London 2012: Will the Olympic legacy be a logjam?

In a little over 10 weeks the world’s biggest McDonald’s will open its doors at London’s Olympic Park. It expects to serve up around 10% of the 14 million meals that will be provided during the Games. And it’s not just McDonald’s that’s licking its lips. The British food and drink industry as a whole stands to strike gold as the largest peacetime catering operation the UK has ever seen swings into action.

But what of the businesses around the country that have had the Olympic circus turn up on their doorsteps? Visa reckons that the Olympics and Paralympics will give the British economy a £750m boost over a seven-week period this summer. But how much of a cut do these companies expect to take?

The Grocer commissioned Retail Attack CBJWT to conduct a survey of retailers close to Britain’s Olympic venues. Encouragingly, 78% expect the Games to have a positive impact on business during the event. And though Verdict Research expects the impact of London 2012 on the UK’s supermarkets to be worth just £10m, those close to the Olympic sites expect a boom. “We’ll definitely get a pickup in trade,” says a big four store manager close to the Olympic Park in east London.

For others however, the Olympic dream is fast becoming a nightmare. Sixty nine per cent of the 250 retailers we polled in our survey were based in London. Of these, more than half (52%) say disruptions to the capital’s roads will have a negative impact on their business. Delays to deliveries is the greatest threat the Games pose, 31% of the total say. And 52% believe the Games’ organisers LOCOG have not done enough to minimise disruption.

Perhaps most worrying of all is the fact only 23% believe, once the traffic jams have cleared, that the Olympics will leave a lasting and positive legacy on their local area, with 51% rejecting the idea, and 26% unsure (see chart on p38 for full details of the survey).

This week 40 London companies situated close to the Olympic Park are preparing to take LOCOG to court over the disruption they claim the event will bring. They say they’re facing ruin and are calling for compensation from LOCOG (50% of retailers polled in our survey support their cause).

Shortly after London won its bid to host the 2012 Games the then secretary for culture media and sport, Tessa Jowell, wrote to businesses and pledged that no company would be left out of pocket by the Olympics. That promise has been broken, says the consortium of businesses, as it prepares its legal case. Tessa Jowell’s letter will play a central role in the coming compensation claim, the consortium adds.

“Traffic will be horrendous. We just don’t know how we’re going to survive”

Graham Phelps, Phelps Transport

The companies range from logistics providers to printers and include a number of food and drink businesses, such as Mr Bagel - one of the country’s biggest suppliers of bagels to the multiples - and wholesaler Essex Foodservice Group, which operates on the doorstep of the Olympic Park and employs some 70 people from the surrounding area.

Those 70 jobs, and more than 500 more, are now hanging in the balance, says EFG’s MD Michael Spinks. “LOCOG are the neighbours from hell,” he says. “They have behaved without integrity and respect. They think they can steamroller small businesses. I am not going to let them get away with it. I’ve asked for an ombudsman to be created. We will sue them after the Games for compensation.”

Essex Foodservice, which also operates as Essex Flour & Grain, is among the many businesses that rely on the A12 for the flow of goods in and out of their premises. LOCOG warns the route will face severe disruption and Olympic traffic will take priority at key times of the day. However, it hasn’t confirmed exactly what restrictions local businesses face, says Spinks.

Closing key roads in London will throttle businesses, large and small. Booker, the UK’s biggest cash and carry wholesaler, will run all its London depots around the clock during the Games. And Dhamecha Cash & Carry will operate its depot at its Wembley HQ 24 hours a day to offset the traffic chaos it expects around neighbouring Wembley Stadium, venue for the Olympic football. It’s also considering keeping its other London depots open through the night.

“LOCOG are the neighbours from hell. They steam-roller small businesses”

Michael Spinks, Essex Food service

The expense of 24-hour opening will cancel out any benefits, says Pradip Dhamecha, CEO of the £527m turnover company. “The Olympics will have a neutral impact. Some of our customers won’t be able to get to us. We’ll try and steer some to our other branches.”

Some customers, however, will inevitably turn to more accessible competition, and the fear is that they will not return when the Games are over. “The question I have is will my customers come back to me after the Olympics?” queries Graham Phelps, MD of Stratford-based Phelps Transport. “In the immediate area the traffic will be horrendous. A lot of the stuff we transport is time sensitive, so if we can’t get it out we will lose contracts. Because LOCOG has not come out and given anyone a definite answer about what’s going on we just don’t know how we are going to survive.”

Supermarkets close to the Olympic venues do not entirely share these concerns. “All our deliveries are always out of hours anyway - they’d never be at the peak times, so the traffic won’t make a huge difference,” says the store manager of another big four supermarket close to the Olympic Park. But he admits: “The impact on trade is a bit unknown at the moment. We won’t know until it happens. But there will be loads more people in the area so hopefully it will bring in more trade.”

Chain reaction
LOCOG expects the capital’s population to swell by 12% during the Games, with as many as 800,000 spectators travelling to the Olympic venues on the busiest days. Anne Scheibler, who manages two companies close to the Olympic Park - German Deli, which sells on the web, at Borough Market and a shop at a London Bridge, and wholesaler and market trader Artisan Foods - also believes she could be quids in. If supplies can get through the expected gridlock that is. And that’s looking like a very big “if” says the consortium of businesses. “We expect to be selling a lot of German sausages and other goods likes that as people plan barbecues during the Olympics, but if supplies of fresh food don’t get through from Germany it could be a disaster,” says Scheibler, who has been stockpiling dry goods in her East London warehouse for some time in anticipation of the event. “All companies are connected so if one company that supplies others breaks down there could be a chain reaction to many others across London. It could be disastrous.”

“Who’s running this? LOCOG or the council? We have no concrete info about what’s going on “

Husseyin Husseyin, Mapps Café

Drop in domestic trade
With LOCOG advising London-based businesses to allow staff to work from home wherever possible, and the Olympic venues more than amply catered for, there are also fears that lunchtime trade for the capital’s cafés and sandwich shops could take a huge hit. “There will be a very muted impact on London’s businesses,” says Neil Saunders, MD of retail research agency Conlumino. “The Games could drive domestic customers away. They’ll be a lot of people thinking that they will avoid London because of the crowds. There will be a lot of businesses who will feel aggrieved.”

Like Husseyin Husseyin, manager of Mapps Café, which has been keeping Stratford in hot tea and butties for the past 30 years. “If they shut down the big businesses around here for the duration of the Games that will be all of our business gone,” says Husseyin, who has been running the café for the past 15 years. “We rely on all these companies around us. We get at least £150 a day from one of them. If they shut down for two or three weeks, that’s a lot of money. I’m not a fortune teller but I cannot see any increase coming in passing trade. This could kill us.”

Husseyin’s staff, some of whom have to start work at 5am, have been told they must apply for permits to be able to travel to and from work because of the premises’ proximity to the Olympic Park. On the other hand, the café manager says LOCOG has told him he can put tables and chairs outside his premises to attract customers. He is not convinced, however. “Normally you need council approval to do that,” he says. “So who exactly is running things - LOCOG or the council? We just don’t know. We don’t know where we can get these permits from and there’s not long to go now. We have no concrete information about what’s going on.”

“The question I have is will my customers come back after the Olympics?”

Graham Phelps, MD Phelps Transport, based in Stratford

Many of the neighbouring companies Husseyin relies on for his trade now face squeezing a day’s work into the hours of darkness, when traffic will be less restricted. Transport for London has relaxed rules on night-time deliveries, but many are sceptical about how beneficial this will be - staff are unlikely to view the prospect of working through the night favourably and there is no guarantee that customers will switch to nocturnal hours.

German Deli’s Anne Scheibler’s answer to this problem is simple: her drivers have been issued with keys to the premises of several of her customers so they can make deliveries at night without customers needing to be present. “It is very unusual,” she says. “We are lucky because we have been supplying some of them for 20 years. It’s a trust thing.”

For others, measures such as this are out of the question. “LOCOG’s plan for me is to only allow me access to my site between midnight and 6am,” says Essex Foodservice Group’s Michael Spinks. “We can’t work during these times. The whole thing is farcical.”

Negative legacy
LOCOG rejects the claim that it has failed local businesses. “We want to ensure people who live and work in the vicinity of our venues are able to continue going about their business with the minimum of disruption this summer,” says a spokesman. “We are working closely with local authorities and Transport for London on our plans and liaising with local businesses to talk to them about their plans and requirements.”

Few of the companies The Grocer has spoken to are convinced. They say that for them the legacy - a word that’s often hard to avoid when talking to LOCOG - of London 2012 will be far from positive. “If we lose customers we will have to cut back on our workforce, clearly that will mean job losses for the local area,” says Phelps. “That will be the legacy of the Olympics - unemployment.”