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Fri 12th Feb 2016 - Friday Opinion
Subjects: Redrawing the market map, London’s restaurant cycle reaching a high point, and delivering impactful local marketing
Authors: David Martin, Glynn Davis, and Ann Elliott

Redrawing the market map by David Martin

Our provincial cities are reviving, finally. After decades of decline and socio-economic “hollowing out”, as the better off moved out to the suburbs and beyond, the city centres are being reinvented – and they are back in fashion. There is a positive boom in urban living, particularly – and significantly for our industry – seen in the increasing numbers of young well-educated adults, living close to our provincial city centres. The number of residents aged 20-29 in large city centres nearly tripled between 2001 and 2011 according to The Centre for Cities’ Urban Development report. It described a “highly educated, mobile generation born since 1980 that have increasingly turned their backs on suburban life in order to live in inner cities”.

Clearly, the issue of affordable property is central to this trend. According to the Institute of Fiscal Studies, when they were in their mid-twenties about 45% of my generation (the boomers) owned their own home. Now, that figure has fallen to about 20%, and as the realistic prospect of home ownership recedes for young adults, so their life aspirations are changing, and this also affects their geographical choices.

But there are attitudinal forces at play here too, and our industry is a key player in these dynamics. A 2015 YouGov poll of city centre residents, for The Centre for Cities, showed proximity to restaurants, leisure and cultural facilities was the most frequently selected reason why residents chose to live there. At the same time, as more people live in city centres, the more this will influence council planning policy, liable to favour some elements of the industry more than others. These attractions of easy access and walkable proximity are in stark contrast to the post-war car-borne flight to the suburbs and beyond – the good life of the old suburban dream. Whereas now it’s easy to imagine that ideal living is more about being close to the right bars and restaurants.

A 2015 piece in the architecture and design magazine Dezeen by the founder of London creative workspace Secondhome Rohan Silva, noted that: “Young people today interpret their quality of life differently to a generation before. And they want to live in the middle of the action. They want to be close to cultural life and amenities like that. And they’re happier actually living in a smaller unit to do that.” The same journal has also discussed the potential for city centre student-style accommodation with communal facilities, developed specifically for young professionals – a trend that would have implications for in-home and out of home food demand.

But changes in food buying are already happening. The Waitrose 2015 Food & Drink report observed the growing tendency for food shopping to be spread across more smaller trips is led by the younger generation, for whom it’s “their norm” – and it will be inextricably linked to the growing numbers who live in, or close to, the city centre. Simultaneously, the big four supermarket groups, after decades of out of town suburban superstore development, now find this floor space becomes less attractive as consumer aspirations, living patterns, and behaviours change.

It’s not difficult to propose analogies in the on-trade. The major managed pub estates have now largely exited the least affluent urban areas, where many of the most profitable boozers would have been found before the car-borne flight to suburbia. Skip forward to the 1980s, and the top performing provincial managed pubs tended to be in aspirational honeypot drive-to destinations – the likes of Didsbury, Headingley, and Four Oaks – the “quality suburban” locations that young adults with money wanted to be seen in, even if they couldn’t afford to live there. 

But that was then – whereas now, CGA Peach says city centres are the main focus for new site growth. It also notes this is not purely down to casual dining, but was also a function of net increases in bar numbers in city centres like Manchester, Birmingham, Newcastle, Sheffield, and Bristol – several of which have benefited from the investment in modern tram systems which make the centres more easily accessible. The “middle of the action” is firmly back in the city centres, and in this context Mitchells & Butlers’ recent comment some of its pub dining brands had been impacted by new casual dining openings was intriguing – not just for repertoire reasons, but also because the geography of that new competition differs from the typically suburban pub dining estates.

These changes are not just geographical. They also involve consumer perception and positioning. On that last point, I defer to the doyen of the ad industry, Dave Trott, whose always-thoughtful blog recently observed: “When you position yourself, you reposition everyone else. If you are the biggest, they must be smaller. If you are the fastest, they must be slower. If you are the cheapest, they must be expensive. That’s fundamental to any positioning strategy.” Translate that to our market, and if the city centres are becoming cool again, what does that say about the “positioning” of the suburbs, and the brands that are typically located there? How are they perceived now – especially by younger adults? 

And this discussion cannot ignore the potential threat of a lower nationwide drink-drive limit, and its differential geographical impact on our market, as the trade in Scotland has begun to reveal. The geography of the population, and their mental maps, are continually changing. Nothing stays the same, and that is true of postcodes’ pulling power too. This is an attitudinal as well as a spatial issue. 
To that point, a recent editorial in The Times described the suburbs as a “world of privacy, respectability, stability and dullness”. That’s as much a state of mind as a place perhaps, but for the more affluent young adult market – the consumer group increasingly setting our market’s agenda – it sounds a long way from their current aspirations, and rather more like a suburban bad dream.
David Martin is managing director of Red Circle Insight, a market and customer insight resource

Why London’s restaurant cycle is reaching a high point by Glynn Davis

It is 42 years since either the major cities of Manchester and Liverpool have had a Michelin-starred restaurant. This has not gone unnoticed by restaurateurs and chefs as highlighted by the recent attempts by Simon Rogan with his restaurant The French in Manchester’s Midland Hotel and Aiden Byrne at Manchester House. Despite their terrific efforts, neither chef has managed to quite get there and gain entry into the famous red guide. But it is only a question of time because both these cities are arguably much better placed to hit the heights demanded by Michelin than they have been for decades. 

The key reason for this is both cities now have people with money living in the centre of town. Whereas all the most affluent people previously chose to live on the outskirts (and naturally this is where the Michelin star restaurants have placed themselves to cater for this audience) this has been changing. These two cities now house plenty of wealthy people willing to spend decent amounts on top-end dining. It is for this very reason the centre of London has long prospered in the Michelin stakes. The people with money live in the most central parts of the capital – chiefly around the areas of Mayfair, Knightsbridge and Chelsea – and this is where the top restaurants have rather sensibly gravitated.

London has also benefited from its decent transport system (despite the fact people habitually moan about it) that enables non-locals to also regularly frequent these establishments. Just such a scenario is now also benefiting other major UK cities. There is the tram system in Edinburgh, the expansion of the existing network in Manchester, and there are plans for high-speed inter-city links through HS2 (if it ever happens). As the rest of the country begins to enjoy this breath of high-quality dining air exhaled by rich people in our urban metropolises, rather the opposite is occurring in London, which seems to be choking on the ludicrous levels of affluence that now centre on its prime central areas.

The likes of Knightsbridge now have many properties that are simply empty investment vehicles owned by the world’s richest people. These individuals and their families are not regular customers of their local restaurants. Hence the sad closure of restaurants like pioneering French brasserie Racine that did not have enough people genuinely living nearby in the stucco-fronted properties to support it. The other aspect that is starting to impact the wealthiest areas of London is the stratospheric rentals that are now being demanded of restaurateurs. This week we have the news two-Michelin star The Square and Hibiscus are both exploring the idea of selling on their leases – which would command hefty prices. That The Square is taking this decision to potentially relocate elsewhere in London after 25 years says a lot about where we are in the capital’s restaurant cycle.

These exclusive parts of town have become the playground for only the richest of restaurant operators who don’t have to operate to the same business models as mere mortals. Hence Richard Caring can splash an estimated £15m on Sexy Fish, while Alan Yau and his wealthy backers had no qualms about spending numerous millions of pounds on Park Chinois.

The lack of oxygen available in these prime areas is washing out across the capital and making life difficult for everybody else. When you have the situation where the extremely successful chefs the Galvin brothers are priced out of the market then this is a real worry. They are being forced into taking on pubs instead. While this looks to mirror the early days of the gastro-pub revolution, the difference today is those taking this route into “cheap” premises are not new to the game they are massively experienced.

What this means for everybody else is anybody’s guess. Actually this is not true because we know the answer. It is street food and the new crop of food markets that are springing up. They are housing chefs who are either just starting out or want their independence but are priced out of the other routes of getting their food into customers’ hands. Jonathan Downey, founder of Street Feast, reckons some of the operators at his markets can bring in about £8,000 over a mere two days of trading with limited property and staffing costs, which represents a radical difference to operating a London restaurant on an onerous lease with all the other attendant costs. 

There are many factors that suggest London is at a high point in the cycle and elements of this are clearly making it tough for everybody other than those at the very top of the food chain. While the rest of the country looks to be enjoying the present buoyancy, things are getting unhealthily hot in the capital’s kitchens.
Glynn Davis is a leading commentator on retail trends

Delivering impactful local marketing by Ann Elliott

Last week a client talked us through a major local marketing campaign it wanted for its business requiring support for new-builds, relaunched/refurbished sites and ongoing local activity on a site-by-site basis. It was an all-encompassing, comprehensive and targeted brief. 

It got me thinking about the nature of local marketing and how it needs to be implemented to deliver business results at site level. Like all marketing activity, individual site success criteria and KPIs (over a set time period) need to be agreed before go ahead – though agreeing what level of incremental sales growth can be attributed to the success of the marketing activity isn’t always clear or easy. This debate has to be had and agreed though. If the return on investment on marketing spend isn’t as clear as it is on, say, refurbishments then why bother spending money at all?

My belief is there are six separate elements to delivering effective and impactful local marketing, all of which have to be aligned for the plan to work.

1. Experiential 

Great local activity should have some form of experimental marketing as part of it. There are loads and loads of ideas that could be covered under this remit – giving out samples on the street, setting up a pop-up, logoed cars, stunts involving customers, teams with leaflets etc – in fact anything that encourages customers to interact directly with the brand outside the confines of the restaurant/bar/pub. It is easy to confuse experimental with creating content but they are not the same thing. Experiential is usually defined as something the consumer can physically interact with – preferably something that’s fun, relevant, engaging and memorable.

2. Face-to-face contact

I know operators need to be left alone to operate but I am a great believer in managers knowing and connecting with the key opinion formers around their site. Some companies I know focus on one day a week as a local sales day and expect their managers to be out and about selling their business locally. Central marketers cannot do this at site level – only managers can. Training and constant practice tend to turn even the most cautious of sales people into avid networkers.

3. Local social and digital 

Central marketing functions shouldn’t run local social activity. They have no idea about what goes on at a local level. They can’t pick up local Facebook, Instagram, Twitter, LinkedIn activity nor should they. That has to be the remit of the manager and his or her teams. Central marketing can set guidelines and train those who are going to implement social at a site level very easily. Each site needs to have a social media plan and should be implementing it consistently and rigorously with mobile being the key priority. 

Managers can, and should, utilise paid-for and sponsored tools within Google and social networks – activity here is very, very measurable. We have just doubled Friday lunch covers for one client through paid-for alone with massively positive return on investment figures. Crucially key messages and content need to be synced across all areas of the business, including website, Google search and maps, and social networks.

Collecting a database from day one is vital and databases now of about 10,000 email addresses per site are not unusual. Guidelines on how to do this legally are readily available and need to be followed. Customers can then be mailed on a regular basis with engaging and motivating content and offers.

4. PR

Encouraging all local media (press, radio, television) and bloggers to visit a site is absolutely imperative. This can vary from simple regular press releases with photos to inviting all journalists and bloggers to the site on a regular basis to sample the offer. Usually the PR plan will be the key content provider for social, but not always.

5. Community involvement

It’s often challenging to see the benefit of sponsoring a local football team or competition at a golf club but local involvement is so important. It’s all about giving back to those who support you.

6. Fantastic team

Word of mouth is the most powerful marketing tool. Without a great team, local marketing is just about as valuable as whistling in the wind. It’s where it all starts – and ends.

Local marketing is exciting, measurable and rewarding if it’s set up, implemented and measured properly.
Ann Elliott is chief executive of leading sector PR and marketing agency Elliotts –

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