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Fri 26th Sep 2014 - Friday Opinion
Subjects: The challenge of achieving a premium price, the European foodservice perspective and omnichannel marketing
 
Authors: Martyn Cornell, Anne Elliott and Matthew Kirby

 
 

You can't charge a premium price if you're not delivering a premium product by Martyn Cornell

The latest – eighth – edition of the Cask Report, published yesterday, is full of thought-provoking plums, as ever. One that provoked me, in particular, looked at drinkers' perceptions of how much training bar staff get in cask ale, compared to how much training licensees said they gave their staff. Edited highlight: Publicans think their staff get a lot of training in looking after and serving cask ale; drinkers don't.
 
Nine out of ten licensees said staff get training in what to look for in a good or bad pint. Less than half of cask ale drinkers believe this to be the case. Two thirds of licensees say staff get training in how to look after cask ale in the cellar, with half saying staff get a lot more training in cask ale than with other kinds of drinks. Again, less than half of cask ale drinkers believe this happens. Four out of ten cask ale drinkers, indeed, believe bar staff get hardly any training in cask ale, while only one in 16 licensees say training is that poor. Two thirds of licensees say staff get training in different styles of cask ale. Barely one third of cask ale drinkers believe this happens. The report says: "There are only two ways to explain the difference in perceptions of training … either publicans are deceiving us (and perhaps themselves) on how much they care for cask, or drinkers don’t realise how much care and attention goes in to presenting the perfect pint." Actually, there's a third, and one that seems to me to be easily the most likely – that drinkers see little evidence their side of the bar of all the training publicans say goes on, because they're getting too many poor pints, served to them by bar staff who aren't knowledgeable about the product.
 
This directly impinges upon one of the major thrusts of the latest Cask Report, that – especially compared to "craft keg" – cask ale is too cheap. Cask ale is one of the glories of Britain: at its best, a sublime celebration of the marriage of malt and hops. Nobody, I think, would deny that a good cask beer, properly looked after, will be better than even the finest brew on keg. So why is this premium product not commanding a premium price?
 
This is not a new phenomenon. In the early 1970s, Carlsberg draught lager sold in London for 18p a pint, while cask ale was 13p a pint or so: a 28% price differential. By 1984 the difference was less but cask ale, at 72p, was still cheaper than lager, at 81p. Today cask ale is only is around 6%, or 20p, cheaper than draught lager. But if draught lager can no longer command the massive premium it once did, "craft keg" is being sold for premiums vastly superior to anything the early Carlsberg marketeers ever dreamed of. The same drink has been spotted in the same North London "craft beer bar" for £3.50 from a cask and £5 from a keg. Not all craft keg is that expensive: the average in the UK now is £4.04 a pint, although some, particularly if it has been imported from the United States and it's up at the top end of the abv range for a draught beer, say 9% and above, will be in excess of £7 a pint. But that is against an average price for a pint of cask ale of just £3.19.
 
So why did lager – and before it the original keg beer, such as Red Barrel and Double Diamond, your fathers and grandfathers rushed to buy, and after it the "craft keg" beers on offer from such highly regarded brewers as Meantime, Camden Town, BrewDog and Lovibond – command a premium? Part of it was and is image, of course. But much of it was the promise of consistency. Drinkers really will happily pay more if they know they're not being invited to gamble their £3.19 on the possibility of a pint of cloudy vinegar – and then have to argue with bar staff who will try to tell them: "It's real ale, it's meant to taste like that."
 
To quote from another segment of the Cask Report: "Premium bottled ale is almost twice as expensive in the off-trade as premium lager, and yet sales are growing faster, despite a wider growth of interest in budget and value brands. People are prepared to pay more for interesting, flavourful beer, and expect to do so." Well, quite. But the point about bottled beer is that it's almost 100% reliable. If it's tasty and interesting as well – that's worth paying extra for. The report declares: "The current price differential between cask ale and ‘craft keg’ beer damages both the image of the former and the sales of the latter." But it's hard to see how the high prices being charged for craft keg are damaging its sales: pubs and bars are pretty good at charging what the market will bear, and the market, particularly in London, seems happy to bear £4.50 and upwards a pint and more for the perceived benefits of craft keg, those benefits being (a) flavour and interest without (b) any risk of your pint being undrinkable. The problem is not that craft keg is too dear, but that cask ale is too unreliable, and what damages the image of cask ale is not its perceived cheapness but its perceived risk. Lower the risk, and pubs will be able to charge for cask ale what they are currently charging for craft keg – more, indeed, since it's almost always, all other things being equal, a superior product.
 
Fortunately the trade recognises this, and the excellent work being done by Cask Marque in raising the standards of cask ale at the point of delivery is now being expanded upon with the launch of the Cask Matters website, announced yesterday. Already, the most read item on the site is a video on looking after cask beer in the cellar from Peter Eells, head brewer at the Yorkshire brewery Timothy Taylor's. There looks to be a mass of other help and information on the site, from offers of free online training on looking after cask ale to a CD called "A Bar Person's Guide to Real Beer" to links to Beer Academy courses to downloadable comprehensive what-to-do lists on everything from line cleaning to glass care. As Pete Brown said yesterday at the launch of the latest Cask Report, when he brought out the first one in 2007 his job was to try to convince the industry that cask ale wasn't dead. Today cask beer is sitting in the middle of what Brown correctly called a beer revolution, with three times the number of breweries in operation now than were operating at the Millennium. But if pubs are really going to benefit from that, they need to tackle the issue of poor quality. Hopefully, initiatives such as Cask Matters are giving them the tools they need to do that.
Martyn Cornell is managing editor of Propel Info
 
 

The European foodservice perspective by Ann Elliott

The 15th European Foodservice Summit, hosted by Gretel Weiss, Chris Muller (busy in London today leading the Propel Multi Site Management Masterclass) and David Bosshart in Zurich earlier this week felt like a family affair even though there were 250 people there from 29 countries (including New Zealand). Out of the 250 attendees, around 150 had been to the conference at least once, with many having been to every single one, a real testament to the whole experience.
 
Usually there is a really good solid UK contingent, and this year was no exception, with Robin Rowland from Yo! Sushi, David Campbell from Wagamama, Andrew Guy from Ed's Easy Diner, Peter Martin, and Rod McKie and Lisa Parsons from Welcome Break all there. Elliotts was at the conference to cover it for Gretel and to write articles from a UK perspective for the European Foodservice magazine, which is published bi-monthly.
 
What makes this conference really different is its real focus on broad learning from two perspective: operators who are prepared to share their own experiences (good and bad) to help others and experts (often academics) who have something really interesting and provocative to say.
 
In the former camp I would put Ian Zilberkweit’s presentation on his experience of launching bakery brands (including Nash Khleb and the franchise operation of Le Pain Quotidien) in Russia. He was so genuine, honest and engaging that I took no notes but just listened, with ever increasing awe, to his story. He is a former HSBC banker, and most in the room wondered why on earth he had given up all the security of that role to become an entrepreneur in our sector. His response to that question gave everyone a lump in the throat. Operators might battle here with food inflation but that is nothing compared to the difficulties he has faced (and is currently facing) in the light of European sanctions against Russia.
 
Andrew Guy, chief executive of Ed's Easy Diner, spoke about how to build, develop and mentor talent. He had so many lessons for us. Some I already knew but had forgotten but there were some new ones too. I particularly liked his comment, "If an internal candidate looks 50% ready for the job give it to them – in nearly every case they will grow into the other half." It was like learning from the master.
 
This fitted with the comments from Randy Garutti from Shake Shack (also presenting at today’s Propel Masterclass), who said his company hired "51%" people – if they were 51% right in terms of how they cared for people, then Shake Shack could teach them the other 49%. He also repeated the Maya Angelou line, "People will forget what you said, people will forget what you did but people will never forget how you made them feel." I think that says it all for those who work in our sector. As Randy said, "Hospitality occurs when you feel like I am on your side – when things occur for you, not to you."
 
For a view on re-imagining the shopping mall, Rachel Belam from Westfield was the person to listen to. She is now working in New York but brought along her lessons from both Westfields in London. She was a great presenter and really interesting: lots of notes taken in that session.
 
The experts presenting included Vaclav Smil from the University of Manitoba, who was absolutely brilliant on The Future of Food. He was very funny, very quick and totally absorbing. We will cover his presentation in our articles, but to paraphrase his message, we can all still eat meat, just not quite so much of it, if the world is to have enough to eat. He was extremely thought-provoking. For example, Chinese life expectancy is almost the same as the United States but with only 25% of the per capita income of the US. I loved it.
 
So, a great conference, with everyone sad to leave. I heartily recommend it – it takes place next year on 24 and 25 September.
Ann Elliott is chief executive of the leading sector public relations and marketing company Elliotts
 
 

The Omni-Channel Holy Grail by Matthew Kirby

I’ll start with a short rant. When pub and restaurant companies budget for expenditure, marketing is the one area you can almost guarantee gets the lowest level of allocation. A chain that will remain nameless had more than two hundreds pubs, 15 operation managers, three regional directors, and one person and an intern in the marketing department, with a budget for the year lower than the capex on dishwashers.

When I started Fishbowl in the UK in 2007, there were only three multi-site businesses that I could see that took a different approach. Steve Richards the managing director at Novus, was one of the few who understood the power of both traditional and digital marketing. In 2007, Novus was a pretty unremarkable business, making no money and carrying a load of debt. I remember meeting Steve at Tiger Tiger and remarking that he looked more like a nightclub bouncer than a chief executive, to which he replied: “You’re not getting in here dressed like that.” On a more serious note, Steve readily admitted Novus’s USP was the investment it made in building both database and websites that allowed it to carry on talking to both guests and potential customers 24/7. The Late Night London Website and a database of more than 500,000 gave the company a platform to generate additional business and leave the competition behind. Novus was ahead of the marketing curve. Steve had worked out what on-line retailers already knew. Five years later Novus sold for £100m. That’s a lot of dishwashers.

The reason I recount this story is that I think we are in a similar position today to when we started back in 2007. Nearly all the chains now do a mix of websites, social media, and email to reach out to customers. What they have not done is find a way to communicate on a one-to-one basis with the customer. As an industry we are still well behind the digital market curve. Both online and high street retailers realise the size of the prize and have been spending large sums to tune their marketing to ensure it remains relevant and personal. The fancy name used is omnichannel marketing.

The aim is to make the pub, restaurant or cafe (or, in retailer terms, the brick-and-mortar stores) become an extension of the supply chain, in which purchases may be made in the location, but are researched through other "channels" of communication. With omnichannel retailing, marketing is made more efficient, with offers that are relative to a specific consumer determined by purchase patterns, social network affinities, website visits, loyalty programmes and other data mining techniques. It is the collection of these sources that enable the business to send relevant communications.

We are entering an omnichannel world, where consumers seek a one-to-one experience that is tailored to them not a piece of mass communication. This comment from one of the leading marketing automation providers in the United States, Marketo, has a retail bent to it, but the rules are the same:
 
 “Marketers now need to provide a seamless experience, regardless of channel or device. Consumers can now engage with a company in a physical store, on an online website or mobile app, through a catalogue, or through social media. They can access products and services by calling a company on the phone, by using an app on their mobile smartphone, or with a tablet, a laptop, or a desktop computer. Each piece of the consumer’s experience should be consistent and complementary.”
 
If you can automate the various information feeds from your customers, be it surveys, POS data, social media interaction, email click through or online table bookings, you will be able to ensure that only relevant content is sent to your customers. This will, in turn, ensure that they connect better with your business, and the result will be higher frequency, and spend.
 
The key to understanding how your customers are interacting with your business is to collect data across the different touch points within your business. Then you will know how to engage and deliver them new experiences where and when it matters most.
 
Once again, I think we have three restaurant chains and one pub chain in the UK actively trying to reach this Holy Grail. The rest are failing to plan or resource to meet this amazing opportunity. Lord (Ed) Turner of Geronimo once said that the best customer relationship manager is the manager running the pub. He may be right. But if you could back that manager's one-to -one relationship up, and continue to communicate in that manner once the manager had left the pub, that is when you really start to move your business to the next level.
Matthew Kirby is the out-going managing director of Fishbowl Marketing


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