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Morning Briefing for pub, restaurant and food wervice operators

Fri 1st Apr 2016 - Friday Opinion
Subjects: The merits of Bring Your Own, a spoonful of sugar makes the medicine go down, and why pre-order is going mainstream 
Authors: Glynn Davis, Paul Chase, and Olivia FitzGerald

The merits of Bring Your Own by Glynn Davis

BYO (Bring Your Own) is an acronym that has always conveyed rather down-at-heel connotations to me. Whether it is establishments that don’t have a drinks licence or cafes that couldn’t be bothered with the hassle of stocking a range of booze, it doesn’t suggest a top-notch experience is on the cards. After a recent dinner at Italian restaurant Locanda Locatelli I’m reassessing my views on Bring Your Own. Ahead of booking I noticed on its website it had a corkage policy that stated a minimum charge of £25 per bottle. On enquiring about this I was informed the sommelier prices it up on a bottle-by-bottle basis.
It is not just about the value of the wine because a host of other factors are taken into account. It partly depends on the level of effort involved from the sommelier – namely the time spent decanting particularly old wines, which would demand a higher charge. There is also a more generous pricing policy given to regular guests who have a record of spending healthily on bottles from the restaurant’s cellar. It is often these customers who will bring in specific bottles related to special occasions and will look to complement them with the restaurant’s own wines.
The sommelier informed me there are also plenty of people from within the trade who visit Locanda Locatelli and wish to bring their own particular wines to drink. There might also be some relaxation with the corkage fees on these occasions. It is all part of adding to the overall experience of the customer and at this particular establishment it has come to represent 10% of total wine sales. This seems to be a not insignificant number and, according to the sommelier, is proving an increasingly popular concept at other high quality restaurants around town.
The reality is BYO and corkage charges are nothing new but having a flexible policy is not something that is widely seen or known about. When describing this policy to a senior buyer at a major wine merchant he was very surprised and described it as a rather cheeky manoeuvre and argued restaurants should only charge a fixed corkage fee, regardless of the wine involved. I disagree with this view. This is no doubt why the likes of Hawksmoor Guildhall do offer a fixed corkage (£5) but the catch is it is only available on Mondays. Clearly it is just a margin-eating footfall driver on the quietest night of the week.
Offering a fixed, accessible corkage fee at all times would likely result in the restaurant missing out on some margin on many bottles – possibly on the more expensive wines where the percentage gross profit drops off. It is surely sensible to offer a sliding scale whereby customers can then weigh up whether it is worth consuming their own particularly decent bottle or sticking to the restaurant’s list.
It’s rather a clever move in my opinion and reminds me of when Amazon first began offering goods from third-party sellers on its website directly alongside its own products. The other sellers’ items were often priced more cheaply because they were often selling used goods (albeit in mint condition predominantly) compared with the new items from Amazon.
This seemed madness until you considered for each of these sales Amazon practically had to do no work other than simply list the items and then take their healthy fee. This frictionless model of retail is behind many of the more innovative online businesses today, such as Uber and Airbnb where the actual handling of the goods and services is done by other people. When you are earning decent margins from such activity then it is very nice work if you can get it.
Certainly handling of wine involves a lot of heavy lifting – from the initial procurement through to potentially years of cellaring for some of the better wines, which comes with great cost and effort. Yes, we all know restaurants put their chunky margins on these wines. But I’d argue if the corkage is priced correctly – on a sliding scale like Locanda Locatelli – then the restaurant should be able to benefit from this near-frictionless transaction.
It also presents an interesting option for diners who might have a specific wine they believe would complement their meal at a high quality establishment where the cost of that bottle on the restaurant’s wine list would be way too prohibitive. Having tried it out for myself at Locanda Locatelli I felt it was a very appealing option and look forward to repeating the exercise either at this restaurant or at another place if I can find this enlightened approach being taken up by other operators.
Glynn Davis a leading commentator of retail trends

A spoonful of sugar makes the medicine go down by Paul Chase

OK, I hold my hands up – I did watch “Mary Poppins” in 1964 – but I was only 15 years old! But George Osborne seems to have watched it more recently if the announcement of a sugar levy in his Budget is anything to go by. But if he hoped the sugar levy would distract from his cuts to benefits for the disabled, then the resignation of Iain Duncan-Smith a couple of days later scuppered that one. As Harold Wilson put it: “A week is a long time in politics.”
But what are we to make of the sugar levy? Is this a genuine attempt to make us healthier, or just another cynical ploy to appease a noisy campaign group, whilst distracting us from the cuts? What is interesting is how the management of expectations has kicked-in since the measure was announced. Before the Budget, Jamie Oliver was claiming a sugar tax would be a “game changer”, then after the announcement, in a moment of euphoria that must have been almost like a sugar-rush, he proclaimed the measure would “send ripples around the world”. Then he came down to earth with a bump and said it was just a “symbolic slap” for the soft drinks’ industry. From game changer to symbolic slap whilst hardly pausing to take breath.
The campaign group Action on Sugar is naturally delighted, although it has always said it is just a “useful first step”. And this is what concerns me most: that these types of policy proposals are always presented to us by campaigners in the media as isolated measures. The truth is they are door-openers to much wider measures that will see state regulation of the food chain and mass product reformulation. If the problem, as presented to us, is the incidence of obesity at the population level is too high – something like a third of the adult population are said to be obese – then are we seriously supposed to believe a sugar levy that will raise the price of a can of pop from 69p to 77p will lead to a measurable reduction in population levels of obesity? Because if not, why introduce it?
Here we come back to the “useful first step” scenario. Certainly a levy that will raise £520m in its first year will be a useful first step for a government desperate to fill an £18bn hole, but what will the next steps be? Fortunately, we don’t have to guess, because Action on Sugar has, at the request of health secretary Jeremy Hunt, provided some helpful suggestions. Here they are:
1. Reduce added sugars by 40% by 2020 by reformulating foods (a similar programme to salt).
2. Reduce fat in ultra-processed foods, particularly saturated fat – 15% reduction by 2020.
3. Cease all forms of marketing of ultra-processed, unhealthy foods and drinks to children.
4. Disassociate physical activity with obesity via banning junk food sports sponsorships.
5. Limit the availability of ultra-processed foods and sweetened soft drinks as well as reducing portion size.
6. Incentivise healthier food and discourage drinking of soft drinks by planning to introduce a sugar tax.
7. Remove responsibility for nutrition from the Department of Health and return it back to an independent agency.
Well, number six is in the bag, so watch this space.
At the heart of all these proposals is the implicit belief that government must regulate because consumers are either too dumb to make their “sensible choices”, or else they are hopelessly addicted to products that have been deliberately spiked with sugar, salt and fat – ingredients that titillate the taste buds – and that “Big Food” has addiction as a core part of its strategy. This fantasy of corporate coercion is at the heart of “healthism” – the ideology of “the health of the nation”.
In fact there is no market failure in relation to sugary drinks – all the major producers sell sugar-free, low carb and calorie-free versions – Coke Zero and Diet Coke are just two examples that come to mind. But that isn’t enough for the healthist zealots. “Aspartame”, which is used as a sugar-substitute in many of these sugar-free alternatives, is then pilloried as being even worse for your health by a series of scare stories that have precious little to do with science. Read “Aspartame – the truth” on the NHS Choices website if you don’t believe me.
The puritanical nature of the sugar-phobes is thus plain for all to see. They won’t be satisfied until all food is bland, tasteless and “good for your health”. The fact is many of the things that give us pleasure involve consumption. And many of these things are bad for us – at least if consumed to excess. But we don’t have to make a zero-sum choice between maximising pleasure or maximising health, most people seek a balance summed up by the old maxim “A little bit of what you fancy does you good, but everything in moderation”. I’d rather decide for myself what those trade-offs should be – I don’t need the state to do it for me.
Paul Chase is a director of CPL Training and a leading commentator on on-trade and alcohol issues

Why pre-order is going mainstream by Olivia FitzGerald

I hate getting the drinks in. Not because I’m especially lazy or don’t want to pay my way, but because the entire process fills me with dread: from battling through the crowded bar, getting noticed, having to shout to make my order heard, to finally struggling to transport the drinks back to my table without any major spillages. I’m not alone – I know that friends who are equally lacking in “bar presence” share the same feelings. 

For bar-phobics like me, the idea of ordering and paying at the table, then having drinks magically brought over is appealing. So appealing, in fact, that I’m much more likely to part with more of my hard-earned cash! And that’s why the operators trialling this concept are seeing more drinks being sold and revenues increasing.

High-street operators such as JD Wetherspoon, Greene King and Be At One are all using apps to drive sales and improve customer experience. The reality is pre-order has gone mainstream and it’s set to grow. It’s a no-brainer when you think about it – in-app ordering drives revenue from a single customer visit by increasing spend in a more convenient, fun, and appealing way. And it’s a very effective tool in terms of converting additional sales.

When it comes to upselling, recommendations from a waiter can seem scripted and pushy, but when a product is suggested in an app it’s viewed as helpful and part of the service, enhancing the customer experience. We work with a late-night bar and club operator that sells bookable booths; for every booking, the app asks if the customer wishes to add a bottle of champagne. The customer is far more likely to say yes to an app than to a human. It’s strange, but true. 

Pre-order apps serve up an array of opportunities and can be tailored to suit individual business opportunities. Another Zonal customer is a theatre group that’s rolling out a pre-order app to boost sales in the interval, and the early results are excellent. Many people, myself included, forego the interval drink due to the long queues and crowded foyers. We would rather stay seated than risk missing the start of the second half. The new app tackles this problem by allowing theatregoers to pre-order drinks and have them delivered to their seat, avoiding queues, hassle and anxiety! And it will come as no surprise that in those venues using the app, uptake has been very strong and revenue is growing exponentially. 

For operators, it’s not simply a question of whether they should introduce pre-order, but when and what the best tool is for them to use. There are many off-the-shelf pre-order services out there, however, they are of little use if they’re not talking to your till system, the central nervous system of your business. Stock availability, pricing and offers are all managed within the EPOS universe, and this information must be shared seamlessly with ordering apps to make them operationally viable. For me, the advent of pre-order is a real game changer. I can’t wait for the next night out, and this time, the first round will be on me!
Olivia FitzGerald is managing director of Zonal’s marketing technologies division

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