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Morning Briefing Strap Line
Fri 17th Jul 2015 - Friday Opinion
Subjects: The growing importance of food at JD Wetherspoon, the challenges of today’s casual dining market, how the supermarkets bottled it and making service a differentiator
Authors: Tim Martin, Steve Richards, Glynn Davis and Ann Elliott

The growing importance of food at JD Wetherspoon by Tim Martin

The Wetherspoon business is a good example of how pubs have put themselves at the heart of the growth in eating-out. We operate an estate approaching 950 pubs. These venues generate revenues of almost £1.5bn, and today food accounts for almost half of the sales in many of them.

We now sell a million cups of coffee a week and 25 million breakfasts a year – I’m told that’s more than Pret A Manger and Caffe Nero. I have said that as a business we should aim to triple this over the next 18 months. Mind you, I also once harboured an ambition to break the four-minute mile and also wanted to become the greatest squash player to ever live, neither of which has happened yet. However, it is a statement of intent and clearly plays to long-term trends.

When I opened my first Wetherspoon in 1979, few people could have imagined that one day pubs would open at 8am to serve food, and not close the kitchen until 11pm.

It wasn’t always like this. Our offer developed ‘organically’, to coin a phrase. We got the idea that we might serve some sort of food quite early on in our history, so we introduced a very limited menu, between 12-2pm. We carried on like this, keeping the same kitchen hours (in the pubs where we actually had a kitchen) up until we were running around a dozen pubs. We then landed upon the notion that if we served food all day we might sell more. It was partly motivated by the personal experience of pitching up at a pub at one minute too late for food, too often. Our kitchens cooked between 12-9pm and the hours continued to expand at either end of the day. Until we arrive at today – where food is one of the key drivers when we open for business and when we close.

So it only took us 35 years to get to a position of offering food all day – I wouldn’t advise that other operators wait so long, given a key theme highlighted in Sacla’s Eating Out – Today and Tomorrow (see bottom or article to obtain a copy) report – the deregulation of life. I’m not sure which came first – whether it was consumers demanding services at all times of the day or night that led operators to respond, or it was the availability and convenience provided by operators that drove the expectation. But it’s part of human nature to adapt, and if people can eat and drink whenever they want, they will.

In the analysis of our business, the trends at our latest, most recently-launched pubs tell a story. These venues are a bit more designed to be food houses – with bigger kitchens and without the history or association of being ‘drinks-led’ pubs, where the primary use was historically, drinking. Food at our most recent 300 pubs represents 50% of the sales mix, between Monday and Thursday. At the weekend the mix shifts more toward drinks sales, although many of these transactions (across all seven trading days) will be connected to a food occasion.

As a company, we have gone from being David to Goliath, which some people don’t like, which is human nature. We can’t complain – most people understand our pubs. They know they are not perfect but they think they’re better than the average.

We will continue to do what we have always done – seeking to make lots of incremental improvements across our business. This may sound mundane but it’s what this business is about: there’s a constant need to improve, driven by our customers’ ever-rising expectations.
Tim Martin is the founder and chairman of JD Wetherspoon. This article is taken from a new insight and future trends report produced by Sacla’, the leading Italian food company, called Eating Out – Today and Tomorrow. To obtain a free copy please email lauren@fsc.uk.com

The challenges of today’s casual dining market by Steve Richards

The UK stands at the top of the food chain when it comes to eating out. Following a 15-year eating-out boom, this country now has some of the best concepts and best food to be found anywhere in the developed world. This is evident in all corners of the market, from fine dining to fast food. I genuinely believe that what the UK eating-out market offers is every bit as good as the US, which for so long has set the benchmark.

The market faces opportunity and challenge in equal measure – (this) chimes with what we are seeing at Casual Dining Group. These are extraordinarily positive times for UK eating-out and we see huge scope for growth in our business. Opportunity abounds. However, the market has never been more competitive. The options and experiences available to today’s restaurant-goer are endless, which means their expectations are ever higher. They will not tolerate second best, and venues that do not take absolute care of them do so at their peril.

Equally, companies must take unprecedented care in the stewardship of their businesses. An example of this can be seen in investment strategy. The market demands that management teams and investors take a far more considered approach to capital investment. In simple terms, in order to keep pace with this dynamic market, companies necessarily have to keep tipping the development cash into restaurants and brands.

It’s a process that extends far beyond the fabric of physical restaurant buildings to include a constant rolling programme of investment in menu and product innovation; marketing support for brands across traditional media plus digital channels and social media; investment in developing people and teams; regular review and upgrades to management systems and software. Above all, what is mission critical – and so graphically illustrated by Sacla’s research (see bottom of article on how to obtain it), highlighting the fluid nature of customer occasions and breaking down of traditional social norms – is the need for a state-of-the-art CRM platform enabling firms to reach and engage with their customers.

Fundamentally, senior management teams must constantly and dispassionately review and evaluate their major operating assets – in our case, Bella Italia, Cafe Rouge and Las Iguanas – continually refreshing and reinvigorating what they do, to ensure their brands remain fresh and genuinely differentiated but also relevant to their core audience. They must also be capable of leading innovation, whilst being financially disciplined and also cultivate a culture capable of inspiring front-line colleagues to create and deliver great customer experiences.

Within our business we are doing all the above and more. After the installation of new investors, a new management team and new structure, plus an enormous change programme that has touched every facet of our business over the past 12 months, we are focused on growth. In the next three years we will open 100 restaurants, driving out our all-day offers to more locations around the UK, including more retail hubs and leisure locations which, as this report shows, is increasingly where people are choosing to dine.

With this pipeline of growth, we are clearly confident in our brands, which are built on high-quality food, value-for-money and widespread appeal. But we are also mindful of the restaurant capacity that is coming into the market and know that only operators who perpetually invest in their businesses – to continually improve things for the customer – can win.
Steve Richards is chief executive of Casual Dining Group, which operates 250 restaurants under brands such as Bella Italia, Café Rouge and Las Iguanas. This article is taken from a new insight and future trends report produced by Sacla’, the leading Italian food company, called Eating Out – Today and Tomorrow. To obtain a free copy please email lauren@fsc.uk.com

The supermarkets have bottled it on premium bottled beer by Glynn Davis

There was a time not so long ago when premium bottled beer was all the rage with the major supermarkets. They saw the category as very lucrative as a result of a willingness of a growing number of beer fans’ to pay-up for interesting ales.

Whereas the likes of Stella and Carling were discounted into the ground – at loss-leading levels in some instances – the other end of the spectrum where the more exotic bottles sat (Hoegaarden, Leffe, Brooklyn Lager etcetera...) could be sold at pretty much super premium prices. With tasty margins to be had the supermarkets jumped in with both feet and fought to be seen as the authority on bottled beers. A clever route to this was through running competitions. Get brewers to send in specially brewed ales and the winners would enjoy countrywide listings on the supermarkets’ shelves.

Sainsbury’s, Tesco and Asda each had their own competition and as a consumer this was terrific. My local (small) Sainsbury’s would suddenly be stocking terrific beers from tiny, largely unknown, brewers from across the UK. But I always felt that their heart wasn’t really in it. With the exception of Glenn Payne – when he was beer buyer at Safeway – it’s arguable whether the supermarkets have really had a true beer champion.

Meanwhile, the likes of Hoegaarden and Leffe have become the mainstream and the bottled beer market has exploded. Where once the supermarkets could almost put their arms around the whole category, this is now impossible. Having effectively lost control of what’s hot and what’s not in the category they no longer have any authority over bottled beer. It therefore comes as no great surprise that the major grocers are planning to cut the amount of craft beer lines they sell – by as much as 15%. (It’s a similar story with wine where dramatic culls in the number of products are currently being undertaken).

As the category has become ever more complex – with more breweries, more esoteric styles, collaborations, myriad imports etcetera – the supermarkets have been increasingly missing out. The one thing they do not have is the time, or the knowledge, on the shop-floor to assist curious drinkers with their beer buying. The result being that – despite the plethora of different bottles on their shelves – customers inevitably drop back to their default (often discounted) preferences and into their baskets go the familiar and safe names of Stella, Carling, Peroni, and Budweiser.

It is all rather sad that the supermarkets’ love affair with premium bottled beer appears to be coming to an end. But there is some good news. The increased complexity of the category and the growing vacuum that is being created by the supermarkets’ gradual disinterest has opened the door to the beer specialists. Whereas once the likes of pioneering Utobeer (in London’s Borough Market and Beer Ritz in Leeds) were ploughing a very quiet furrow the field is now full of activity. The term bottle shop was new to me until only a couple of years ago and now these small high street shops that sell bottled beers (and in some cases have a licence for consumption on the premises) are a fast growing part of the retail marketplace.

The Bottle Shop in Canterbury, Favourite Beers in Cheltenham, Beers of Europe in King’s Lynn, Gravity Station in Cardiff, Real Ale in Richmond and Tall Boys Beer Market in Leeds as well as the online only players Ales by Mail, Eebria, and Beer52 highlight a burgeoning industry. (Apologies to the many classy operators I’ve not name checked).

They all offer a stack of constantly changing beers – which goes without saying really – but what they also have most crucially is passion and knowledge about their products. It is these two components that really make the difference and today this is what enables them stand out from the supermarkets. This knowledge is absolutely vital in a category that has become extremely complex for all but the most enthusiastic aficionado.

The reality is that maximum value can only be wrung out of the bottled beer category by retailers that can add a layer of knowledge. The story has to be told about the products that are being sold – otherwise what’s the point in the consumer splashing out £10 for a 330ml bottle when they can bag something drinkable for more like £1.50. This is something the major grocers have acknowledged is beyond their remit and are pulling back. In the current climate they are more pursuant of the discounters with whom they are waging a price war rather than trying to flog £10 bottles of ale.

Rather ironically they recognised early on that there was some price elasticity in bottled ale but right at the point at which it has become extremely elastic they are effectively exiting the game. The specialists have been given a great opportunity that they should now grasp as there are lots of people out there thirsty for knowledge as well as beer.
Glynn Davis is a leading commentator on retail trends

Making service a differentiator by Ann Elliott

When I was marketing director at Whitbread’s Beefeater brand, many moons ago, we once received a complaint from a customer saying she had found half a mouse in her salad (the back half) and thought she had eaten the other half with her lettuce. She was not best pleased, asked for £20 in compensation and closed her (written) letter by saying she would continue to be a loyal customer.

In those somewhat halcyon days, customers would stay with brands through thick and thin encouraged by loyalty cards, voucher schemes and regular door drops. Service would have to be truly dreadful before anyone complained or stopped being a regular. And I mean, truly, ‘soup in your lap’ sort of dreadful. Even then we did have a complaint where we had actually dropped soup in someone’s lap and then wouldn’t pay her dry cleaning bill – and she still came back.

I was reminded of these incidents the other day in a meeting with the managing director of a leading casual dining brand. They were asking me how they could make service a real point of difference in their business – one which would drive loyalty.

That is a bit of a challenge and not only because loyalty is something of an old-fashioned concept. Customers these days are as loyal as their last bad experience. They have a wide repertoire of brands / concepts in their minds, at any one point in time, to choose from. They get bored. They demand a flawless experience every time. What might have been considered a minor service flaw years ago will now stop a repeat visit. It may not warrant a complaint or a three star review on TripAdvisor but it’s just not good enough to return – there are too many better options out there. I just don’t think customers talk about being loyal to a brand any more.

So how can service become a differentiator for a casual dining brand?

Well, it’s certainly not about settling for a brand proposition which talks about ‘Great food. Great service’. That’s just motherhood. Does anyone ever talk about delivering ‘Poor food? Lousy service’? No, they don’t. ‘Great’ is the minimum standard when opening the doors and serving customers. It’s not something to promote and be proud of. It’s not distinctive nor differentiating.

Having said that great isn’t always delivered. I went out with friends last night in London and ordered a bottle of wine, brought to the table without glasses, and five tapas dishes – brought to the table without cutlery. Sloppy. Not great and certainly not a differentiator designed to motivate and inspire a return visit.

I don’t think it’s hard to get this right. The service proposition of any hospitality business has to start with a compelling brand proposition – the two should be seamless. A great example of this is Wagamama and its philosophy of kaizen. As they say on their website: “In Japanese, our name means ‘naughty child’, or ‘one who is wilful and determined’. A good example of that determination is the art of ‘kaizen’, meaning ‘good change’. This philosophy sits right at our heart. It shapes every dish we create, and pushes us to find better ways in all that we do. We’re restless spirits, forever creating and making things better”

Without this brand vision, service is allowed to be just ‘great’. Not awesome or inspiring. Have a look at the websites of some of the leading casual dining pub and restaurant brands – not many communicate a distinctive brand vision or talk about service in this context. Those operators where service is a differentiator start here and are relentless in ensuring their teams deliver this vision at every table and at every bar. I still don’t think it encourages loyalty but it’s a massive start.
Ann Elliott is chief executive of leading sector marketing an public relations firm Elliotts – www.elliottsagency.com

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