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Fri 15th Feb 2013 - Friday Opinion
Subjects: The rise of premium, the opportunity of meetings, the future of foodservice
Authors: Paul Charity, Ann Elliott and Nathan Wall

The rise and rise of premium by Paul Charity

It was back in 2004 that former Mitchells & Butlers chief executive Tim Clarke told me, in the wake of opening The Cock at Wishaw, that there was huge untapped consumer demand for a premium dining experience in a pub environment. The company went on to prove his point by building 81 Premium Country Dining Group (PCDG) pubs across the country. In fact, it operates no fewer than 300 pubs that rely heavily on an above average quality dining experience – they are in, ascending order of food spend per head, 194 Vintage Inns sites (food spend per head is higher than at Harvester) 39 Village Pub and Kitchen venues and the aforementioned PCDG. The company has had plenty of success playing in the premium part of the park with Miller & Carter laden with potential after expanding to 26 sites.

The addition of the Spaniard Inn in Hampstead to its first two Castle Premium pubs also hints at another angle of attack. With 90 iconic Castle pubs – terrific pubs in great locations – there must be plenty of other opportunities to pitch a premium food and drink offer into premium buildings. It should be pointed out that M&B’s drive into the premium market very largely pre-dates the tougher trading environment that currently prevails. The company might have been hugely surprised to discover that the premium end of the market is having a pretty good recession. Analysts were treated to a tour of key M&B sites last October and were given some surprising insights on why the premium end of the market is faring so well. M&B reported that to sustain their eating out habits and frequency consumers are trading down at lunchtimes and trading up in the casual evening occasion. Average spend at lunch had dipped from £7.34 to £7.07 whilst diner spend increased by £13.11 to £14.37 (and stood at £16.65 in branded restaurants). Disposable incomes may be stagnant or eroding but consumers have sought consolation by treating themselves to better quality, more premium experiences. M&B chief executive Alistair Darby noted last month that the peak and troughs of trade have become more extreme, with consumers determined to mark occasions in style.

It was no coincidence that all of the major players reported strong sales growth on Christmas Day. Part of this will stem from more sites opening on 25 December – but it’s just as well if exploding demand is to be met. With sales so robust in this part of the market, it’s no surprise that each of the managed pub and restaurant companies is working on expanding its offer – Marston’s is developing ten sites under the Revere Pub Company and Greene King is premiumising country pubs under the d’Arry’s internal tagline. Bedrooms are moving in the same direction with Greene King’s Old English Inns division, Revere, Young’s, Shepherd Neame and Fuller’s all working to recast expectations of the quality that can be found above a pub.

The Restaurant Group parked itself ahead of the premiumisation curve when it bought Brunning & Price in 2008. Everything that has followed as the brand expands has been consistent with the standards put in place by its founders Jerry Brunning and Graham Price when they came together in 1988. Its promising growth brand Coast to Coast parks itself firmly at the premium end of the sector. Despite its premium prices, pop on to TripAdvisor to see how customers have warmed to its top-end food offer delivered with superior service. Premiumisation is having a trickledown impact elsewhere. With ferocious competition at the out-and-out value end of the market, elements of premiumisation provide a way of out-shining the competition. If you’ve touched bottom on price, the challenge is creating the perception of enhanced value through better service, environment or presentation. It’s a new and intriguing battleground. 
Paul Charity is managing director of Propel Info

The opportunity of meetings by Ann Elliott

One thing on my mind this week was how we can help pub and restaurant operators drive demand for their brand – particularly from those customers who want somewhere to hold informal business meetings. I meet lots of people informally and I don’t always (in fact almost never) want to have those meetings in a stuffy office or in a faceless rented space. By the look of those around me, I am not the only one feeling that way.

This casual business meeting market is a undoubtedly a great opportunity for many operators to fill their breakfast/ mid am/ mid pm dayparts with customers who might come back in peak trading times - during lunch/ in the evening or weekends.

Inevitably the starting point for operators has to be identifying who these customers are (and could be) and what they want/need and expect when they meet up with others. Some form of research really helps here. It doesn’t have to be terribly formal but it needs to give both quantitative and qualitative feedback that will help frame the offer and its communication.

One critical piece in the offer development piece is ensuring there is clear differentiation between you and the myriad of other operations in this space - from hotels, department stores, coffee shops through to motorway service stations and even the odd garden centre. What will you be famous for in the minds of those who use you for informal meetings? This has, of course, to be aligned with your overall offer and its USP.

It’s a truism that it’s easy for an operation to be fantastic when it’s in full flow and busy - less so when it’s quiet. This can be a real challenge for the shoulder period sessions when most informal business meetings are likely to take place and team motivation might not be at its highest. I have known some operators put their ‘worst’ team members on during these periods so they don’t have such an impact on customers – needless to say this tactic doesn’t provide a totally aligned experience for customers.

We have received briefs from clients wanting to specifically communicate their business meeting offer and they are fun and rewarding to deliver as results are pretty quick to come through. We consider the full range of marketing options in these communication plans including digital, social media, PR and local marketing.

Whilst we are about to open a London office, I won’t stop using restaurants and bars for my meetings as I want to see what’s going on in the market place and I still don’t like stuffy offices.

I prefer Café Nero to any of the other coffee chains for meetings – great coffee and nice team members. Speakeasy in Carnaby Street is a great alternative in the West End with brilliant coffee. Firmdale Hotels are wonderful for meetings because they have a variety of different seat arrangements so I can be more or less formal depending on the occasion. I had a breakfast meeting in Wetherspoon the other day where a latte and porridge (complete with a banana, honey and a bowl of seeds) was only £3.29. The Parcel Yard in Kings Cross is a good central location. Carluccio’s does a fab breakfast and the service is totally consistent throughout the day. The Somers Town Coffee house in Euston is great with very friendly staff and amazing meeting rooms. Absolute favourite has to be The Dean Street Townhouse with awesome food and very accommodating team members.

Key in most of these are - free WiFi, generous tables, wonderful coffee but a good range of other soft drinks too, great food and, most importantly, team members who are happy to see you.
Ann Elliott is chief executive of Elliott Marketing and PR

The future of foodservice by Nathan Wall

My 25 year career has involved working for diverse brands - Wimpy in its heyday, Burger King as it put roots down in the UK, and a decade on the bridge of HMS Wetherspoon. I’ve also seen fundamental changes in out-of-home foodservice in travel hubs. It leaves you with an interesting perspective. In fact, the very phrase ‘foodservice’ seems so antiquated nowadays.

Social and media changes over that period and the changes in expectations driven by travel, increasing affluence, the impact of the supermarkets and the rise of the celebrity chef have all created a millennial generation that wants more from food. I watched a fascinating documentary recently that followed the life and achievements of the magnificent Mary Berry and her television programmes, which were borne in a time when people complained that avocados were as odd as sugared fruit in a dessert. Mary now has cult status thanks to her reality bake-off show - and so the wheel has fully turned.

Millennials, representing over 80 million people in the US alone according to Viacom media, following research for MTV and VH1, ignore the old top-down approach to communication. They want better experiences and brands with a social conscience (note the Starbucks taxgate reaction). The good news is that they will be brand advocates for those culinary (non-Millennial word) or foodie brands that embrace this change of mood.

The multiple quarters of sustained growth by McDonald’s since 2003 (barring two months) is evidence of the trend in the mass market as it moved from the plastic Ronald McDonald days through investment in its environments and improved marketing. It’s been a contrast with the decline of others who share that market space. Its success is not driven primarily because straitened consumers have been trading down - the brand became more consumer-centric and alive to its market.

Here in the UK, the rise of the posh burger, the relaxed dining experiences provided by Hawksmoor, Byron, Jamie Oliver and many others like Russell Norman all play to this theme.

Authenticity and quality is key. The recent ‘horsegate’ saga will only accelerate the drive toward brands that are trustworthy. This is, after all, only the follow up to ‘pink slime’ a few years ago. Stop reading this, hit YouTube for 2:20 and search for ‘back to the start’ by Chipotle – it has great power (and over seven million views).

How is the UK out-of-home foodservice going to develop? I’d summarise the future in ten key words (the challenge is how your company delivers against these): experience, integrity, engagement (customers and staff), quality, social, value, passion, detail, innovation and energy.

These are the trends of 2013 onward. The food we eat is likely to continue the trend toward ever improving quality. Protein costs and other agri-inflation, in particular, will make menu design an ever greater challenge over time.

High streets will reinvent themselves as centres of entertainment where people who choose to go out can connect in reality, as opposed to virtual connection. Already, consumers can enjoy a mix of great experiences that cannot be replicated at home. In simple terms, home will be where you rest and order stuff on the internet. I ate recently at Za Za Bazaar in Bristol, which follows on from some notable others in providing a giant food emporia – it’s an experience you can’t get at home. I believe this site still has much to do on many of my ten buzzwords words above. But it was literally buzzing where others courted tumbleweed.

We will see a decade of Darwinian selection where those that don’t change will fail quickly or gradually. Witness already the many pubs that have not adapted or whose business model leaves them trapped in antiquity.

The posh burger thing will go on. Again, witness, the success of Oast House in Manchester’s Spitalfields and others in different categories who proved their concept as a pop up and now occupy bricks and mortar.

I have not touched upon the space where people work and travel at the same time but the opportunities are incredible for those that can adapt to this very tough environment.

We must never forget that eating or drinking out especially in today’s economy is an indulgence, according to the Bank of England. It will be at least 2015 before it feels like 2007. Today, successful food brands have an increasing aversion to the posh or snobby with ‘cool’ having an ever-greater resonance. The overstuffed maître d has had his day - and the future, well, you can only look forward to it!
Nathan Wall has held senior positions at a number of companies, including SSP, JD Wetherspoon and Burger King

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