on Hong Kong issues said the territory had been “too unbridled” prior to last year’s passage of the national security law. “The central government had no other option,” said the academic, who asked not to be identified. “The Hong Kong opposition overestimated its power.”
Additional reporting by Xinning Liu in Beijing
Sunak goes big and bold to try to repair the public finances
Chancellor Rishi Sunak’s Budget was big, bold and broke many longstanding records for the public finances.
At an estimated £355bn, the level of UK government borrowing forecast for 2020-21 is due to be the highest since the second world war, reflecting the severity of the coronavirus crisis. It highlights the sheer scale of emergency state support for companies and households during the Covid-19 pandemic.
The tax rises announced on Wednesday by the Conservative chancellor for the middle of the decade — affecting businesses and individuals — will be the largest since 1993. The increases will raise the UK tax burden to its highest level since Roy Jenkins was the Labour party chancellor in the late 1960s.
Justifying his approach, Sunak told the House of Commons: “Just as it would be irresponsible to withdraw support too soon, it would also be irresponsible to allow our future borrowing and debt to rise unchecked.”
As far as the public finances are concerned, the March 3 Budget will become known as a “give then take” affair that will reshape the relationship between the state and the private sector for many years ahead.
And the figures in the Budget documents confirm the coronavirus crisis has utterly transformed the public finances for the worse.
At the March 2020 Budget, when the UK had little clue about the enormity of the pandemic, the Office for Budget Responsibility thought the government would borrow £55bn in 2020-21.
Sunak, who unveiled a £12bn support plan for the economy in what was his first Budget, has since had to add huge amounts of public spending in 16 major announcements.
On Wednesday, he outlined another £40bn of support, bringing total spending to £344bn, according to the OBR: roughly 16 per cent of gross domestic product, and well above the average of 13.3 per cent among advanced economies.
It is this spending, alongside a loss of £90bn of expected tax revenues, that is set to raise the level of government borrowing to the highest level in peacetime.
In 2021-22, the government is still planning to spend £93bn on virus related support, mostly going to the NHS, but with large sums also for continued support for companies and households.
Karen Ward, strategist at JPMorgan Asset Management and a former adviser to Philip Hammond when he was chancellor, said Sunak was wise to keep splashing the cash in the next financial year. “The chancellor has rightly erred on the side of an extension that is potentially too long, rather than one that is too short,” she added.
With the colossal borrowing, underlying UK public debt, excluding temporary Bank of England schemes, is set to jump from a pre-pandemic forecast of 73 per cent of GDP by the middle of this decade to 97 per cent in the latest OBR prediction.
The 24 percentage point rise in the core debt burden is the second large jump in a little over a decade following the fiscal shock associated with the 2007-08 financial crisis. At about 100 per cent of GDP, UK public debt is now at its highest level since the early 1960s, when it was gradually coming down following the second world war.
This Budget was not just about fiscal support in 2021-22, but also stimulus to power the recovery, according to Richard Hughes, OBR chair. He said Sunak’s £25bn “super-deduction” in corporation tax would “stoke the recovery” and “encourage businesses to bring forward future investment into the next two years”.
But after 2021-22, the giveaways stop, and Sunak becomes the revenue raising chancellor, with very large increases planned in corporation and income taxes.
The moves risk damaging the UK’s international standing. In 2018, the OECD said the UK taxed corporate profits below the rich country average. Britain collected 2.6 per cent of national income through the levy, compared with the OECD average of 3.1 per cent.
By 2025-26, the OBR projections suggest UK corporate taxes will generate revenues above the OECD average, although Hughes said this level was “one [the UK] seldom sustained for very long in the postwar period”.
Paul Johnson, director of the Institute for Fiscal Studies, a think-tank, said Sunak’s corporation tax rise was a significant risk. “For all the rhetoric about it leaving the headline rate here below that in other G7 countries, our effective tax rate will be relatively high,” he added.
The tax rises will tackle the high level of borrowing, however, according to the OBR.
It projects the increases will lower the current budget deficit in 2025-26 from £37bn, had Sunak done nothing, to £1bn, almost balancing the government’s books excluding public investment. This is a core ambition of ministers.
Some economists thought Sunak should have been more explicit in setting new targets for the public finances.
Hande Kucuk, deputy director of the National Institute of Economic and Social Research, a research organisation, said the Budget needed “a comprehensive fiscal framework to build confidence in a sustained recovery given the significant uncertainty regarding the long-term effects of Covid-19 and Brexit”.
Other economists were more forgiving since there are huge uncertainties hanging over the public finances. The path of the pandemic is perhaps the largest, but Sunak also has to worry about the possibility of increased debt servicing bills if interest rates rise, and whether he can cut spending as he plans when the virus subsides.
Torsten Bell, director of the Resolution Foundation, another think-tank, was sceptical the chancellor would be able to reduce departmental spending.
The Budget documents showed a stealthy £4bn a year cut in spending alongside the tax rises. “He’ll end up spending more than that,” said Bell, adding this would add to pressure to proceed with additional tax rises.
But Sunak is an optimist, and hopes the uncertainty will go in his favour. If the economic recovery is sufficiently rapid, the chancellor will be looking to the OBR to cut its estimate of a 3 per cent long term hit to the economy from coronavirus.
And if that happens in a future Budget, Sunak can look forward to the possibility of tax cuts before the next general election.
A pivotal moment for Scotland’s independence champion
Nicola Sturgeon, Scotland’s first minister, has credited her former mentor and predecessor Alex Salmond with making her career.
Sturgeon’s appearance on Wednesday morning before a parliamentary inquiry into her Scottish National party government’s handling of harassment complaints against Salmond will be a potentially pivotal moment for her, and her dream of leading Scotland to independence from the UK.
At an extraordinary appearance before the parliament committee on Friday lasting almost six hours, Salmond accused Sturgeon’s closest associates of maliciously colluding to drive him from public life and his former protégée of breaching the ministerial code by intentionally misleading parliament — potentially a resignation matter.
Sturgeon denies the allegations. But the televised session must have made difficult viewing for the formerly shy working-class girl from Ayrshire in south-west Scotland who has, in recent years, helped bring her nation closer to independence than at any time since the 1707 union with England that created Great Britain.
When Sturgeon succeeded Salmond as first minister in 2014 — in the aftermath of a referendum in which Scottish voters backed staying in the union by 55-45 per cent — she was fulsome in praise of her predecessor. “Without the guidance and support that Alex has given me over more than 20 years, it is unlikely that I would be standing here,” she told the Scottish parliament.
But Salmond was hardly the first figure in the SNP to spot Sturgeon’s talent. Aged just 16, Sturgeon in 1987 timidly rang the bell of then SNP general election candidate Kay Ullrich to offer her support. Four years later Sturgeon was a veteran student campaigner and, according to biographer David Torrance, Ullrich was presciently describing her to party comrades as the future “first female leader of the SNP”.
Sturgeon, who describes her nationalism as more “utilitarian” than “existentialist”, has said her early interest in politics was driven by anger at the social cost and deindustrialising impact of the policies of late UK prime minister Margaret Thatcher and the powerlessness of Scottish voters to resist them.
After studying law at Glasgow university, she became a community lawyer and a rising SNP star. In 1999, she was elected to the new devolved Scottish parliament and by 2004 she was a contender for the party leadership. But she accepted the junior place on a joint ticket after Salmond, who had already led the SNP from 1990 to 2000, entered the race.
Robert Johns, politics professor at Essex university and author of a book on the SNP’s rise, said Sturgeon was a big factor in the party’s fortunes as deputy leader from 2004 and as deputy first minister of Scotland after it won power in Edinburgh in 2007.
“She’s got better and better at being seen as a normal human being and becoming likeable, while at the same time not losing that reputation for competence,” Johns said.
After playing a central role in the 2014 referendum, which the pro-independence Yes campaign lost by a much smaller margin than expected, Sturgeon took over an SNP energised rather than dispirited by defeat.
Today, the first minister enjoys approval ratings unmatched by any other UK party leader despite 14 years in government and a patchy record on key policies.
An international education survey in 2019 found Scotland’s progress in narrowing the attainment gap between advantaged and disadvantaged pupils had actually slowed since Sturgeon made the issue her top priority four years earlier. And the SNP’s reputation for governing competence has been dented by serious problems with construction and equipment at flagship hospitals in Edinburgh and Glasgow.
Sturgeon’s instinctive caution and mastery of detail — on display at near-daily televised briefings — appears to have served her well during the coronavirus pandemic. Most voters think she has handled the crisis better than UK prime minister Boris Johnson. While Covid-19 deaths in Scotland are high by international standards, they have been somewhat lower than in England.
But Sturgeon’s determination to keep a tight rein on the SNP and her reliance on a small inner circle of confidants, which includes her husband and SNP chief executive Peter Murrell, has fuelled discontent among some party colleagues. Formidable self-discipline was an ingredient in the once anarchic SNP’s rise, Johns said, but now the party felt “over-professionalised”. “It’s more top-down than it ever used to be,” he added.
Some in the SNP also believe that Sturgeon has been too cautious to take full advantage of a rise in support for independence since the UK in 2016 voted for Brexit despite 62 per cent of Scottish voters backing staying in the EU. Tensions in the party have also grown over her plans to make it easier for trans people to receive official recognition for the gender they identify as.
But it is the rift with Salmond that now threatens Sturgeon’s hopes for a renewed push for a second independence poll.
Relations between the two had already been tested by Salmond’s decision to host a chat show on Kremlin-backed Russian broadcaster RT when in 2018 two civil servants made formal complaints against the former first minister dating to his time of office.
In 2019, the Scottish government accepted that its investigation into the complaints had been “tainted by apparent bias”. At a criminal trial last year, Salmond was acquitted of all of the 13 sexual offences charges against him.
Salmond has accused Murrell and Sturgeon’s chief of staff Liz Lloyd of involvement in a “concerted” effort to damage his reputation “to the extent of having me imprisoned”. They deny the allegations.
Salmond has also accused Sturgeon of breaching the ministerial code by misleading parliament about when she learned of the complaints against him and by failing to report meetings between the two. And he says she has presided over a broad failure of “national leadership”.
They are charges that, if proven, could prove politically fatal, but Sturgeon — a formidable debater — says she is “relishing” the opportunity to set the record straight on Wednesday.
With crucial elections for the Scottish parliament just nine weeks away, her committee appearance could have a major impact on the UK’s constitutional debate, said Mark Diffley, a consultant on Scottish public opinion.
Polls suggest the SNP has been on course to go from minority to majority government, removing its need to rely on the pro-independence Scottish Greens for support on constitutional matters and providing a strong mandate to demand UK approval for a second referendum.
But securing a majority in the proportionally representative Scottish parliament is a difficult feat that would be made harder if Sturgeon was not seen to effectively rebut Salmond’s allegations, Diffley said. “She can, with a good performance, recover some of the damage,” he added. “It’s a huge deal for her — and she knows it.”
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