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Morning Briefing Strap Line
Fri 20th Apr 2018 - Friday Opinion
Subjects: Social suicide or sensationalised stunt? Small Brewers Relief, JD Wetherspoon's timeless success and how to handle the surge in food hall popularity
Authors: James Hacon, Rupert Thompson and Collin Wood, Ann Elliott, and Nick Hucker

Social suicide or sensationalised stunt? By James Hacon

This week, JD Wetherspoon has hit the headlines across the trade, business and even consumer press with its decision to no longer engage in social media. The reaction has been vast and mixed. With a clear outcry from the many social media "experts" warning of impeding doom, turkeys at Christmas comes to mind.
 
All sensationalism aside, given the recent news agenda relating to data and social media, it was bound to give way to senior-level discussions about strategies and company position on social.
 
Am I surprised Wetherspoon has made this move? I don’t think so. Nor am I surprised about the level of response. I am sure the communications advisors at the company were expecting and perhaps banking on the sensational media reaction. Let’s face it, to be the first of what is likely to be a number companies making such moves, gains the headlines. The timing is impeccable really, as often seems the case with Wetherspoon announcements. It seems to have a real knack of putting out just the right message at the right time to keep ahead of the news agenda. You have to respect this skill.
 
In fact, I respect Wetherspoon for lots of reasons. I think it’s easy to be snobby about the brand, I’ve heard lots of this type of talk in recent days following the announcement. I’m sure there are some poor Wetherspoon pubs out there and, yes, you can go in and see people drinking beer earlier than you might personally choose to, but the bottom line is it is a very successful business. 

Personally, I also think it does a good job of raising retail standards in unlikely parts of the UK. I was born and spent my early years near Great Yarmouth in Norfolk, where most of my family still live. When going to visit, Wetherspoon is by far the best place to drink in the town centre. It is safe, has great staff and brilliant ranging. It has also just invested a pretty penny into its site, the Troll Cart, and subsequently opened another venue a few miles away in Gorleston. Both are remarkably busy. Almost everyone I know in the area uses them, from friends who earn six-figure salaries to my 18-year-old brother. It really does cross demographics in a way few other brands do.
 
Returning to the question of social media, do I think those customers really care someone isn’t answering them on social media? Maybe some but not most, not really. I think they want to know they are going to get good-value, affordable food, great beer and service that delivers a good place to be social – in real life, not online. I’d even take it one step further and say Wetherspoon has built its business on cutting the nice-to-haves and concentrating on delivering this value-based proposition. Tim Martin makes no secret of his no-frills formulae with no music or sport. You have to praise it for its innovation too, just look at the success of its app – who’d have thought a value-driven, wet-led operator would have nailed this technology before almost any other major player in the market? 
 
The larger can of worms this move opens is one about the suitability and importance of social media to brands. There is a proliferation of articles from social media and digital consultants judging it a bad decision. These people have a vested interest in keeping the social treadmill going, of course. Are they objective? No. I read one such consultant who proclaimed Wetherspoon would be back in "three months". I doubt it.
 
If we take a step back, social media is a tactic a business should be choosing whether to invest and engage in, alongside others. I couldn’t imagine another tactic or medium attracting such significant publicity. Imagine gaining publicity if Wetherspoon had decided to stop engaging in traditional PR. It wouldn’t gain any attention. This really highlights the tidal wave of sensationalism that has built around social over the past decade, which many of us have been swept away with at one point or another. It’s fair to say this has, in part, been supported by a lack of senior-level understanding of digital and social media as a tactic, as well as the rapid developments in this space.
 
Please don’t get me wrong – I’m a big advocate of social media in marketing. In fact, I know most brands are planning to do more. At the Restaurant Marketer & Innovator event in January, we took a pulse of the audience as to their marketing budgets. Within the survey, paid social media was the biggest tactic brands planned to spend more money on, with 58% of participants planning to increase spend in this area. Second to this was organic social media (55%), followed by video (45%) and photography (34%). In fact, not one participant suggested they would decrease spend on social media, paid or organic.
 
It’s important to remember this is a tactic, like any other, which you have to provide resource for in time or money. As Wetherspoon has highlighted, you don’t have to be investing in social media – it is a choice. I hear lots of people talking about it being a free or cheap tool to engage. Done properly at a multi-site level, it is not – it takes significant investment, energy and infrastructure. If this not in place, it is important to remember it may be worth remembering you are just adding workload to your operators and a potentially welcome distraction from the key metrics and role of a general manager. 
 
If you choose to make this investment you have to believe it will make a difference to your bottom line, directly or indirectly. Ask yourself this, in the grand scheme of things, is having a few tens of thousands of followers on social media really going to move the needle? When considering you might be serving hundreds of thousands or even millions of people each week, probably not. 
 
If you decide it is a worthwhile investment you have to make it effective. I see many brands making one of two fundamental mistakes. The first is to invest heavily in content and community management, with a tiny audience and no ad spend, meaning they are fundamentally in an echo chamber. The second is the reverse, to have built a great audience and then not investing in the content or regular community management. To me, successful social is a fine balance between commercial messaging, editorial-style content and responsive customer service-driven community management.
 
Where social works best is with entrepreneurial businesses and for brands with real depth, with a strong tone of voice and something relevant to say. If you don’t have this, you need to develop it, define your brand, build a story and have a clear hierarchy of messages that mean something.
 
Increasingly you have to spend money on social to gain significant reach, even if you have a large audience – there are so few exceptions of brands that cut through the noise by being outstanding with their content and creative. In reality, most of these will have considerable paid budgets. 
 
There are lots of brands out there doing it really well. For some examples, check out the winner and finalists from the Best Use of Social Media category at the Restaurant Marketer & Innovator Awards we held earlier this year.
 
It would be remiss of me to not take the opportunity to thank Wetherspoon for making this bold move, whether the right decision or not, time will only tell. I will be watching, as I am sure the rest of the sector will, to understand how, or if, it affects their business. Let’s watch this space.
James Hacon is managing director of Think Hospitality, which advises multi-site brands on growth, brand and development strategy, as well as investing in early-stage concepts with a bright future 
 

Small Brewers Relief by Rupert Thompson and Collin Wood

The debate surrounding Small Brewers Relief (SBR) has intensified recently. This is not unexpected given it is a policy that has existed and operated unamended for 16 years. It is perfectly legitimate for a policy that has been in place while the market it serves has fundamentally transformed to be under some scrutiny. In that time, because of changes to the headline rate of tax on beer, the value of SBR to those in receipt of it has increased by 60%. For that reason, the Small Brewers Duty Reform Coalition (SBDRC) came together more than a year ago with the aim of asking the government to conduct a review of SBR.
 
As a first step, and following discussion with the Society of Independent Brewers (SIBA), Campaign for Real Ale (CAMRA) and the British Beer & Pub Association (BBPA), we commissioned a major independent review of SBR. This work, undertaken by Europe Economics and with submissions from more than 100 brewers, confirmed SBR is in need of urgent review.
 
The SBDRC has been working hard with other industry bodies such as SIBA (of whom more than half of the SBDRC are members), CAMRA and the BBPA to achieve a cross-sector consensus on the best way forward. All parties are now united in the need for reform and agree on many aspects, but a few key differences remain. The SBDRC remains happy to discuss alternative proposals from other groups with different ideas but, in the meantime, is simply proposing the solution we think would work best to create a more sustainable British brewing sector.
 
At its core, SBR is relatively simple (although in practice there are many complexities). For brewers brewing less than 5,000 hectolitres of beer per year (to give a sense of scale, 5,000 hectolitres amounts to almost 900,000 pints a year, or a business with a turnover close to £1m) the government provides a 50% discount on beer tax. For brewers going past that level, there is a particularly perilous "cliff edge". It is not a progressive scheme despite this being the original intention.
 
This means any brewer who is at, or close, to 5,000 hectolitres, has an enormous disincentive for growth – it would be stung with a significantly increased tax bill once it grew past that figure. A 5,000 hectolitres, a brewer can receive SBR subsidy equivalent to close to 25% of turnover.
 
There are also issues of competition and market distortion. Naturally when there is a sharp increase in the number of brewers entering the market, competition becomes tighter. However, when some brewers are receiving such a large tax discount that over-compensates for diseconomies of scale (as confirmed by the Europe Economics report), the picture becomes distorted and their advantage relative to other (still small in the grand scheme of things) brewers becomes unfair. In the case of cask ale, where wholesale prices have barely moved for a decade, the issue is particularly acute.
 
For these reasons, the SBDRC wants to see the SBR system reformed. To be clear, the SBDRC is not calling for the elimination of tax relief for small brewers – far from it. Neither is this debate one of “big versus small”. All the brewers most directly affected by SBR are small or very small and no one member of the SBDRC accounts for more than 1% of the UK beer market. The SBDRC has put together a package of proposals that retains the 50% discount at 1,000 hectolitres for all micro-brewers who are supplying their own pub or a small group of local pubs, and thereafter it tapers gradually downwards to 200,000 hectolitres to more accurately reflect the growing economies of scale, and to bring the UK into line with other European markets. A further proposed amendment to the scheme would see exports excluded from the calculation for SBR to encourage export growth, and to introduce a three-year transition period to enable brewery owners to sell without immediately losing the SBR relief.
 
This is not about pulling the ladder up on those brewers who came into being as a result of the relief, it is about creating a level playing field for a wider spectrum of smaller brewers. Of course any amendment that involves change for those in receipt of a substantial tax relief would require careful implementation. Any change could, if necessary, be phased in a transitional period to allow for change over time. It is in the interests of everybody brewing in the UK that making and selling beer is as sustainable as possible so we can maintain an innovative, vibrant and lively brewing scene.
Rupert Thompson and Collin Wood are co-chairmen of the Small Brewer Reform Coalition. Visit www.reformsbr.com to find out more
 

JD Wetherspoon's timeless success by Ann Elliott

In mid March, JD Wetherspoon announced a 6.1% rise in like-for-like sales, a 3.6% growth in revenue and a 20.6% growth in pre-tax profits for the 26 weeks to 28 January. That is an amazing achievement in the current climate.
 
Since then it has announced the deletion of its social accounts. I love the ability of Wetherspoon to refuse to run with the pack. It must be in its DNA. It leads, it innovates, it is brave and, more than anything else, it knows its audience. There is no way chairman Tim Martin and chief executive John Hutson would have made these decisions without appreciating its impact – or lack of impact – on their customers.
 
The other weekend six of us went for lunch at Wetherspoon. It was busy with a constant stream of customers coming in to eat and drink. There were tables of families, groups of friends (old and young), couples and singles. The atmosphere was friendly, relaxed and convivial. It felt like a genuine community pub.
 
Of course, the debate started at our table about ordering food and drink for the six of us. Who was going to stand and queue at the bar? Who had paper and pen to write down the order? No one. We sat there for a few minutes reading the menu before someone spotted the message on the front cover of the menu.
 
I have to say, being the designated order-taker and bill-payer, the app was extraordinarily easy and fun to use. I didn’t quite get the hang of ordering halves, however, so we drank more pints than perhaps we had intended to, although I can hardly blame the app for that. Drinks arrived in minutes and the food in fewer than ten – swift and efficient.
 
More than that, though, ordering by app meant our group stayed together instead of constantly being broken up with one of us having to go to the bar, wait, order and carry back drinks. Conversation flowed without interruption. It meant the whole experience was more inclusive. Of course, paying by app is not new – Flyt has been extremely successful in this area for a while. Branded pay-at-table apps (that Flyt support) have now taken off too, with Prezzo, PizzaExpress and Wagamama all launching their own recently. There are bound to be more to follow.
 
The food itself was fine and, to be honest, at £34.18 for five meals and a pint (meant to be a half) of Fosters, it was really good value for money. The receipts were sent straight to my phone. It was seamless. I could have stayed there all afternoon ordering for the fun of it.
 
We had a great visit to Wetherspoon – straightforward, democratic and customer-focused. It appealed to everyone because it was easy, safe and inclusive. The app is fantastic and I am sure must be contributing to the company's sales growth (certainly if my experience is anything to go by). The lack of live sports helped create an easy (rather than tribal) atmosphere. Price, and value for money, is key – on the menu, on the bar and on the POS. We were all genuinely surprised at how little we spent on our food and drink.
 
Wetherspoon is not frightened of digital or social. It just uses it where it counts – in the experience every customer has day to day. From now on it is going to have to rely on these customers to tell the Wetherspoon story, and I think they will.
 
In the current economic climate, Wetherspoon seems to be doing the right things in the right order. It knows its audience and, from our visit, its audience knows and loves Wetherspoon. It can ignore sniffy city commentators because the results speak for themselves. I remain full of admiration for this timeless and enduring brand.
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 
 

How to handle the surge in food hall popularity by Nick Hucker

In car parks, old markets and rooftops all over the country, urban food halls are popping up to serve a never-ending range of food to hungry city-goers. Instead of going to a restaurant for dinner and then on to a bar for drinks, food halls are offering a new experience, combining both types of venue, to suit any social occasion.
 
The way in which consumers dine out is diversifying; Millennials and Generation Z are interested in experiences – as well as convenience, choice, “authenticity", and things that look amazing on their social media pages. Food markets not only offer that diverse range of Instagram-worthy dishes, they’re also a convenient and social option for dining out. Late into the night, foodies can sit along communal benches, enjoy KFC washed down with craft beer, or walk around with huge pizza slices and a gin and tonic. A quick and more relaxed option than a traditional sit-down meal, it is no surprise Dinerama, Boxpark and similar venues have become so popular.
 
Despite a surge in their popularity, there are some drawbacks to having a food hall presence. Here is how operators can maintain popularity beyond this initial burst of enthusiasm. 
 
Be noticed
Unfortunately, in a food hall, operators can lose the sense of individuality and independence that comes from having a standalone food business. Because of this, the menu is everything. There are dozens of other street food competitors in the hall around you, so you need to be unique to be noticed. Consider what your unique selling point is and make the most of it; it’s why customers come to you. Ensuring your product is the best it can be, and it remains consistently so, will keep people coming back. In the food hall world, there’s nothing worse than seeing another business offering a better version of what you’re doing. Create food that appeals to all the senses and people will be flocking to your pitch.
 
Be efficient
One of the drawbacks that comes with high footfall is queues. The inconvenience this poses should be no surprise given Brits only like to queue for a maximum of six minutes and in that environment there are many other options to choose from. For the food hall and the installed operators, long queues can result in a loss of customers and profit.
 
To prevent outlandish queues, you need to prep and serve food at speed. A good way to ensure efficiency and to bust the line is to offer customers the chance to pre-order their food through a mobile app – this will save everyone a lot of time. From the customer’s point of view, it reduces the wait, and from yours, you know how much you need to cook and by when.
 
Because pre-ordering gives customers the opportunity to peruse a menu before arrival, it can put you ahead of the competition, helping you secure sales before customers get a chance to look at other available options. Ordering ahead might also encourage customers to open their purse strings a little more. There are suggestions people spend more when buying "in-app"; a huge benefit in an environment where visitors are mostly primed for small purchases.
 
Be special
Even if you focus on a specific cuisine and have a limited menu, offering special variations and letting people know they can order something, with or without certain elements, can make your menu more attractive. People might come to you because you produce the same excellent food week-on-week, but consider introducing a weekly or monthly special to add variety and you will soon attract an even wider audience.
 
Food halls are the eating trend of 2018; in January, six new London food halls, including the UK’s biggest were announced. If you’re one of the many businesses considering a food hall operation, remember to make the experience as unique, efficient and special for customers as possible – it will ensure you stay popular long after any initial excitement has waned.
Nick Hucker is chief executive of Preoday 

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