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Fri 19th Oct 2018 - Friday Opinion
Subjects: Data is the driver, return of rationing, the labour misconception and Generation Sensible
Authors: Glynn Davis, Paul Chase, Alastair Scott and Antony Hunt

Data is the driver by Glynn Davis

When Boparan Restaurant Group launched a 50% discount on food for emergency service workers this week to support police, firefighters and NHS staff during the winter, it triggered the simplest of reward schemes that targets specific customers. 

To qualify, I suspect these essential workers simply have to show their ID card at the group’s Giraffe, Ed’s Easy Diner and Harry Ramsden’s restaurants. This scheme represents the most basic reward mechanic but at the other end of the spectrum we are also seeing some more complex, algorithmically driven initiatives that not only reward select individuals but can also be used to exclude others.

Uber recently introduced a system in Australia and New Zealand that bans people from using its taxi service if they have been awarded a low rating by its drivers. A spate of unacceptable behaviour resulted in the company bringing in measures to remove access to its service for six months for offending individuals who fall below a certain level when scored by the drivers. 

Such data-driven mechanics are going to play an increasing role in the leisure and hospitality industry, helped by the fact it has become increasingly easy to accumulate data on individuals. From this a business can determine exactly the levels of service it chooses to give to individual customers. It makes sense for a business to look after its best (most valuable) customers by allowing them access to the best service, potentially more competitive pricing and other exclusive perks.

Collating this data would have previously required a margin-eating loyalty card to identify the customer following a transaction and then monitor their activities, but this is no longer necessary as people leave a trail of activity-led data on social media platforms. At base level this can be simply “likes” and “follows”. This information is easily accessible and can reveal rich insights on an individual’s preferences and intentions.

This data is coming into play regarding gig tickets, where solutions have been sought to address the major problem of touts. An enormous secondary market exists for the most popular artists and the industry wants to get its hands on more of the revenues without “ripping off” genuine fans via high ticket prices. 

Finding these fans is at the heart of Ticketmaster’s Verified Fan solution, which has been deployed by artists such as Taylor Swift. It uses an algorithm that seeks to identify true fans by assigning points based on the number of videos they have viewed and merchandise they’ve purchased. Tickets are offered to true fans at an affordable base price. 

This targeted allocation operates alongside a general release of tickets, which are priced much more highly than the base price and at a level that seeks to suck out all potential profit margin for touts. Although there has been scepticism about the capabilities of such algorithms, Ticketmaster is claiming victory. It said while almost one-third (30%) of tickets for the 2015 Taylor Swift tour ended up on the secondary market, this was cut to 5% for her 2018 tour when the Verified Fan technology was deployed.

The other finding from the early days of this solution is that events have failed to sell out as not all the higher-priced tickets ultimately found buyers. It looks like a more dynamic pricing model also needs to be introduced to ensure all the tickets find a home.

Such experimentation with data-driven solutions, algorithms and dynamic pricing will inevitably feed into all parts of the leisure and hospitality industry because there is arguably no sector that can’t be improved by using the increasing mountain of data that is now available. 

By intelligently deploying solutions that use insights gained from this data, companies can make better decisions, improve the efficiency of their operations and ultimately drive up profitability.
Glynn Davis is a leading commentator on retail trends

The return of rationing by Paul Chase

Fear not – despite its title this piece is not about whether a no-deal Brexit will lead to food rationing, although Public Health England (PHE) would probably applaud if it did! On the contrary, it’s about PHE’s attempt to get the government behind state rationing of food. 

Hard on the heels of its fraudulent revision of the “low-risk” drinking guidelines in 2016, PHE gave us a set of guidelines relating to daily calorie intake. A man’s diet should involve a breakfast of no more than 400 calories and a lunch and dinner of 600 calories each – 1,600 calories a day. When it was pointed out that even under wartime rationing civilians were given 3,000 calories a day, PHE explained the guidelines for 2,500 calories a day for men and 2,000 calories a day for women remained but snacks and drinks between meals would make up the difference.

Of course, the purpose of setting arbitrary limits on the number of calories is to conjure dragons for the PHE to slay. Restaurants and food manufacturers are now expected to reduce their servings to meet the new guidelines and those that don’t will be named and shamed, with companies threatened by legislation if they don’t co-operate with the “voluntary” arrangement. 

An article appeared in The Telegraph on 11 October headlined: “Pizzas must shrink or lose their toppings under government anti-obesity plan.” Pies, ready meals and sandwiches will also be subject to the proposed calorie limits in a desperate bid to tackle the “obesity epidemic”. Under draft proposals, a standard pizza for one should contain no more than 928 calories and a savoury pie no more than 695. These plans would see recommended limits on thousands of regularly consumed foods, including cooking sauces, soup, burgers and processed meat. 

Dr Alison Tedstone, PHE’s chief nutritionist, said it wasn’t enough for restaurants to offer healthy options – Britain’s weight problem could only be tackled if the calorie content of most foods was cut. She told the Telegraph: “It could mean less meat on a pizza, it could mean less cheese, it could mean a smaller size. Consumers are saying they want smaller portions and healthier options.” In which case Alison, let such options be made available on menus and let people choose! But no, that’s not enough for this self-appointed food nanny. 

She goes on to say: “We know just having healthy options on the menu won’t change the nation’s habits – we need the default option to have fewer calories. The default option for pizzas are margherita and pepperoni, so we need them to get healthier.” It beggars belief that someone no-one voted for thinks it’s OK to get involved at such a granular level in mandating other peoples’ food choices. Get your hands off my pepperoni Alison or there will be trouble!

Under current plans, the limits wouldn’t be mandatory but similar targets for sweet foods, which have seen a 2% fall in sugar against a target of 5%, have prompted warnings from ministers that tougher steps may be taken. The proposals are part of a government childhood obesity plan, which has proposed calorie counts on restaurant menus, a ban on advertising unhealthy food on television before the 9pm watershed, and removing such goods from checkouts and two-for-one deals. 

Such interference in the food chain and in the food choices of consumers is unprecedented and unjustified. The percentage of obese or overweight people has hardly changed in the past 15 years. It is high, but it isn’t getting higher and it certainly isn’t an “epidemic”. 

“Obese” and “overweight” are actually two separate categories and overweight people are slightly less likely to get illnesses associated with excess weight than people of a so-called healthy weight. More than three-fifths (62%) of people are obese or overweight and that breaks down as more than one-quarter (26%) of people obese and the remaining 36% being overweight. We also know the childhood obesity figures are grossly exaggerated and arise from faulty mathematical modelling.

Obesity is not a public health problem, it is a private health problem. If people eat too much or too little these are self-regarding choices that may or may not have an impact on their health. Government’s role is to ensure we have enough information to make informed choices and understand the consequences of those choices. The fundamental point is that what adults choose to eat is a matter for them, not Alison Tedstone or the government. If the food industry doesn’t push back hard on this and say to the government “enough is enough”, nanny state over-reach will continue to the detriment of personal choice and the prosperity of food businesses.
Paul Chase is director of CPL Training and a leading commentator on alcohol and health policy 

The labour misconception by Alastair Scott

Ann Elliott’s article in last week’s Friday Opinion was a timely reminder that this will be a tough period for the hospitality industry. Recent analysis suggests consumers spent too much during the summer and are now cutting back. This, combined with a mass of cost pressures, will force all of us to work even harder just to stand still – but we have been there before.

Staff costs are, as always, one of those areas we all look at and, like Ann, become nervous that cutting staff costs will make the guest experience worse.

This can be true if carried out in a blunt and imprecise way. However, all our analysis shows the worst guest experience occurs not when we are understaffed but when we are overstaffed. Of course we fail to deliver the quality of experience and speed when we are understaffed and we need to increase the level of team when we are busy, but we also have significant challenges when we are overstaffed. Let me give you two examples.

I was recently in one of my own pubs and there were three staff on. A guest came to the bar wanting a drink but one staff member was too busy tidying up to notice the guest or assumed someone else would do it. Another team member was delivering food to a table, while the third team member was at the back of the pub having a cigarette with one of the kitchen staff “because it was quiet”! If we had only had two team members on we would have done a better job all round and not wasted money. 

Recently I was in another pub when a lot of people arrived at the bar but the two bar team members were too heavily engaged in a conversation in glass wash to notice or stop for the customers.

Of course training helps but there is an old adage: “If you want a job done, give it to a busy person.”

Labour management, like every other part of the business, requires insightful and precise management, and managing through historic percentages no longer cuts the mustard. In labour I argue we can genuinely have our cake and eat it by saving costs and improving service, normally with the removal of the wasted spend easily outweighing the reinvestment to grow sales and improve service.

It will be tough in the next six months for those who chose the wrong site, the wrong rent or spent too much on the site but for those who are simply spending more than they need to on day-to-day costs, there is a lot we can do.
Alastair Scott is founder and chief executive of Catton hospitality, which includes labour management system S4 Labour. He is also a director of three leased pubs

Generation Sensible by Antony Hunt

With the academic year in full swing there has been a mass movement of a new student consumer group that will boost local economies across the country. While this annual phenomenon has historically evolved around freshers’ week, packed with alcohol and partying, events are increasingly focusing on a range of “sensible” activities to welcome students.

The driving force behind this move is a change in consumer behaviour. Data from the Office for National Statistics shows school-leavers are drinking less. “Generation Sensible”, which abstains from alcohol and focuses on other more constructive activities, is clearly emerging among this young demographic.

Interestingly, these changing tastes drove the University of Hull to scrap freshers’ week this year in favour of Welcome Fest, with events focusing on speed-friending, cafe crawls, fairs, quizzes and life-skill workshops, while campus bars made way for ice-cream parlours alongside reduced nightclub opening hours. While this might make JD Wetherspoon founder and chairman Tim Martin scoff, this is reality! So what can leisure operators do about it?

Plan, plan, plan
Leisure operators are clearly in an era where they need to plan the proposition across their pub, bar and food networks according to each location’s business opportunity by serving during multiple dayparts or providing for the demands of today’s students on a “seasonal” basis at sites in and around campus.

Planning is clearly pivotal. There are still students looking to work hard and play hard but if a leisure operator has a one-dimensional offering based around alcohol sales, they may need to shift their effort towards other products and activities to provide an increasingly multi-dimensional proposition for the student population they serve.

Don’t think sales, think sales mix
The “student consumer” category within CACI’s Acorn classification shows this group are increasingly health-conscious regarding food and drink and are socially aware. This emphasises a generational shift in attitudes and behaviours.

Acorn’s student group shows a high tendency towards quality soft drinks, juice and mineral water where there is no compromise on taste. This reveals an opportunity for cafes, restaurants, bars and pubs to stock a bigger range of non-alcoholic adult drinks. Students also prefer healthier snacking options such as popcorn, edamame beans and yogurts.

Perhaps a pint of lager and a packet of crisps is starting to make way for an alcohol-free cider and a ramekin of wasabi peas? Whatever the reason, there is clearly an opportunity to recapture potential revenue lost as a result of a move away from alcohol.

Think place, not space
The second Grimsey Review showed that curating a place for consumers is multi-dimensional. A clear purpose is needed to define a proposition that can answer why customers should want to live, work, play and invest in a “place”. 

The suggestion from the report is to develop community hubs that serve multiple purposes – leisure, retail, office space, art, education. This concept is also relevant for individual businesses, which increasingly provide a diversified proposition to increase dwell time, and the consumer need to refresh and replenish throughout the day. Take PizzaExpress, for example, which has decided to use redundant space in more than 50 units to roll out its live music formats, or Grind in Shoreditch, which has created a stylish scene based around its own record company and grindhouse with a focus on coffee, food and cocktails 18 hours a day.

For locations supported by student trade, however, where can businesses look for inspiration? It might be surprising to suggest student unions. The nature of these cheap and cheerful places has for some time focused around central hubs a student can visit any time of the day to use a study room, get lunch at the bar or cafe, take part in a social activity, have a beer or a night out, and hold events.

Could these spaces provide a new, multi-dimensional business model capable of capturing new revenue streams and what does this mean for leisure operators with sites in student-driven locations?

What we are witnessing is a change in consumer attitude. Operators of pubs, bars, clubs and cafes need to identify these changes and make informed decisions on how to innovate their proposition to make the most of the opportunity. The key is to clearly offer something extra in terms of “products” and “place”. It will be interesting to see how this evolves.
Antony Hunt is managing consultant at Caci

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