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Fri 12th Aug 2016 - Friday Opinion
Subjects: The challenge of the regions, the ‘silly season’ has come early this year, and technology, the customer and you
Authors: Glynn Davis, Paul Chase, and Clive Consterdine

The challenge of the regions by Glynn Davis

While the government’s Northern Powerhouse project looks like it might be running out of steam it has not been all bad news for the region as the scheme’s potential demise has coincided with a myriad of announcements from restaurateurs, pub operators, and hoteliers setting up shop well north of London. There have been signs for some time that the pressure cooker that is the food and drink scene in the capital is close to exploding from rather too much steam. Rentals have raced ahead as competition for sites has made it an even tougher place to compete than previously, which is saying something.
 
There can be little doubt that the competitive market has been made even harder by the sheer variety of operators that have had the appetite to set up in London. And it’s certainly not just about the chains because the city’s hospitality scene is predominantly made up of independent and smaller operators (with fewer than 25 sites). It seems anybody with a bit of cash in their pockets, or who has run a professional kitchen, wants to either fund the opening of a bar or restaurant, or go it alone and become the owner/chef of their own place.
 
Small independents account for a whopping 64% of food venues in the capital – up from 51% five years ago – that contrasts with a much lower 40% across the UK’s other big cities, which is an increase on the 34% of five years ago (according to Market Growth Monitor from AlixPartners and CGA Peach). Against this backdrop, there has been a flurry of activity in the market from proven London-based concepts making the move beyond "the Smoke" to try their hand in other big cities and towns. The trend has been building up for some time but there is now a case to be made that it is accelerating.
 
Indian chain Dishoom has announced its first unit outside London, in Edinburgh, while seafood specialist Randall & Aubin has revealed it is to open only its second site (after 20 years of trading solely from its Soho site) in Manchester. A combination of the right building and vibe (along with no doubt a bit more economic sense than opening site number two in the capital) led to its decision to go north. Craft beer chain Draft House has also announced it is to open its first unit beyond central London, in Milton Keynes. I admit it’s not exactly within the boundaries of the Northern Powerhouse but it absolutely highlights how yet another operator has been forced to look further afield due to the scarcity and ridiculous expense of sites in the capital. Draft House founder Charlie McVeigh recently encapsulated this scenario rather nicely: “We’d love to have a few more [pubs] in the City. We’d love to be in Camden, Victoria and Notting Hill but the rents there are just nuts.” Milton Keynes it is then.
 
Another business announcing a similar move (further afield than Milton Keynes) was Zetter Group, which is to open its first hotel – with attendant top-notch restaurants and bars – in Manchester. It recognises the potential of moving to the northern city rather than putting another flag in the ground in London where it has proven its concepts and successfully operates three hotels as well as a standalone restaurant.
 
Despite such activity from operators with proven working models and concepts there are many things that can go wrong when making the move beyond the capital’s perpetually inflating bubble. Burger & Lobster is a case in point. Its massively successful model in London has been aggressively rolled out and to avoid any cannibalisation of the enormous units it prefers to operate (because this suits its very limited choice, competitively-priced, high volume model) – it has branched out into other major cities with equally large sites.
 
As buoyant as places like Manchester and Cardiff have been of late the scale of the venues Burger & Lobster has opened (170 covers in Manchester) have proved a stretch and it is now looking to downsize some of its regional sites. It is not alone in finding it a challenge to transplant a proven model in the capital into the provinces. But as long as rentals in London remain in the stratosphere, and there continues to be a welcome resurgence in eating and drinking out of home in many of the UK’s other major cities, the lure of travelling beyond the capital will continue to prove extremely tempting for growth seekers.
Glynn Davis is a leading commentator on retail trends 

The ‘silly season’ has come early this year by Paul Chase

The “silly season” – it happens every year and usually coincides, for some reason, with the party political conference season. This year it has come a little early. First, a little levity: the Palace of Westminster in which our MPs sit is a wonderful Gothic building but it’s crumbling and needs more than just running repairs. Some may see this as a metaphor for our entire political system. When you look at the political events since the Brexit vote, and the state of turmoil in the political parties, it’s enough to drive MPs to drink!
 
And therein lies a tale. MPs are due to move out of their offices to enable much needed reconstruction to the Palace of Westminster that will commence in 2020 and last for six years. However, the Department of Health offices they will move into are in a building called Richmond House, which is held under an Islamic bond scheme that forbids the sale of alcohol. So, where will our heroic representatives of the people go for a little taxpayer-subsidised libation when the House of Commons ceases to be the best gentlemen’s club in London? Well, there is a nice little pub between the two buildings called the Red Lion, and it has been reported that nationalising it in order to reserve it for MPs’ use was on the agenda. Fortunately the owners have refused to sell.
 
There is more than a little irony to all this. There has been a growing tendency to denigrate alcohol and to favour a temperance approach among some parliamentarians. Well MPs, be careful what you wish for, a little Islamic teetotalism might be just what you need – remember what chief medical officer Dame Sally Davies said – “there is no safe level of alcohol consumption” – so prepare to set a good example.
 
Meanwhile there is a House of Lords all-party committee looking into the workings of the Licensing Act 2003. How is the act doing? Do we need more licensing objectives? How about one on “health and wellbeing” or one that requires licensees to “promote equality”? They can’t leave it alone can they? I do suspect that this committee is really about banging the health drum and calling for a health licensing objective, but I could be wrong.
 
But the House of Lords seems particularly exercised by alcohol at the moment. Lord Tariq Ahmad, our unelected new aviation minister, is concerned about incidents involving drunken people at airports or on board flights, to the extent he is looking at restricting the hours of opening of airport pubs and bars. Helpfully he has said: “I don’t want to end merriment altogether.” So, just a bit then? And on what basis does he consider this to be a problem? There are about 241 million people going in or out of UK airports every year. An FOI request by the Press Association revealed there had been just 442 drunken incidents at UK airports in 2015 – only 0.0001% of the total throughput. Time for a moral panic then!
 
Our politicians’ attitude to alcohol at both national and local level has historically been driven by paternalism. Some people feel quite nostalgic about this. So, July saw a spate of articles about the “Carlisle Experiment”. In July 1916, while the Battle of the Somme was raging, a new pub opened in Carlisle called the Gretna Tavern. It was our first nationalised pub. The Defence of the Realm Act was then used extensively to create a Central Control Board (Liquor Traffic) and to nationalise five breweries in Carlisle as well as 235 pubs in the Carlisle, Gretna and Annan area. In 1917, pubs in the Enfield Lock area of London and Invergordon in Scotland were taken over. In all some 363 pubs were nationalised over 300 square miles either side of the English-Scots border around Solway Firth, where a giant munitions factory was being built; the idea was to keep the munitions workers sober and turning up on time for work.
 
The Central Control Board then took an axe to licences, with 40% of all alcohol licences in the area being declared “redundant”, including all grocers’ off-licences. Some authors today see this as a noble experiment to “civilise” the pub; they suggest this was a successful example of nationalisation because the Central Control Board made a profit out of these pubs for every year it ran them. Well, I guess if you can buy a packet of already profitable pubs using taxpayers’ money, and then use your legal powers to close down most of the competition to them, that might give you a flying start!
 
Since the Labour Party appears to be undergoing a terrible attack of socialism at the moment, I wonder whether Diane Abbott might have a little word with Jeremy Corbyn and see if he would like to nationalise some pubs along with the railways. Peoples’ quantitative easing; the peoples’ railways; the peoples’ pubs. You never know. It all depends on how long this year’s “silly season” lasts.
Paul Chase is a director of CPL Training and a leading commentator on on-trade health and alcohol policy
 

Technology, the customer and you by Clive Consterdine

We live in a round-the-clock society where technology is changing all the time. Keeping abreast of the trends, what to invest in and, crucially, what to ignore as a passing fad, is a skill we all wish to have. What we do know for certain is that hospitality operators are having to adapt and invest in technology to meet the demands of their customers, from providing online booking and mobile payment to pre-order. 

In less than two years, the number of consumers who use mobile devices to speed up payment has increased from 2.4 million to 3.1 million (source: GO Technology report by Zonal Retail Data Systems and CGA Peach). Of the 5,000 British adults polled, 25% who do not currently use mobile devices to speed up payments would consider doing so in the future, with the biggest barrier being a lack of education (39% didn’t know it could be done). Lack of trust in using mobile payment is also falling as it becomes more mainstream, with only 20% of consumers citing it as a concern in February 2016, compared with 31% in July 2014.

There is no doubt then about the influence mobile has had on consumer behaviour, transforming the way we socialise, shop, play, listen to music and watch programmes. But it’s the split between apps versus web usage that is most striking, with 81% of UK time spent on apps compared with just 19% using a web browser (source: eMarketer). Surprising again is the high level of regularity amongst consumers over app usage, with the average person using just five apps on a regular basis. So while the popularity of apps may vary from person to person, with some consumers preferring social media and gaming, while others spend more time on Instant Messenger, it’s clear the battle for featuring on a smartphone screen is well and truly under way.

So how do we fully maximise the consumer’s insatiable appetite for apps? One thing’s for sure, it’s not just about creating apps for apps sake. It’s about really understanding your customers, what makes them tick, what they do, when and how frequently. Whether a multiple or single site operator, the fact is that through integrated technology we can learn more about our customers, their behaviour and purchasing preferences than ever before.

Investing in technology such as EPOS is one thing, but understanding the power of the data and using it effectively to build your business is something that operators still need to grapple with. Supermarkets have been doing this successfully for a number of years, but many pubs, bars and restaurants now have the ability to get on board and start targeting their promotions to meet their individual customers’ desires, rather than running costly blanket offers. Knowledge is power, but only if you take the time to understand it and focus your campaigns accordingly. We see many operators who have the tools but as of yet, not the expertise to use this knowledge to its fullest effect. 

Loyalty for example is not about discounting, but rewarding people for their custom with a targeted offer relevant to their demographic and purchasing history. If you know your customer visits your venue with their family, then family offers are going to be much more meaningful than a promotion directed at a young couple. With apps being so influential it goes without saying that using mobile technology to engage with and optimise the customer experience is becoming more commonplace. Be At One already does this very well, but the broader industry is quickly playing catch-up with the growth of pre-order and “in app” bar tabs to settle and split payment.

Indeed, for many of us navigating a crowded bar is not an experience to be relished and we’d much rather take time over our drinks to avoid the next round. This will soon be a thing of the past though as bar tab apps take off, enabling customers to set up their own tab, order their own drinks and pay for them remotely. Suddenly, getting the drinks in is no longer a problem, which can only be good news for the bottom line. And what if you could get the drinks in for your customer, before they even arrive? Well, it might sound like science fiction but the technology is already available. If a customer is signed up to your app, you can tell through “beacons” their estimated time of arrival, whether or not they’re in a pub down the road or in fact have just entered your venue.

Being able to engage in a fun, light hearted way with your customers because you know them, probably better than they do, and personalising their experience, is the future. But the future is here now and as with anything, those who embrace it will be the ones to prosper. Don’t give your competitors a head start – make sure you invest in developing a proactive and evolving digital strategy today to help ensure your success for tomorrow.
Clive Consterdine is sales and marketing director at Zonal Retail Data Systems

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