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Morning Briefing Strap Line
Fri 2nd Mar 2018 - Friday Opinion
Subjects: Raising the bar, restaurant closure outbreak isn’t over and Disney principles still hold good
Authors: Glynn Davis, James Sandrini and Ann Elliott

Raising the bar by Glynn Davis

Perched on a bar stool mid-afternoon on a work day in Moeder Lambic craft beer bar in the centre of Brussels, I read the headline: “As millennials become increasingly preoccupied with their physical and mental wellbeing, has the gym become the new pub?”

If I was closer to the millennial age group I might have felt a little guilty about my situation but, since I’m sadly many years past, I chose to have another beer. It slid down all the more easily with a chaser of relief that I’m my comfortably out of the gym-versus-pub early-life crisis zone.

However, this is potentially a disaster for the pub industry. Despite the dubious statistics spouted by alcohol prohibitionists with religious zeal, the reality is booze sales continue to decline – and the most staunch abstainers and teetotallers are younger people. They seemingly focus more on the bad head the morning after than the good time the night before. Perhaps the constant recording of lives on social media has taken away one of alcohol’s key attributes – living in the moment.

Some statistics from student letting agency SPCE will give pub operators a headache. Last year, it found drink featured last on a list of student expenditure, with 18% of the 2,000 people surveyed stating they spent zilch on alcohol, although I remain unconvinced.

I have to say if my landlord asked me how much I was spending on booze when I was a student I’d have reduced the figure significantly to ensure I was deemed a good risk and not some skint student who was spending all his hard-earned loan in the Student Union bar rather than paying his rent.

My own dishonest thoughts aside, there is no doubt the younger demographic is choosing to spend time and money on exercising in gyms rather than drinking in pubs. In the US, as many as 36% of 18 to 36-year-olds paid for a gym membership last year – twice the percentage of older people.

Such figures are in tune with the UK, where we are apparently entering a golden age of fitness with the number of gyms set to hit 7,000 for the first time and total membership forecast to exceed ten million with a market value for the industry approaching £5bn.

We could say every pound lost in the gym is potentially a pound lost in the pub. This is clearly not true and ideally we should be advocating a balanced lifestyle that includes both gyms and pubs. One thing puzzling me is how can record-breaking levels of gym membership coincide with all-time high obesity levels in the UK?

Perhaps a polarised situation is building? It reminds me of time I spent working in Los Angeles. It seemed half the city was on an obsessive health regime while the other half were on a mission towards an early grave through over-consumption of food and drink. The former noticeably looked down on the latter.

Let’s hope we are not headed in the same direction as LA but what operators must do is take into account millennials’ full-on shift in mentality towards health and wellness. This is why it is increasingly necessary to offer the new breed of non-alcoholic drinks such as beers from craft brewers that focus specifically on that part of the market, creations such as Kombucha that have hit the market and are rapidly gaining a following.

The beauty of pubs and bars is they have continued to evolve over the centuries and their present owners should ensure they continue to make room, and a warm welcome, for everybody otherwise a whole generation will miss out on the fact you can sensibly mix the pub with the gym. It’s an “and”, not an “or”.
Glynn Davis is a leading commentator on retail trends

Restaurant closure outbreak isn’t over by James Sandrini

“Serves them right, they over expanded,” some said. Others lamented: “They lost their way; why didn’t they stick to their values?” 

Here’s what we know – 20 Byrons are due to close, 11 Stradas bit the dust, 12 Jamie’s Italians are saying ciao, and 100 – yes 100 – Prezzo-owned outlets are joining them. A platter of EATs may not be far behind.

This isn’t “churn”, this is an outbreak – 984 restaurants closed in 2017, up 20% on the previous year. January and February depict a graver 2018.

One question. Why?

Rates, rent, payroll, food prices – they’re all going up. An industry that operates on tight margins is under siege from rising costs. These “structural” changes are challenging and in many cases unexpected. Even those that have planned – as they should – for regulatory and supplier shifts have been hit, and hard.

EAT is profitable – its like-for-likes were up almost 5% in its accounts published last month to June 2017. Yet Sky also reported last month that EAT is considering a wave of shop closures, with KPMG brought in by EAT’s management to advise on restructuring options.

The pace and power of social change have been even greater. Consumers are eating out more than ever but have less expendable cash when they do. Breakfast and brunch, dayparts that feature lower spend, have long-since replaced traditional lunchtime trade. Add in the sheer level of competition and many restaurants are forced to offer more for less.

Much of the competition is being compelled by outside investment. That isn’t necessarily a negative but this influx of cash often comes with aggressive growth targets that, under strain, can stretch an operation – and with it the customer experience – to breaking point.

A new wave of competitors have come in subversive form. Meal kits, street food stalls and grab-and-go alternatives are stealing guests away before they even consider eating in a restaurant.

Expectations have also risen. Guests expect regular menu changes, a host of specials and memorable serves in their search for a unique experience. All this comes at a precipitous cost.

The greatest shift in the industry, however, has been borne from a technological shift. Delivery platforms now control distribution and search aggregators marshal discovery – there have never been more middle-men between operators and their customer.

These platforms can also spend fortunes to acquire new customers and sponsor their loyalty without the need to balance the books – Deliveroo might not turn a profit for half a decade.

Broad and unremitting, these structural and social changes have transformed the industry. But success or failure is still defined by strategy.

First-mover advantage – so vital in platform models that rely on network effects – rarely applies to bricks and mortar operations, especially when venturing into a new territory. And yet restaurant groups frantically race to open sites at a rapid, incoherent pace.

This pace requires strict, operational efficiency in favour of dexterity and investigation. A pace that relies on templated design and ideas rather than regular review – “what we always did” instead of “what we could do”.

Companies launch sites in locations they don’t understand or care to adapt to. They overlap an offer built for one region in another. They take for granted many of the reasons their restaurants were so loved in the first place.

Competitive advantage is often confused for a transient, departing trend. Just because everyone loves your concept today doesn’t mean it will retain any equity once the seas shift – and the seas always shift.

The restaurant industry is not the only one struggling with scale, of course. Repeating an operation across multiple venues isn’t without difficulty, but it is a familiar concept.

Scaling HR and recruitment, however, are not. There is nothing more expensive than manning a venue with untrained or unmotivated team members. If the business doesn’t retain, foster and develop talent as it grows, future openings simply won’t measure up.

Unfortunately for food and drink, there have never been more viable alternatives to working in the industry and the trade has been slow to match the pay, benefits and career opportunities provided beyond its walls.

Technology, the transformative force of our times, has been treated as an enemy. This antipathy is – at best – a strategic error. Despite a bevy of data, few restaurant groups personalise their communications; fewer still react to the information they are presented.

There have never been more restaurants, and there have never been more reasons to fear for their future. Some will prosper, defined by a strategy that embraces and adapts to structural and social change – but the outbreak isn’t over.
James Sandrini is a director at 48.1 – a creative agency for food and drinks brands. For more, read the blog at or follow @fortyeight_one on Twitter

Disney principles still hold good by Ann Elliott

Once upon a time, many years ago, I attended a quality service course at The Disney Institute in Florida, which was probably the best course I have ever been on. I have just looked online and the course is still being run. 

From my own experience, I cannot recommend the course enough. Its introduction states: “Excellent service does not simply come from a friendly transaction or helpful technology – it is the result of truly understanding your customer’s expectations and putting the right guidelines and service standards in place to exceed them. When an organisational framework properly unites its people, place and processes by putting the customer at its core, exceptional service becomes possible across customer touch points. This creates greater intent to return and recommend, as well as a stronger competitive edge.”

The course helped align our whole organisation around every element of customer service. Every point made on the course was supported by a visit to the park itself to see principles put into practice. Those lessons have stood the test of time – so much so they keep coming to mind almost 20 or so years since I attended the course. They are still as relevant today as they were then.

One lesson was the concept of on stage and off stage. Disney customers save for years to visit the park so their holiday is the fulfilment of a family’s dreams. It has to be perfect in every way. Visitors don’t need or even want to see what happens behind the scenes – it’s the front of house that matters. Seeing Cinderella having a surreptitious fag behind the scenery breaks the dream and shatters the illusion. The customer (and their dreams and expectations) is central to all Disney does.

Once a Disney character appears on the park, the staff member in the costume is on stage. The same principle applies to all other team members. Off stage and below ground, team members can say what they want or wander around wearing only half an outfit but once on stage they are immediately in character and their focus is to keep the dream alive for their guests.

This is not always as easy in pubs, bars and restaurants these days. There isn’t always such a clear delineation between on and off stage. Is a bartender behind the bar on or off stage? Is the chef in an open kitchen on or off stage? Is a glass collector on or off stage? Of course the answer is they are all on stage as far as the customer is concerned. They are part of the play, the expectation and the experience a guest pays for.

Yesterday I was waiting to order a coffee in a Starbucks franchise. The manager (I assume) handed my server a list of instructions on a laminated sheet while she was trying to take, and make, my order. No glance in my direction from him. No apology. No “do serve this person first and then I need to talk to you” request. When the manager left, my server turned to a colleague and said: “If he thinks I’m doing any of this he has another think coming.” She then proceeded to chat to her colleague while I was paying her. Nice.

There was no point in me commenting, although I was tempted to ask if she could actually see or hear me. I felt ridiculously cross with everyone there – the manager, my server and her colleague. I don’t want to hear a conversation that should be kept back of house and private. I don’t want them to air their dirty laundry in public. I don’t want to feel like they couldn’t give a monkeys about my experience or whether I returned or recommended them. I don’t care about my £2.90 but I do care how they made me feel.

The Disney principles still hold good. When you’re in front of a guest you are on stage. The customer deserves your full attention – now more than ever.
Ann Elliott is chief executive of Elliotts, the leading integrated marketing agency in the hospitality and leisure sector – Follow her on Twitter: @elliottsagency

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