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Morning Briefing for pub, restaurant and food wervice operators

Fri 21st Jun 2019 - Friday Opinion
Subjects: Indecision is a killer, communicating cancellations, promoting pubs as a career, and dealing with dine and dash
Authors: James Hacon and Michael Ingemann, Sally Whelan, Andy Holness, and Ann Elliott

Indecision is a killer by James Hacon and Michael Ingemann

The headline of a recent report in the Harvard Business Review read: “Performance suffers as a result of indecision” – and we couldn’t agree more.

As both consultants and investors we sit in the privileged position of getting to view the inner workings of different businesses every day. Over the years we’ve worked with many types of leaders and, on many occasions where we’ve been called into a business in decline, indecision is one of the key problems – particularly when a business runs into stormy weather, as many in our sector currently do.

One key to running a successful business is to stay positive and keep forward momentum. This refers not only to bottom-line growth but more generally to having a clear goal and constantly moving towards it. Ideally you’ll have a clear strategy on how you’re going to get there – regardless of the tough problem-solving and decision-making required along the way.

Indecision immobilises this momentum. It leaves gaps where nothing gets done and saps your team’s energy or leads to sub-optimal decisions from sheer desperation. We’ve seen it time and again. In a challenging time leaders stop making decisions, scared of the output, or worse still blame this indecision on a “period of consolidation or review”, which sends a clear message – “we are in trouble” – to the team. 

Confounding the issue further is the symbiotic relationship of decision-making and communication. When you make a decision and set a path forward confidently, you’ll be confident in communicating it in hard times. However, when decisions aren’t made and nothing is communicated, it creates a void that sends powerful – but negative – signals to the organisation. 

There are a number of ways you can avoid getting stuck in this particular rut:

1. Make a plan and do something
Even in the hardest times, gather your fellow leaders around a table, prioritise your goals, take a good look at the options and decide how to move forward. If that plan isn’t about growth and you’re in a holding pattern, which can be perfectly logical, concentrate on other ways to improve. Set some projects and keep your team inspired, engaged and energised. Keep people busy – spare time breeds gossip and gossip breeds negativity. Once you have a plan, it’s time to commit to it.

2. Align the leadership team
When leading a business in disarray, you can bet your bottom dollar the leadership team will be pulling in different directions if left misaligned. 

The above process of building a plan should unite you as a team and, if it doesn’t, it’s time to analyse why. We often find it’s because people aren’t being frank and open about the problems they see or they end up going along with the consensus, meaning they walk out of such sessions with no real commitment to “the plan”. This tendency must be rooted out, and most often it needs external support to truly get that done. You need to make some tough decisions and move people on if they can’t support the direction. Some people are simply not used to dealing with a change of direction and can’t cope with it. Don’t let them hang around, they will quickly erode any sense of forward momentum.

This whole process becomes super challenging when you have an aligned leadership team other than the chief executive or founder, which is unfortunately often the case. On occasions when you’re the odd one out you have to honestly ask yourself whether you’re the right person to be at the helm, taking personal ambition and ego out of the equation. I’ve met some incredible business founders who took a step back and believe their business wouldn’t have thrived otherwise. 

3. Empower your team to make decisions
Micro-management is rife in our sector. Many leaders have risen through the ranks, which can be a great thing, but haven’t necessarily had leadership training along the way to support delegation and management through others. If “the boss” feels uncomfortable or unable to make a decision, this can soon lead to bureaucracy, lengthy waits and a “why bother” attitude among staff. The same thing happens when accountabilities are blurred and decision-making wanders through the organisation as “everyone” needs to have their say.

In both cases the key is to assign clear accountabilities and let those people make the necessary decisions without either “the boss” or “the crowd” becoming bottlenecks. This can only be achieved by having the team aligned around a clear plan – and a culture of accepting some level of failure along the way (see next point).

By the way, don’t be fooled into thinking this only happens in smaller businesses, we’ve worked with anything from ten-person companies to global corporations that have faced these challenges. 

4. Accept and embrace (some) failure as a learning opportunity
In the US, even the most successful entrepreneurs will reveal stories of failure on the path to success. Head to Japan and every disruption is seen as an opportunity to learn and become better. In the UK, however, we don’t seem to have this level of acceptance of failure. While entrepreneurs may embrace this in themselves, it’s rare to see this translated into their organisation’s culture. Some of the best companies we know embrace and even encourage a sense of hustling in an attempt to try something new, accepting that while most will fail, real gems may emerge from the process. 

Insisting on getting more than 60% of decisions right results in a slow, indecisive and risk-averse culture. Being satisfied with less than 40% is likely to end up in tears. Getting the balance right is key.

5. Keep communicating
No matter your business’ challenge, silence is never the best option, nor is communicating through a narrow group of people – especially if you’ve traditionally been a great communicator. The key is to keep communicating your plan and projects and keep it positive. We’ve analysed a number of recent company voluntary arrangements for a project. One of the key findings was deteriorating employee confidence in the months or even years leading up to the eventual formal proceedings, resulting in people leaving or feeling disengaged. One of the key reasons cited by former staff members was lack of attention and communication by senior leadership. We can think of at least three situations where leaders were avid users of social media but stopped abruptly, sending a clear warning something was up and alarming their internal team.

If problems arise, don’t become a rabbit stuck in the headlights. Make a plan, align and empower your team. Accept they might not get all decisions right – and keep up the communication. It’s the necessary oxygen and lifeblood of your wider organisation.
James Hacon and Michael Ingemann are partners in Think Hospitality, which advises multi-site brands and investors on growth, brand and development strategy and invests in early-stage concepts with a bright future

Communicating cancellations by Sally Whelan 

With former MasterChef finalist Dean Banks recently in the news for considering a £65 charge for diners who fail to honour their bookings and Damian Wawrzyniak’s #StopNoShows Twitter campaign still receiving publicity almost a year on, restaurant no-shows have been the talk of the hospitality sector for some time. While specific insights into how much our industry loses due to no-shows are hard to come by, I have seen reports estimating the figure at a staggering £16m a year. It has been predicted no-shows account for between 5% and 20% of total restaurant bookings across the country, with many blaming a rise in online booking tools – but are these tools a convenient scapegoat? 

While we’ll never eliminate restaurant cancellations – it’s an inevitable part of our industry and something that should always be accounted for in forecasting – is there anything we can do to reduce their impact? Having spoken to a large number of UK diners, they believe there is – and with no mention of online booking tools.

More than half of UK diners believe restaurants need to make their cancellation process easier, with 56% expecting an option to cancel in response to any correspondence. While I know the responsibility falls on the diner to cancel their booking if they can no longer attend, as a consumer myself this is often easier said than done – sometimes life just gets in the way. With smartphones a staple in our lives, it’s worth noting increasing consumer engagement doesn’t have to require additional resources on an operator’s part. More than one-quarter (27%) of consumers welcome the ability to cancel a booking via a text message and 17% through a restaurant’s app – both processes that can be automated. While baby boomers and Generation Y may be used to picking up the phone to give a restaurant a call, millennials and Generation Z expect to communicate through technology. 

Sometimes it can be as simple as a nudge. More than three-fifths (61%) of customers said they would be more likely to turn up to a booking if they received a reservation reminder 24 hours in advance. Of those respondents, 62% would like the reminder sent via text and 35% by email. Perhaps even baby boomers and Generation Y are steering away from telephone conversations? 

How would Banks’ approach affect customer behaviour? When it comes to parting with their money, almost three-fifths (58%) of diners said they would never book a restaurant that required a deposit, with one-third (33%) not wanting to lose their money if they could no longer make the booking and 12% admitting it made them feel like they were spending more. That said, more than two-thirds (69%) would be more likely to turn up if they had paid something in advance. While Banks’ proposed £65 charge doesn’t class as a deposit, with consumers reluctant to “lose their money unnecessarily”, I wouldn’t be surprised if his no-shows dramatically fell if he went ahead with his threat. 

With business rates, wages and unpredictable food prices contributing enough to restaurants’ struggles, if there’s an opportunity to reduce losses in response to consumer demand, it’s a chance operators should be willing to take. Putting the blame solely on diners won’t do much more than generate negative media coverage. By introducing smoother cancellation processes and upping communication, diners will engage with their restaurants and be more likely to alert them should they need to cancel their booking. Eliminating restaurant cancellations will never be achieved but getting the majority of consumers to communicate their cancellations can. 
Sally Whelan is founding director of guest experience management expert HGEM

Promoting pubs as a career by Andy Holness

In recent years the pub sector has shifted its focus to put learning and development at the forefront at a time when talent is at a premium. As the UK’s largest owner and operator of community pubs, Ei Group has introduced a raft of initiatives and business-building tools for publicans to make the most of while offering training in a number of important areas to help build their knowledge, improve retail standards and, ultimately, customer experience.

While we continue to expand and improve the offer and services to our pub estate, we also recognise the fundamental importance of ensuring we develop our colleagues at head office – our Pub Support Centre –so they can further their own careers and provide best-in-class support to our pub communities.

In this regard it’s fair to say the business has evolved considerably in a short time. We’re now focused on delivering structured training and development programmes for people at all levels, no matter their role. We’re also continuing to promote Ei Group and the hospitality sector as a great place to work, offering diverse and fulfilling long-term careers from bar to boardroom while addressing the skills shortage.

We see the impact of this learning and development evolution in improved staff retention and internal progression rates, positive employee engagement scores and, importantly, our continuing financial performance.

Career progression
Sector-wide, the importance of nurturing talent and providing opportunity has never been more recognised. At Ei Group the culture of learning is becoming firmly embedded – team members are building their knowledge daily, adding genuine value to their roles and the wider business. Like many other businesses we have a strong focus on developing apprentices in roles such as administration, finance, data analysis, HR, public relations and procurement. Apprenticeships provide high-quality vocational training and are a great way to gain professional qualifications while earning, with training fitting around the day job. 

There are also three group-wide internal management development programmes in which participants interact to gain a greater understanding of how their role fits into the wider business. Our high performance in these areas was recognised earlier this year by reassessment for the prestigious Investors In People Gold Award. It’s an award we’re incredibly proud of and validation of all the hard work put in by our teams.

Attracting talent
Now in its second year, Pub Pros is a work-readiness programme run in partnership with education enrichment organisation Stride Learning. It aims to inspire school-leavers to begin a career in pubs while building employability skills such as teamwork and critical thinking. Pub Pros sees up to 30 pupils from each school take part in three half-day workshops including a meet-the-publican session followed by an in-pub taster day.

Ei Group also partners with charity The Clink, which works to cut reoffending levels by training prisoners during their sentence and placing graduates in hospitality roles when released. 

According to a recent Justice Data Lab report, a Clink graduate is 49.6% less likely to reoffend having been through one of its programmes and the charity is well on the way to achieving its goal of training and releasing more than 1,500 highly trained and qualified graduates into employment each year.

Bermondsey Pubs, meanwhile, is supporting the Diageo Learning For Life: Bartending And Hospitality course, which is led by The Springboard Charity. The six-week course gives candidates the skills, qualifications and experience to help them launch a career in hospitality. Bermondsey will also offer candidates an opportunity to go through the selection process should any permanent vacancies arise.

Craft Union Pub Company and Bermondsey Pubs have both partnered with another industry-led charity, Only A Pavement Away, which creates a conduit between employers in the hospitality industry and those charities and associations whose main aim is to help the homeless, former offenders and ex-service personnel reintegrate into society.

The future
We are striving to arrive at a place where all our business units benefit from this exciting learning culture. Alongside delivering free training courses to publicans and providing e-learning courses and webinars they can access in their own time, we also capture valuable feedback from our Publican Council forums. This feedback has led us to extend our e-learning and digital offer and ensure courses are bite-sized and accessible.

We can, of course, do more. We will move further towards digital provision and extend our internal training courses to greater numbers in our managed estate as it continues to grow. However, we’re proud of the progress Ei Group has made on its journey to upskill colleagues, publicans and operators – along with helping wider industry efforts to promote pub sector careers as an attractive choice for all.
Andy Holness is group HR director at Ei Group

Dealing with dine and dash by Ann Elliott

Former Camden councillor Sarah Hayward certainly caused a stir on Saturday night when she tweeted from Wahaca in Kentish town: “Hi @Wahaca. Just ate in your Kentish Town restaurant for the last time. People next to us left without paying and their server is made to foot the bill from his wages. Apparently, company policy. Utterly shameful employment practice.”

Wahaca founder Thomasina Miers picked up the issue the following day, responding to Hayward by tweeting: “@Sarah Hayward. We will definitely ensure our managers know the full policy as carelessness definitely isn’t the same thing as gross negligence (gross negligence is totally standard practice in the industry). It is discretionary, though, hence us looking into what happened. Thank you.”

Later in the week Wahaca said it had changed its policy on the issue from: “If, through your negligence, a customer leaves the restaurant without paying you will be liable to pay the full bill including service to the company or it will be deducted from your wages. Once you have taken an order, whether for your own table or not, until you hand/transfer the table to the correct person you will be personally responsible for collecting the money and required to repay any shortage or it will be deducted from your pay.”
To: “In situations of a walk-out, while the waiter is responsible for the table they won’t have to pay any element of the bill. However, if the manager suspects the waiter was complicit in the walk-out there should be a full investigation, which will be taken to the operations manager to decide the appropriate action.”

From my own experience Thomasina is a person of utmost integrity, an inspiration to other entrepreneurs with huge passion for her business and commitment to providing a great working experience for her team. I think she’s brilliant. I can imagine, but don’t know, that this is a policy written years ago when the business began and hasn’t been reviewed since – as may be the case with hundreds of other restaurant businesses.

Of course this has become a huge topic of debate within the sector and the public having featured on Jeremy Vine’s Radio 2 show. How responsible should a team member be for ensuring none of their tables leave without paying their bill? How many really are complicit with those who walk out? Should team members be made to pay for walk-outs? How many other companies have the same policy as Wahaca did but we just don’t know (but may find out soon)?

I have known restaurants with zero walk-outs, largely due, I believe, to the vigilance (and intuitiveness) of the manager on the floor. They understand customer behaviours, watch every table and can spot a potential walk-out miles off. It’s about the tiny things exceptional managers are so good at. They also have strategies to deal with incidents before anything kicks off – they don’t want anyone from their team chasing a customer down the street asking them to pay. They train their teams well on recognising “dine and dash” customers so neither the team nor other customers are embarrassed by the situation. 

There are places where walking out without paying could be easy – venues that don’t appear to be on the ball, with management thin on the ground. There must be a good deal of quick service restaurants where not every customer pays for everything they take out of the shop. I assume the profit and loss (PNL) allows for a percentage of “wastage” caused by theft? Perhaps many full service restaurants do the same?

The general feedback on dine and dash has been pretty unequivocal. Waiting teams shouldn’t have pay deducted for walk-outs whatever the situation. Managers should be on the ball, processes should be in place, recruitment of honest team members is vital, and there should be allowance for “wastage” on the PNL. Oh, and crisis management processes must be in place in case it all goes wrong. It would seem prevention really is better than the cure in this instance.
Ann Elliott is chief executive of Elliotts, the leading integrated marketing agency in the hospitality and leisure sector –

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