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Fri 13th Jan 2017 - Friday Opinion
Subjects: Perhaps it’s no longer ‘bigger and better’ in the US, a handy cut-out-and-keep instant rebuttal guide to countering neo-prohibitionist lies, and the growing importance of foodservice outlets in shopping centres
Authors: Ian Dunstall, Martyn Cornell and Glynn Davis

Perhaps it’s no longer ‘bigger and better’ in the US by Ian Dunstall

Like many in the industry, I have been a regular pilgrim to the US restaurant market to observe and admire the latest brand innovations. Brands like Cheesecake Factory, Houston’s, Seasons 52 and PF Chiang have been important in my continued education of hospitality excellence. But the US market is maturing and has some key structural challenges. What is happening and what can we learn to protect our UK brands and businesses against comparable challenges?

A market in malaise
Study the news feeds of the US restaurant sector and its clear the industry is in a significant long term malaise – in October it reported the casual dining segment was in its 16th straight month of decline while quick-service was in its seventh straight month of decline. Previous trend analysis has indicated there has been a structural demand shift in the market away from established quick-service restaurants (QSR) and casual dining brands into the emerging fast-casual sector – but even this sector is showing evidence of slowing growth as the market matures and competition between the emerging fast casual brands intensifies with scale. For years we have admired the continual scale and growth of the US restaurant industry. It appears that in the short term maximum capacity has been reached.

Time for a shake out? 
While demand is at best static, the in-flow of attractive new entrepreneurial concepts in the US continues to attract the interest of consumers. And these exciting new competitors are share stealing from established large scale brands that are well into middle age and beyond (many popular brands are now 50-plus years old, KFC (a relatively successful example of positive evolution) as an extreme example is now nearly 87! (founded in March 1930).

Many of these brands, especially in the QSR and casual dining segments, have grown into scale institutions (many casual dining brands between 800 and 2,000 locations, QSR between 2,000 and 7,000 locations – McDonalds has 14,000!). As the market toughens Darwinian principals implies a survival of the fittest, but these brands have become too large to fail. Inevitably some of these brands will contract, eventually at least one of them will expire. Credit the brands that have managed to continually reinvigorate and reinvest to remain relevant, but increasingly some of the older casual dining and QSR brands are looking tired and their proposition is at increasing risk of losing relevance and attraction to the modern US consumer.

Over-focused on convenience and value?
We have long observed the intensity of US competitors and the propensity for US diners for high frequency out of home “meal replacement”. This has been fuelled by intense promotional discount to encourage higher visit frequency. Plus, a relatively high focus on carry out (or even drive-thru) convenience to encourage the “on the move” refuelling market.

But in the process some of these brands have lost the experiential and sensory magic of the overall experience. Value for money is not simply about low price – it’s about the service, the ambience, the personality, the quality and the price. This transforms a hospitality-based business from a commodity to an experience. My observation on recent US visits is that many of these traditional scale brands have become transactional and too charmless and functional. They have transformed from the unique to the ubiquitous.

Are new trading opportunities the answer?
Facing the challenges of declining core demand, US restaurants are chasing new channel opportunities – office catering services, take out, express lunch and delivery. These are important and positive opportunities – done well they provide incremental revenue and increase the relevance and reach of the brand for more customer occasions. And brands have to adapt their offer to remain relevant, when and how consumers want to access the offer.

The risk, however, is the brands lose the focus and obsession to drive their core brand experience and daypart focus. The challenge is how to ensure these do not dilute the core role of the dining experience. Else the brands experience a further role shift from a hospitality experience to a refuelling stop. In the UK we observe this trend also – as core lunch hour and midweek evening occasions diminish, brands seek to grow breakfast and more recently delivery services – the challenge is to use these new opportunities as incremental trading opportunities and not to dilute the focus or quality of the core dining occasions.

Rebalancing the export trade
It feels the tide of restaurant innovation is also turning. There are still great US exports like Five Guys and Shake Shack arriving from across the Atlantic, but in counter balance some of the UKs brightest and best are heading west. In New York the “shiniest” brand I recently observed on many prime estate street corners was Pret A Manger, which now has nearly 50 locations in central New York. Pret is a fabulous example of a brand that has remained true to its core brand principals and continues to execute the offer to the highest standards. Other successful brands entering the US shores include YO!, Wasabi, Nando’s and Wagamama.

Still leading in technological innovation
The US brands have been relatively early adopters of technological applications to enhance business efficiency, both for operator and guest benefit. From high temperature ovens for faster cook times, to guest technology to improve order and payment processes (“beat the line” pre-ordering apps are the relative norm in many sectors).

One recently observed extreme of technological evolution is Eatsa, billed as “the first fast food chain in America that requires zero human interaction”. When customers enter Eatsa, they order their food at an iPad kiosk. Then they wait in front of a wall of glass cubicles, where their food will be appearing when it’s ready. Hidden behind the wall, kitchen staff prepare the food. When an order is ready, an employee will place it in one of the cubicles. The door to that cubicle will then light up with the name of the customer who ordered the bowl. When the futurist John Naisbett (Megatrends) forecast the future impact of technology on our lives he described the status of “high-tech/ high-touch”. While Eatsa is an interesting trial of the technological extremes, perhaps removing all human interaction with the customers does tear at the soul of a “hospitality” experience.

Learnings for the UK market
Historically the US market acted as a barometer of the UK hospitality market. So what lessons can we learn from the current US malaise to influence our UK businesses? Firstly, let’s applaud how the UK market has come of age. It is a compliment to the UK industry so many UK brands are now exporting into the US, and we are relatively less impressed by US brand evolution now there is so much positive concept development in the UK market. But the current barometer indicates the UK market is rapidly changing, with the stable economics of the past five years being challenged in many areas of demand and supply.

The winning UK brands in this more challenging new world will be those that retain their fanatic focus on the unique magic of their individual brand experience. While being open to new trading opportunities they will not be over promiscuous and become a jack of all trades – the winning brands will ensure they nurture the core essence of their brand and will ensure any new trading opportunity does not compromise this core experience focus. And they will understand the true meaning of giving value to the guest. It’s not about lowest price – it’s about a competitive price that enables the guest to continue to afford to access the quality of the total brand experience.
Ian Dunstall is a brand consultant advising hospitality businesses on brand strategy and development. He has a strong legacy of success, including startup brands and brand revitalisation

A handy cut-out-and-keep instant rebuttal guide to countering neo-prohibitionist lies by Martyn Cornell

In the 40-plus years I have worked as a journalist, I never wrote anything I knew to be an actual lie. I’ll admit, though, that, very rarely, I span a story to leave the reader with an impression that, while not actively untrue, did not present a totally balanced narrative – generally because the balanced narrative was so dull no one would have read it.

But I certainly worked with news editors from the “don’t let the facts get in the way of a good front-page splash” school of journalism – men (no women) who sent their reporters out with a clear brief on the story they were expected to bring back, and who would erupt with sweary rage if the reporter returned to say, actually, very sorry, the facts didn’t support the news editor’s wished-for narrative at all.

Thus I recognised the report by Zoë Beaty, “The real story behind the ‘drunk women’ headlines”, in which she details how, when she worked as a stringer in the north of England, news editors from London papers would ring her up and order a report on women drinking on New Year’s Eve: “We were asked to ‘find the woman, crawling on the pavement with vomit-flecked hair’ (a line that has always stayed with me). They wanted fights. They wanted bodily fluids. They wanted short skirts and high heels – anything that fitted the ‘scantily clad’ caption they’d already written.”

Of course, Beaty and her photographer colleague would tour the night-time city centres, and discover the facts did not at all fit the narrative the news editors demanded. Beaty said: “Let me tell you, those stories are not easy to find. The spread of stories each year, from the same towns, the same areas, the same working briefs sent down from the same papers, make ‘booze Britain’ look alive and kicking. But, while there’s no denying there is a boozy culture in Britain (upheld and esteemed when it’s white middle-class blokes propping up the bar) – and alcoholism is no joke – actually, the nights I was sent out on these jobs were intensely dull. It took forever. We walked the streets for hours, around and around. We saw one fight, eventually, at about 4am and it was over in a matter of seconds – hardly the fractured, violent streets full of staggering youths you’re expected to buy into.”

Still the stories get repeated – my personal theory is middle-aged male news editors get a secret sexual kick seeing stories about, and pictures of, young women in revealing clothing out of control and vulnerable through drink, hence the popularity of pictures like one taken in Bristol in 2010, which has subsequently appeared in publications as far away as Poland to illustrate stories on binge drinking.

But if you think this making-the-facts-up-to-fit-the-story policy is at all new, that we have only recently, after Brexit and Trump, shifted into a “post-truth” world, let me quote you George Orwell, writing 75 years ago about his experiences as a fighter for the Republican forces during the Spanish Civil War: “Early in life I had noticed no event is ever correctly reported in a newspaper, but in Spain, for the first time, I saw newspaper reports that did not bear any relation to the facts, not even the relationship which is implied in an ordinary lie.”

Newspapers and news suppliers have had an agenda since the Mercurius Civicus and the Mercurius Aulicus fired inky broadsides on behalf of the Roundheads and the Royalists respectively in the early 1640s. In fact, reporting the news is always going to be biased, because the act of “curating” – choosing what goes in and what has to be left out for reasons of space and time – is inevitably going to mean stuff someone thinks is important will be left out.

Worse than active bias, though, is the journalist’s requirement for drama – we want you to read us, and we know you like to be thrilled/shocked/stirred. What this results in is a bias towards the shocking rather than the true. If someone comes along with a story that is thrilling/shocking/disturbing/scary, it is likely not to be interrogated too hard before being slapped into print/on the web. Smart operators know this, and among those skilled in exploiting the media’s love of a good shocker are the neo-prohibitionists, the Institute of Alcohol Studies, which is ultimately descended from the UK Alliance for the Suppression of the Traffic of All Intoxicating Liquors – and its fellows. 

They bend the facts, they publish half-truths and quarter-truths, they spin all the figures to put the worst possible impact on them, and newspapers report what they say without questioning it because the stories may not be true, but they are shocking and disturbing and they give readers that little electric thrill of horror at how terrible the world is – even if it’s not, really. For example, it was reported that 92,220 alcohol-related hospital admissions of children and young people under 18 were made between 2002 and 2009, or 36 under-18s a day. Your mental picture, possibly, is 36 totally drunk teens in one room. But there are about 180 “major” A&E departments in England, so even if all those 92,220 little drunks went into hospital via A&E, that works out at each A&E seeing an under-18 with a critical alcohol problem once every five days – a figure that sounds rather less worrying.

The neo-prohibitionists produce a regular drip-drip of misinformation, the latest being a report that hit the news this week claiming current drinks industry marketing practices are encouraging young people to drink. In the UK, head wowser professor Sir Ian Gilmour, chairman of the Alcohol Health Alliance, declared: “We all know that alcohol marketing contains content and messages that appeal to children and that due to exposure to this advertising children drink more and start drinking at an early age.” His solution is a “comprehensive ban” on alcohol advertising worldwide. But Gilmour’s “we all know” is an actual lie. As The Guardian (not always the first to declare a neo-prohib’s underwear is ablaze) pointed out, the most recent figures show levels of youth drinking in the UK are the lowest on record. In the past decade, the proportion of children aged 11 to 15 who have had an alcoholic drink has fallen by 38%, while under 18 alcohol-specific hospital admissions have fallen by 46% since 2008.

This is not just a UK phenomenon – levels of teen drinking in the US are at their lowest since figures first started being gathered 25 years ago, and under-age drinking is also falling in Australia and New Zealand. The leader of the latest study on drink advertising and the young, Dr David Jernigan, of the Center on Alcohol Marketing and Youth, part of the Johns Hopkins Bloomberg School of Public Health in the US, declared: “Exposure to alcohol marketing among youths is linked to more under-age youth drinking and, in particular, binge drinking.” But in the UK the proportion of young adults aged 16 to 24 binge drinking fell by more than a third between 2005 and 2013, from 29% to 18%, while the proportion of teetotal young adults rose by more than 40%, to about 27% of the total, over the same period. The proportion of 11 to 15-year-olds who have never had a drink rose from 39% in 2002 to 61% in 2013. So exposure to alcohol advertising seems to be having the opposite effect to that claimed by Gilmour and Jernigan.

The best way to counter this neo-prohib “post-truth” spinning is to play whack-a-mole with the neo-prohibitionists’ claims – every time they repeat another exaggeration, or make another unfounded claim, hit them with the hard stick of truth. Here, then, is your handy cut-out-and-keep instant rebuttal guide to countering neo-prohibitionist lies (compiled largely from facts gathered from Christopher Snowdon’s Velvet Glove, Iron Fist blog. I disagree with much of his politics, but on the neo-prohibitionists he is extremely sound, and an excellent source of material):

“Britain is in the midst of a booze epidemic”
Per capita alcohol consumption has dropped by a fifth since 2004
Alcohol-related deaths have fallen by 7% since 2008
Alcohol-related violent crime has fallen by 40% since 2007
Drink-driving related accidents fell by 45% between 2003 and 2014 and are now at the lowest rate on record
The proportion of 45 to 64-year-old males who drink alcohol on five or more days a week has fallen by 29% since 2005

“There is no safe level of drinking”
I once covered a story about a young wife whose husband brought her a moped. The first time she rode it, in the cul-de-sac where she lived, she accelerated straight into a brick wall, cracked her skull and died. We can thus conclude there is no safe level of moped riding – once is enough to kill you.

But this “no safe level” claim about alcohol, based on the idea the tiny, tiny risk of alcohol-caused cancer is there regardless of intake, deliberately ignores the much stronger proven health benefits of moderate drinking. More than 100 studies have shown moderate drinking brings a 25% to 40% reduction in risk of death from all cardiovascular causes. Heart disease risk is at its lowest for men drinking about four units a day, or two 500ml bottles of 4% ABV beer (for women the optimal level is lower). And heart disease, incidentally, kills more people than all the “alcohol-related” cancers combined. Moderate drinking is also associated with a 30% lower risk of risk of type-2 diabetes, and of ischaemic stroke.

Moderate drinkers have less osteoporosis and a lower risk of fractures in the elderly compared with abstainers. Light to moderate drinking is associated with a significantly reduced risk of dementia in older people. What is more, the risks for many diseases have been found to be lower among frequent drinkers, including daily drinkers, than those reporting less frequent drinking. In the US, the National Institute on Alcohol Abuse and Alcoholism, which says men can safely drink up to 25 units a week, almost two thirds more than current UK guidelines, estimates 26,000 deaths a year are prevented by moderate alcohol consumption thanks to reduced risk from heart disease, diabetes and stroke – the equivalent of 5,000 deaths a year in the UK. So yes, there is a safe level for drinking.

“Alcohol-related harm is estimated to cost the UK taxpayer £21 billion a year”
Nonsense. This figure first appeared in 2003 in a publication by an economist called Dr Rannia Leontarid, from something called the cabinet strategy unit – it actually applied to England only, and should be slapped down whenever and wherever it appears. Those alleged “costs to the nation” include an estimated £4.7bn of “emotional impact costs of victims of crime”, £7.3bn for “loss of output due to absenteeism, reduced output and premature death” and “lost productive output of victims”, and £1.5bn for “costs in anticipation of crime (alarms etc)” – £13.5bn, almost two thirds of the total, which can basically be described as “sums we made up and bunged in to make the total sound high”. 

How, for example, can you estimate “emotional impact costs”? Or lost output because someone has a hangover? In addition, of the £2.7bn alcohol harm is supposed to cost the NHS, and the sums it is supposed to cost the criminal justice system, there is no analysis of how much of this is sunk costs on the supply of doctors, nurses, ambulances and so on that would have to be paid for anyway, no analysis of how many jobs would vanish, putting people out of work, if “alcohol-related harm” disappeared, and no analysis of how much is saved in everything from bus passes to pensions to subsidised housing through people dying early. For more, see here.

“We are drinking 42% more than we did in 1980”
A classic example of how to lie by telling only half the truth – shamefully (though unsurprisingly) this untrue claim was a Daily Mail headline late last year. In 1986/87 431 million litres of alcohol were sold. Sales hit 567 million litres in 2008. But thanks to an ever-rising population, sales per head show a very different tale:
1980: 9.4 litres
1990: 9.8 litres
2000: 10.4 litres
2010: 10.1 litres
2013: 9.4 litres
And the figure is still falling. So no, today we are, as individuals, drinking less than we did in 1980.

“Three in four people in A&E at weekends are there because of alcohol”
Two lies in one sentence, found in stories in national newspapers at the end of 2015. The story sprang out of a study of A&E admissions in Newcastle published in a journal called Emergency Medicine, which actually found alleged “alcohol-related attendances” make up less than 20% of the weekend total, and only topped 70% about 3am, when there were comparatively few people in A&E anyway – and these weren’t necessarily “alcohol-related attendees”, merely people who “tested positive for alcohol ingestion”. I’d suggest most people test positive for alcohol ingestion at 3am on a weekend morning. 

“Alcohol is now 60% more affordable today than it was in 1980”
Another lie, based on the fact disposable incomes have risen (and ignoring the fact we now buy much more stuff – smartphones, computers – and other costs are much higher – housing, travel). In fact, since 1980, the price of alcohol in the UK has gone up by 23% more than the rate of inflation, and the real price of drinking has thus increased.

“Minimum pricing cuts alcohol-related deaths and hospital admissions”
This claim is based on a study of British Columbia, in Canada. The neo-prohibs claim “a 10% increase in average minimum price for all alcoholic beverages in British Columbia was associated with a 32% reduction in wholly alcohol-related deaths within nine months, a 9% reduction in acute alcohol-related hospital admissions and a 9% reduction in chronic alcohol-related hospital admissions two to three years after the policy was implemented”. But in fact alcohol-related deaths did not fall and alcohol-related hospital admissions continued to rise. And to quote Christopher Snowdon: “The alcohol-related mortality rate in British Columbia, where they’ve had minimum pricing and a state-run off-licence monopoly for years, is 24 per 100,000, whereas in the UK, where we supposedly have a boozing epidemic, it is barely half of that – 13 per 100,000.” 

“More than 135,000 UK drinkers will die of cancer caused by alcohol by the year 2035”
This is the “big figure” lie – 135,000, the population of Gloucester, sounds a huge number. But that figure of alcohol cancer deaths is spread over 20 years – so it is actually 6,732 a year. There are 7,674 GP practices in England alone. Therefore each GP surgery is likely to see less than one patient a year die from cancer caused by alcohol. Any figures you see from the neo-prohibs will always be spun to look as bad as possible – deaths quoted over ten or 20 years, for example, risks given as relative rather than absolute, so the risk of a particular disease “doubles” if you drink, but further digging will reveal “doubling” is from, say, a one in 5,000 chance to a one in 2,500 chance; – so in reality from very, very, very, small to just very, very, small.

Overall, then, when you read anything from any anti-alcohol campaigner, the best policy is to remember what the late Times foreign correspondent Louis Heren would ask himself when interviewing a politician: “Why is this lying bastard lying to me?” The next step is to try to identify exactly where the lie is, and then rebut it, as loudly as possible.
Martyn Cornell is a leading beer writer and his blog can be found at www.zythophile.co.uk

The growing importance of foodservice outlets in shopping centres by Glynn Davis

When visiting the Trafford Centre in Manchester on the day it opened – 10 September 1998 for the record – it was clear the developer (later renamed Peel Holdings) had not stinted on spending big money on quality fixtures and fittings. The vast shopping mall shone and represented a glimpse of the shiny future of shopping. This helped it attract some big name retailers such as Selfridges that had only previously operated from its London flagship. What now also stands out in my memory is just how little effort they had spent on the centre’s food offer.
 
Like all shopping centres at the time it simply had a food court with a central seating area that was serviced by a number of generic food outlets. These were badged as blandly as burgers, fish and chips, pizza, and baked potatoes. That was about as far as it went and the quality of the output was as imaginative as the names.
 
The focus was clearly 100% on the retail offer and food was simply an aside the mall owners sort of felt they ought to provide. They were undoubtedly correct with this strategy because the Trafford Centre, like other major developments at the time – Lakeside and Bluewater among them – were massively successful. They changed the retail landscape.
 
How times have changed. Today, there is no operator in existence that would think so lowly of its food proposition. The food and beverage offer has gone from zero to hero. With changing shopping behaviours (partly driven by the internet) the hospitality and leisure component is fast becoming the future of the shopping centre. Research from property firm JLL has revealed over the past decade the area occupied by food and beverage concepts in shopping malls has more than doubled and it forecasts by 2025 they will account for about 20% of the total space. In Asia this figure is already a hefty 25%.
 
Among the more progressive mall operators has been Westfield that long ago recognised the value of committing plenty of effort to attract top food operators into its developments. Its Stratford and west London malls have always had a high percentage of quality food and beverage providers. This has clearly been a sensible move when you dig into the numbers, which Cardlytics rather handily has done over the past 12 months at Westfield (West) London. It found 58% of all visitors to the mall dined while there, and they spent on average £21 per trip in quick-service restaurants and £33 in casual dining outlets.
 
What these people also did was spend more time in the development (27 minutes more on average, according to JLL). Increasing dwell time has always been the primary objective of a food and beverage offer for the shopping centre owners. It absolutely ensures visitors do not leave the premises for sustenance. They can ponder their further spending (they outlay 18% more on their total purchases says JLL) while having a bite to eat. This is why quality hospitality sits so well alongside the retail outlets.
 
What is particularly interesting though is a staggering 36% of people who visited Westfield London did so specifically for the food and did not spend any money elsewhere in the centre. This is rather like the findings from the train stations that have undergone major refurbishments – involving the introduction of massively overhauled food and beverage provision. Many people now use the stations as destination dining venues and do not then travel on from the location by train. This has been a major aspect at London’s St Pancras station. Such actions highlight the trend of increasing footfall at shopping centres (and train stations no doubt) in the evenings when customers are clearly visiting these venues predominantly for their evening meals.

Recognition of the growing importance of food and drink in shopping centres can be seen in the recent planning submission by British Land to add a £300m “Leisure Hall” to its Meadowhall shopping development in the Yorkshire city of Sheffield. This would comprise a 330,000 square foot multi-level glazed-roofed extension and an open-air terrace housing numerous dining and entertainment options.
 
Against this changing backdrop, what exactly is the food and beverage proposition at the Trafford Centre today? Let’s just say it has changed somewhat and it now houses a roll call of the UK’s foremost food and drink brands – from All Bar One to Zizzi. The world’s cuisine is available under this one (extremely big) roof in Manchester. There is even a “360 Champagne & Cocktails” bar. Nobody in their right mind would have wanted to consume premium alcohol in that old food court back in 1998 but today the world and its shopping centres are a very different place.
Glynn Davis is a leading commentator on retail trends

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