Subjects: Machines making their mark in hospitality, 2017 – the year operators took the influencer seriously, and keep your company fighting fit
Authors: Glynn Davis, Ann Elliott and Ian Dunstall
Machines making their mark in hospitality by Glynn Davis
There are three massively beneficial aspects of pizzas that make them so beloved of the foodservice industry. Firstly, everybody likes eating them; secondly, any fool can make them (not to the same standard I admit); and thirdly, the margins are extremely healthy.
The latter point is enhanced dramatically by the second. Not having to employ skilled chefs at high rates is guaranteed to significantly boost margins and then there are the temperamental aspects that come with chefs who are armed with plenty of in-demand skills. Their preponderance to down tools and move on to another kitchen can result in the issue of high staff turnover, which itself eats further into the margin pressures being faced by restaurateurs.
But even the ability to employ lesser-skilled chefs at lower hourly rates is not enough for some operators and we are starting to see the emergence of robots taking over some of the more repetitive tasks involved in food preparation. Pizza making is among the processes at the forefront of the early stage of the rise of the robots.
By adopting robotics, US-based Zume Pizza can churn out as many as 288 pizzas an hour. This is not only improving its productivity but also the long-term cost savings are blindingly obvious. Where Domino’s spends 30% of its revenues on employee salaries, and McDonald’s outlays 26%, the total salary expenditure is a mere 14% of sales at Zume. The machine it uses is not yet capable of dealing with the “complexity” of handling a variety of toppings but that is surely only a question of time.
It is a similar story with burgers where automation is also creeping into the production process. Momentum Machines has developed a robot that can produce 400 burgers per hour – it would take the efforts of three humans to produce the same output we are told. Meanwhile, the CaliBurger chain has just started using a £45,000 “Flippy” system from Miso Robotics that can flip burgers twice as fast as humans.
Even the world of artisan coffee is not immune to the growing intrusion of automation. The US concept Café X completely removes all human interaction from the purchasing of quality coffee. Customers place an order either via an iPad-enabled kiosk or on the Café X app and the drink is then produced in a mere 20 seconds.
The reason for this incredible speed is not because Café X churns out poor quality instantly processed beverages. It is down to the ability of the robot barista to produce multiple drinks at the same time from a concise menu. Payment is taken at the point of ordering and the drink is removed from the kiosk by the customer entering a four-digit code that opens up the hatch.
It’s definitely the case that much of this automated activity is taking place in the US, but don’t think it is wholly confined to operators across the Atlantic. We are seeing some early robotic experimentation in the UK and it has broken out of the back-of-house.
Shopping centre operator Intu has recently revealed it has been testing a robot within its Milton Keynes mall that in addition to directing people to different parts of the centre and collecting feedback from them, also informs them about special offers and any relevant promotions at Starbucks and Pret A Manger that are housed within the development.
Retail Insider recently published its first “Digital Leisure & Hospitality Innovations Top 20” report to celebrate the most innovative use of technology within the industry and it is littered with various applications of robotics that are being used by a variety of operators around the globe.
Regardless of whether such solutions are being adopted because of the margin enhancements they can potentially bring, or because in some cases robots can actually deliver a better customer service than humans, it is inevitable that intelligent machines in their various guises will absolutely be playing an increasingly important role in the future of the leisure and hospitality industry.
Glynn Davis is a leading commentator on retail trends
2017 – the year operators took the influencer seriously by Ann Elliott
As an operator, what’s your main aim? To increase footfall? Spend-per-head? All of the above and more? Welcome to the world of influencer marketing. This year, more than ever, I’ve heard various clients and colleagues talking about “influencers” and how to successfully work with them. Brands are fascinated by them, consumers are obsessed with them and, no matter what, you cannot escape how they are shaping the food and drink industry.
While consumers are becoming wiser about (and increasingly annoyed with) paid-for content, using an influencer is an effective way to reach demographics that have been traditionally difficult to engage with, such as millennials or Generation Z. What’s more, it’s working. According to research carried out by Zizzi, 18 to 35-year olds spend five days a year browsing food images on Instagram.
We’ve all seen the effect organic social media posts can have on a new food trend – freakshakes and cronuts became overnight sensations with people lining the street to get their hands on them. The same can be said for restaurants. Sketch, for instance, has been named as one of the most Instagrammable restaurants in London due to the huge numbers of people posting images from inside the toilets. It’s now a trend (seemingly) for guests to visit and ensure they get the right bathroom “selfie”. These trends are sometimes started organically or sometimes via the power of the influencer.
Influencers are aspirational people and their followers trust them. Followers want to eat in the places where their favourite influencer has dined, they want to drink the same cocktails they have had in their hand and they want to take pictures in exactly the same spot favoured by the influencer. It’s tempting for an operator to work with an influencer with the most followers but that isn’t always the best route to take. Working with someone whose followers mirror your target market is much more important, as is the fact you want their followers to be likely to engage with your brand.
Pizza operators tend to use influencers a lot – perhaps because pizza is the most Instagrammed food (making it difficult to spot an advertisement from genuine content). Pizza Pilgrims has worked with food bloggers since the launch of its first food truck. Using hyperlocal influencers and documenting its brand’s journey through the YouTube channel meant it has been able to reach local people and achieve great results. Pizza Union recently opened its third site, in Aldgate, and created a social influencer campaign to do this, reaching nearly two million people in its target demographic for a relatively low budget.
All Bar One executed a brilliant campaign to increase brunch sales across its 50 bars nationwide, and it tracked its results religiously throughout. Targeting professional women aged 25 to 34, it worked with an influencer agency to source a diverse selection of ten micro-influencers with a combined reach of 200,000. They were tasked with taking a visual report of their food, as well as linking through to All Bar One’s “Time for Brunch” competition.
The results were incredible. In spite of publicising the competition using its own channels and paid-for social, All Bar One found the majority of the 200 entries and 4,000 engagements came through the influencers. Not only this, but All Bar One’s Instagram followers grew by 18%. As amazing as these results are, brunch sales also spiked 28% like-for-like growth, and across the year brunch sales grew by 13%, increasing the number of brunches sold by 1,800 per week.
Working with influencers can be daunting and, while I would never suggest committing your whole marketing budget to them, it is important to understand how they work and how successful they can be in generating interest and footfall.
It has to be said while influencer marketing is working very well in some areas of our industry it isn’t working everywhere. We are seeing a huge gap for suppliers to utilise the trend and work with influencers to create lead generation. While this might be harder to execute well, it is important to stay ahead of the curve and innovate when it comes to marketing or risk losing out to competition.
Ten Instagrammers in the food and drink industry to keep an eye on:
Ann Elliott is chief executive of Elliotts, the leading integrated marketing agency in the hospitality and leisure sector – www.elliottsagency.com. Follow her on Twitter: @elliottsagency
Keep your company fighting fit by Ian Dunstall
Many hospitality leaders will be directing a siege mentality as they deal with the immediate implications of subdued demand and raging cost pressures. But as companies endure the short-term pain of boot camp, they must be prepared to get fighting fit for the next stage of the battle. The Zurich foodservice conference – where, incidentally, European operators seemed bullish about current demand growth – highlighted the magnitude of consumer change society is currently experiencing.
We are apparently entering the fourth industrial revolution, driven by accelerated technological innovation. For those interested, the original Industrial Revolution used water and steam power to mechanise production, the second used electric power to create mass production, while the third used electronics and IT to automate production. However, it is the speed of transformation we must now adapt to. In the first industrial revolution, it took almost 100 years for society to adapt to change. We currently need to prepare to manage equivalent scale of transformation to our lives and businesses within a couple of decades.
Let’s remind ourselves of the recent impacts of technological change that have fundamentally disrupted the market place, albeit with over-used examples. Amazon is having a transformational impact on the retail high street; advertising media is now dominated by Google and Facebook; Apple has inadvertently become the largest watch manufacturer; and Tesla’s market capitalisation exceeds Ford.
Other technology companies are still in the early stages of market disruption, with some inevitable growing pains (principally around the human interface). However, their ambition is clear – Uber wants to make cars so easy and cheap personal ownership will be considered an expensive irrelevance, while Deliveroo and others are transforming the home delivery market for restaurant-quality meals. Both these sectors will be further transformed as it seems inevitable driverless vehicle technology will become available, cutting the cost and potential disruption humans cause these businesses.
These disruptive elements are also having an impact on how customers view the restaurant industry. Amazon customers are being taught to be intolerant of retail inefficiency. Why go through the hassle of a shopping experience that can often disappoint – struggling to find the exact product you’re looking for, queuing for payment, tolerating mediocre service assistance, and battling through traffic laden with heavy bags – when you can instantly find the product you want online, pay for it in seconds and have it delivered to your door – often in less than 24 hours? This “intolerance” will rub off on consumers’ attitudes regarding the restaurant experience.
So as we spend the next months in short-term economic survival mode, what challenges need to be planned for as the restaurant sector experiences comparable levels of market disruption that other sectors are already witnessing?
The younger generations are our future key customers and are entering the consumer market with different expectation levels. They start with a stronger sense of entitlement and a need for self-fulfilment. They are much less loyal to established behaviour so as an employer or brand, expect them to switch much more readily than previous generations. However, they have a stronger sense of ethics regarding the state of the world, which will impact on their views of supply chain origin and sourcing. Economic reality is also changing their attitudes to ownership, especially of big-ticket items such as homes or cars.
They more readily accept the concept of renting or sharing and are putting a higher priority on the purchase of experiences rather than consumer products. Given the social norm to share their lives online, their restaurant visit needs to be fuelled by photogenic experiences they can post. There will be an ever-increasing focus on creating an experience for the guest – they want an experience to share with their community (both present and virtual). We need to design our restaurants as a holistic experience amplified by the combination of technology, product, service and atmosphere.
Within foodservice, technology investment will become increasingly important. Currently, the strongest guest-facing impact can be seen in the delivery or quick-service sectors – for example, Domino’s digital ordering and McDonald’s order-and-pay kiosks – but this will inevitably accelerate. Online ordering and digital payment options are becoming more of the norm in the casual dining market. Most brands have already invested to some degree in digital, social, mobile, loyalty and CRM marketing areas, but the reality is these platforms need to be constantly upgraded to keep up with market expectations. You can add to that the back-of-house emergence of “chef robots”, with the potential for technology to have an impact on the quality, speed and cost of kitchen labour.
Service models will also evolve – guests will become increasingly intolerant of any service mediocrity. Technology can play a supporting role in removing service delay barriers. The question of post-Brexit labour availability remains unresolved and the unit cost of labour will increase as the political and social expectations for fair pay continue to grow.
Menus will continue to shift towards healthy options. Health and lifestyle will become increasingly important as guests (and politicians) adjust to the reality that working lives are increasingly sedentary and therefore we need to balance our consumption. Reduced alcohol consumption is already evident, while sugar taxes are launching and, generally, “freshness” is becoming increasingly important in guest expectations.
A key theme of the Zurich conference was the power of data – “the new oil”. Other sectors are adopting the power of “big data”, a combination of enhanced modern computing capacity and the ability to track consumers’ activities and movements via their mobile phones and electronic payments. This allows brands to capture and analyse all aspects of guest behaviour to understand and influence guests’ buying preferences and activity. In our sector it’s currently the food delivery technology companies that are the leading data aggregators. The impact of big data collection and analytics, and the networks that companies form to share and interrogate their consumers’ behaviour, will become increasingly important.
Capital expansion will clearly calm in the next year but the reality of recent times is of strong cannibalisation with supply expansion outstripping demand growth. There are more than 20 restaurant brands that have been created and achieved significant scale expansion in the past decade. Inevitably, these shiny new toys attract other operators’ existing customers. The concepts that achieve scale growth generally have a clear proposition, a quality food offer and an attractive atmosphere, which consequently attracts some of the brightest service personalities into their employment.
The reality for many established brands is there is almost a dis-economy of size when it comes to effective evolution – it’s expensive to transform an established scale brand with an ageing estate. There is a reality that many brands have, over time, sought to engineer the menu margin and labour efficiency for short-term profit – so reinvestment is challenging. And even with the best intentions, achieving transformational change in larger-scale brands is time-consuming and disruptive.
We continue to live in challenging times. There are some strong short-term economic headwinds that need effective management now but you can’t lose focus on navigating the disruptive market challenges ahead to ensure your brand increases its future relevance to guest needs and exploits the advantages that change creates.
Ian Dunstall is a brand strategy consultant, advising hospitality and leisure clients – from established scale brands to startups – on their brand development and evolution needs