Subjects: Creating a service culture, getting premium and value to coalesce, reasonable expectations of social media and the late-night food opportunity
Authors: Paul Charity, Professor Christian Edger, Ann Elliott and Alastair Scott
Thoughts on creating an outstanding service culture by Paul Charity
In two weeks’ time, we plan to take a group of operators in partnership with the ALMR to the National Restaurant Association show in Chicago. On last year’s trip I came away with the distinct impression that US foodservice operators still have a lead on UK operators in terms of engaged and personable service. Ann Elliott and, indeed, Tony Hughes, non-executive director at The Restaurant Group, disagreed with me, arguing that US service is mechanistic. But I think the more entrenched culture of tipping in US restaurants generates the stronger service culture that I, at least, observed. For every piece of outstanding service I see in UK foodservice, I encounter disappointing service. Recently, a Spirit pub manager thought it was funny to shout “no” at me as I asked whether he was serving food.
It’s hard to think of a more important subject – and companies in the UK are looking harder at how they can make a difference here. Spirit Pub Company boss Mike Tye spoke last week about the drive to ensure staff have freedom within a framework to deliver outstanding guest experiences. He was humble enough to admit that the company was investing in upgrading his skills in engaging with and motivating his teams.
In today’s ultra-competitive market, how companies galvanise their teams to produce superlative service is a key differentiator. Last week, Karen Forrester, boss of TGI Friday’s, provided a masterclass on the challenge of team engagement at the Association of Licensed Multiple Retailers’ conference. The first thing that stood out was the absolute sincerity mixed with passion when she talked about the task of motivating her 4,000 staff to go the extra mile to connect with the ten million customers the brand serves each year in the UK. The starting point for changing a culture is the attitude of leadership. I think staff can sense when their managers are towing a company line, parroting the company service manual – and can spot it immediately when their managers are not actually emotionally engaged themselves. It had enormous symbolic significance that Forrester stood on the ALMR stage in the full TGI Friday’s uniform, complete with stripy tie. It sent a strong “no hierarchy-for-the-sake-of-it” message. Forrester, even though she wasn’t with company colleagues, was saying: “I am part of a team.” Referring to her colleagues as family, she explained how the company recruited on the basis of “pride, passion and personality” and then invested in extended training to up-skill. Bar tenders, for example, receive three months of training. But underpinning the re-invigorated culture is a belief in recognising and rewarding individuals at every turn. There are “recognition” pins for all manner of service success and longevity in post. There are long-service pins, for example – and the company has had to commission 15-year and 20-year service pins because staff are staying for record lengths of time. “Recognition is a personal thing,” said Forrester. She spoke of the need to make “emotional connections” with her staff and her staff to make “emotional connections” with her customers. A culture of celebration and reward is a key way of forging emotional bonds with her staff. This means that each branch is given at least two nights a year where the entire staff is replaced to allow the team to go out and enjoy themselves. It meant that in January 360 staff were flown to Orlando for a company conference. And this year, Forrester has asked her waiting staff to develop unique and personal pieces of service – she calls it the development of a “personal signature” on the job. It’s a powerful way of engendering personal pride.
It seems to me that outstanding service cultures are driven by the crucial personal connection between managers and staff. Stephen R Covey, in his “Seven Habits of Highly Effective People”, refers to an “emotional bank account” existing between managers and staff. The more credit that exists in the “emotional bank account”, the greater the chance of staff going the extra mile in service terms. He notes: “The little kindnesses and courtesies are so important. Small discourtesies, little unkindnesses, little forms of disrespect make large withdrawals. In relationships, the little things are the big things.”
Paul Charity is managing director of Propel Info
Getting premium and value to coalesce in multi-branded businesses by Christian Edger
Over the past ten years some retailers (ie Signet, Intidex, Aldi US, Arcadia) have sought to exploit their assets and capital more effectively by simultaneously addressing both the value and upper/mid or premium ends of the consumer market with differentiated branded concepts. This is a strategy fraught with danger as the complexity of managing distinctive supply chains and service delivery systems poses particular problems. Value-based branded models are based around the principles of ‘standardised lean’ whilst premium branded offers are constructed around ‘customised quality’. Ensuring that both models flourish under the same corporate umbrella (in a variety of formats) requires agility and dexterity. Taking the pub restaurant sector, in particular, there have recently been a rash of announcements by multiple ‘managed’ chains who have stated that they are going to launch concepts touching the premium end of the market - partially in response to competitor activity - but also due to the key insight that craft/artisan pub offers, which (theoretically command higher margins) can balance their portfolios that have become replete with high volume, low margin value-based offers. Also, in an increasingly crowded value-based market, where homogenous products owned by a variety of managed multiples offer the consumer minimal differentiation, ‘branching out’ with higher-end products - which have far more ‘segmental space’ - can seem attractive to behemoth operators with ‘cash to burn’.
The problems inherent in running two business models in tandem are obvious, particularly when organisations have designed their systems, policies and procedures (such as IT, Financial Reporting, HRM, Maintenance, Labour Scheduling etc) around a paradigm of centrally-driven control rather than local discretion/autonomy. Based on the research I have conducted to date which has covered a range of developed and international multi-unit enterprises (44 case studies showcased in ‘Effective Multi-Unit Leadership’ 2012 and ‘International Multi-Unit Leadership’ 2013) how do service-based multi-unit enterprises successfully run a ‘mixed’ branded portfolio. And how can operators achieve the nirvana of optimising their operations in both (seemingly diametrically opposed) segments of the market?
1. Architectural Alignment – The first thing that organisations who have a spread of brands addressing a range of customer segments with differential levels of pricing, product and amenity do is ensure that there is clear structural separation. That is to say that the architectural design of the firm ensures that roles/responsibilities both within the operational line and its support functions (ie property, HR, marketing, finance, administration etc) are completely aligned to individual brands. Although expensive, the benefits of having ‘one team’ enfolding the brand, understanding and believing in both its emotional and functional raison d’etre, are obvious in terms of creating a vibrant culture, innovative community of knowledge and (theoretically) increased discretionary effort.
2. Idiosyncratic Ratios – The next thing that needs to be understood and accepted by senior decision-makers is that the P&Ls of each branded segment will be fundamentally different. For instance in value models, due to the compressed nature of the service cycle and simplicity of food and beverage delivery, labour might constitute 18-24% of sales turnover. By contrast, within Premium brands – due to the need for more personalised service and complex ‘fresh’ production – labour might amount to up to 30% of sales turnover. In addition, due to the need for a greater number of ‘investment sparkles’ to maintain amenity and higher maintenance spend to remedy defects, depreciation charges will also be more onerous in premium rather than value brands. Whilst higher margins will evidently offset these costs in premium it is not unusual for brands that have encountered seasonal roadbumps (such as a ‘bad’ summer) to suffer pain from the ‘suits’ who – in a misguided attempt to recover profit – attempt to turn premium P&Ls into a mirror image of their Value cousins. Re-engineering ratios within premium brands (particularly in relation to labour, training and maintenance) might produce short-term gains, but will (unless there is an obvious problem with productivity) lead to ‘brand drift’ into mid-market territory where a spiral of price decompression degrades service delivery.
3. Distinctive Systems and Policies – The third thing that policy makers operating successful multi-branded formats do is ensure that - whilst basic auditing and checking procedures are standardised across the range - food production and service delivery systems, selection and training practices and (importantly) reward policies are designed around the specific requirements of both premium and value brands. That is to say they recognise that a ‘one size fits all’ approach does not work and, indeed (following on from the point above), the level of resources that are required to facilitate high-end premium execution are significantly greater than those needed in branded offers servicing the value segments. That is not to say, however, that they should encourage a ‘class system’ to flourish where operators within premium are treated with ‘kid gloves’ whilst those elsewhere are expected to labour with scarce resources in a harsh compliance regime. Equal acknowledgement should be made of the contributions of team members working in both paradigms BUT any attempts by the ‘suits’ to ‘level down’ premium in response to political pressure from value-led vested interests must be resisted!
4. Tacit Expertise and Capability – As inferred above, the tacit skills required to service more sophisticated, discriminating and wealthy consumers who have (due to what they are being expected to pay) quite high expectation levels, requires technical skills, behaviours and cognitive problem-solving capabilities that are quite different in premium compared to value. Indeed, one of the main issues the industry currently faces is a shortage of operators who can understand and service ‘higher end’ user groups. Whilst some ‘poaching’ of talent will fill some of the gaps, the plans that have been outlined by many multiples recently suggests that there will be ‘war for talent’ that organisations will only resolve if they devote sufficient resources to ‘growing their own’. A major issue they face is that the skills and behavioural profiles of their incumbent operators do not fit the demographic they are now seeking to address. Great effort must therefore be made to either ‘re-set’ extant talent or recruit staff with the right behavioural profiles that can be trained to a higher level of technical proficiency.
In summary, multi-branded pub and restaurant operators who are attempting to operate a spread of premium and value brands in ‘simultaneous flight’ must acknowledge and act upon the insights outlined above in order to stand any chance of effective ‘coalescence’. Ensuring there is a requirement for clear architectural separation, differential ratio construction, distinctive systems and policies that require different levels of resourcing and heavy (in relative terms) investment in the co-option and development of expertise in premium might afford strategic policy makers who are investing vast sums of money in the ‘upper end’ of the market some prospect of success.
Professor Chris Edger, the author of ‘Effective Multi-Unit Leadership – Local Leadership in Multi-Situations’ and ‘International Multi-Unit Leadership’, is Professor of Multi-Unit Leadership at Birmingham City University where he researches and teaches the ‘art and science’ of high performance service-based retail, hospitality and leisure
What are reasonable expectation of social media, asks Ann Elliott
We have received a number of briefs over the last few weeks which have centred around: “What should I be doing and expecting from the time and effort we spend on social media?” And: “How can I make sure that I am maximising everything we do from a digital and social media perspective?” I have picked up a real sense of frustration in a number of areas.
1. Are they doing the right thing?
Most managing directors know that they need to be doing (and are doing) something but the scope and range of social media seems to be growing exponentially as does the resource needed to fuel it. They are having to work across so many more communication points than even just a year ago. They are unsure if they are sending out the right (engaging) messages at the right time in the right medium to the right people and not sure how they should be integrating all their work in this area for best effect.
2. What benefit are they receiving for their investment?
Many are irritated that they can’t say, really, what benefit they are getting from social media. There is a sense that their efforts must be working because footfall is growing but measuring its commercial impact is proving challenging. They are finding it difficult to compare ROI for their revenue spend here versus revenue spend in other areas (refurbishments/training/customer service initiatives).
Their marketing teams are measuring their own success in terms of Facebook comments, likes and shares, virality of their Facebook posts, their number of Twitter followers, the percentage of retweets, the number of blog visits, page views, time on site and bounce rates and their email open and click through rates. They are very valid and important but the operators I meet want to inextricably link these facts with footfall, sales and profit growth. They don’t want objectives simply measured by social media performance improvements (nice as they might be) but by real hard commercial deliverables.
There is a tendency to quote Henry Ford: “I know half my advertising works but I’m just not sure which half.” Simply replace the word ‘advertising’ with the words “social media”. As ever operators want to know which bits of their marketing is (or isn’t) working.
3. How should they resource it?
One of the key questions behind social media activity is one of resource. Should they do it all in house? If so who should do it – a central resource or people at site level who are closer to customers? If the latter, how do they maintain some sort of control to prevent all manner of potential mistakes of which poor spelling is the least of their worries. If they outsource it, how do they make sure the team doing it on a daily basis, really understand their business?
4. What’s real?
There is a myriad of agencies out there all – many brilliant and many not so brilliant. Some understand the detail of our sector and how to drive covers but many don’t. Loads of them are simply fluffy. They talk about increasing fans, improving customer engagement and identifying brand ambassadors as though speaking in an impressive new language. They aren’t. The operators I meet want real deliverables. They see digital and social media campaigns as a means of achieving commercial success and not an end in themselves. They want agencies who understand this reality. I see the awesome opportunities that operators have with ‘new media’ every day. Whilst the technology might be daunting- the fundamentals aren’t. It’s all about how they communicate with their customers in a way, which makes them want to come into their business in the first place, to return and to recommend.
Ann Elliott is chief executive of Elliott Marketing and PR
The opportunity of late night food by Alastair Scott
I recently had a night out in Oxford and was struck by the number of burger and kebab vans that decorate the city. Having studied there too many years ago, I had somehow assumed that they would have gone, superseded by more sophisticated food offers. But, of course, the good students of Oxford would rather spend their money on booze than food. Food is necessary, but cheap calories rank behind cheap alcohol in the hierarchy of needs. The vans typically sell burgers, pizzas and of course the infamous kebab. How do they survive?
Going round the pubs of Oxford, the reason is easy. Many pubs still don’t serve food, and if they do, they stop serving at the very civilised hour of 10pm at the latest. For those who want a good night out, the food requirement hits at about 11 or 12pm, and the good drinkers of Oxford are left bereft of choice other than the van on the way home. I started to wonder whether the post 10pm munchies are a bigger opportunity than breakfast?
When I ran All Bar One I opened the kitchen in one bar on New Year’s Eve until 2pm. We sold 300 burgers in two hours. Of course this is an exception, but it does show that the opportunity exists at least on some occasions. Obviously the maths of opening kitchens take over - the cost of chefs, holding the kitchen equipment open, etc. But at that time of day we aren’t choosy, we just need food. So what about warming ovens for pasties. I had a microwaved frozen burger this week and, while it wasn’t nearly as good as the real thing, it would be most welcome after a few beers.
So what stops us having a little microwave, a holding oven or even a little sandwich toaster on the back bar to feed our punters later on. If we feel really helpful we could even keep the fryer on and drop some chips for them. How much would trade increase, both for food and drink? The Spanish did this years ago while the customer was drinking, with tapas and pinchos covering the bar to encourage eating. Many English pubs enjoy the wonderful tradition of putting food out for guests on certain occasions.
Based on the number of times I stop at the pasty shop at Marylebone station after a night out, I think there is a big market for us all to grab. Breakfast eat your heart out!
Alastair Scott is managing director of Catton Hospitality, which specialises in helping improve hospitality operations, and owns Malvern Inns, which operates two Punch Taverns sites. He can be reached at email@example.com