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Morning Briefing for pub, restaurant and food wervice operators

Fri 17th Jan 2020 - Friday Opinion
Subjects: Got the T-shirt, searching for a silver lining, and digital maturity
Authors: Glynn Davis, Paul Chase and Tim Davis

Got the T-shirt by Glynn Davis

When designer and restaurateur Sir Terence Conran took over Quaglino’s in 1991, a small part of his rejuvenation of the large restaurant in the smart St James’s area of London involved creating a metal Q-shaped ashtray for each table.

In the days of smoking in restaurants and pubs Quaglino’s also sold cigarettes, which helped the ashtrays become a well-used feature. What he couldn’t have foreseen was the amount of theft involving those well-designed items would play a role in Quaglino’s becoming an era-defining restaurant.

The restaurant gained many column inches about those ashtrays, with an estimated 25,000 stolen in the first ten years of Conran’s ownership. They were going “missing” at such a rate the decision was made to sell them in smart gift boxes for £15. This didn’t prove as successful as Conran hoped but this story highlights how restaurants and food brand merchandise is nothing new.

Quaglino’s followed a move by Hard Rock Cafe to make merchandise an integral part of its proposition. The clever part of Hard Rock’s mission was to ensure each restaurant had its own T-shirt with its home city emblazoned across the front. This created a desire to collect the shirts, which itself drove footfall into the restaurants. Others have followed its lead including one early adopter, Italian motorcycle fashion chain Deus Ex Machina, whose clothing features the addresses of its stores’ cities. 

Many people will look down on such items when compared with those covetable Quaglino’s ashtrays – even though Conran’s creations were accessories to shortening lives at a much quicker rate than a Hard Rock quarter-pounder.

But clearly those smart cookies at Hard Rock Cafe were on to something way before others because merchandise is arguably as important today as it has ever been. “Merch” extends memories of a restaurant visit way beyond the initial experience and helps to feed social media’s ravenous appetite.

Perhaps we’re moving towards a situation where the T-shirt becomes more important than the meal itself in the same way people are attracted towards the gift shops in galleries and museums before they’ve even seen a single piece of art or exhibit. Why bother to pay to see the painting when you can buy the postcard for a snip of the price?

This might be a little far-fetched but you can’t dispute the rise of merchandise. Even McDonald’s has recognised its value. Having been reluctant to get involved, the company changed tack a couple of years ago and started selling cleverly designed merchandise at its convention for employees and operators. Items were feverishly snapped up, leading McDonald’s senior vice-president of global marketing Colin Mitchell to see potential to make some money while enabling the Instagram generation to “deploy their fandom”. 

Since then, the company has been building the variety of branded items it sells online through its Golden Arches Unlimited store and a pilot within a flagship Chicago restaurant. McDonald’s joins other major foodservice brands such as KFC and Taco Bell in spotting merchandise can drive a healthy revenue stream to offset tough food sales on the high street.

With the larger restaurant operators flogging merchandise, supplying branded food items to supermarkets and handling increasing delivery orders, these are interesting times for bricks and mortar and what share of total revenue they will drive in the future for major foodservice brands.
Glynn Davis is a leading commentator on retail trends

Searching for a silver lining by Paul Chase

Here we are at the start of a new decade – unless you’re a pedant who thinks the new decade starts next year! I thought about reviewing the onward march of the nanny state and prospects for even more scolding from the public health racket in the year ahead but I’m an optimist, so I’m searching for silver linings from 2019 instead!

In January, medical journal The Lancet launched the EAT-Lancet Commission diet designed to counter the non-existent obesity epidemic. This is virtually a vegan regime promoted by a couple of billionaires whose main hobby is to jet round the world saving the planet. The Lancet followed this up with an article about “Big Food”, which advocated regulating food like we regulate tobacco. 

In February there were fresh demands for the plain packaging imposed on tobacco products to be extended to food, while in March the government announced it was determined to clamp down on junk food even though it wasn’t really sure what “junk food” was.

In April, new restrictions on fixed-odds betting terminals came into effect to combat the non-existent gambling addiction epidemic and, by strange co-incidence, it was announced 2,300 bookmakers would close. Meanwhile in Scotland – home of temperance and nanny state regulation – we discovered Scottish drinkers responded to minimum unit pricing (MUP) by buying more alcohol. 

In May we saw the collapse of Jamie Oliver’s restaurant empire and, sad though this was for his employees, we can rest assured he can devote himself full-time to ensuring the ban on turkey twizzlers remains in place. In June, claims alcohol consumption and alcohol-related deaths fell in Scotland following the introduction of MUP received blanket media coverage, while the truth – that both factors rose – gained none. Meanwhile, the Institute for Public Policy Research called for plain packaging on food. 

In July we saw the glimmer of a silver lining when Boris Johnson said an extension of the sugar tax would “clobber those who could least afford it” while calling for a review of sin taxes in general – hoorah! One month later, anti-smoking campaigners called for health warnings on individual cigarettes – you couldn’t make it up. In September, evidence the sugar levy had failed to reduce obesity kept coming while it was revealed, to no-one’s surprise, the sugar levy revenue had been swallowed by general government expenditure and not ring-fenced to promote sport in schools as previously promised.

In October, chief medical officer and self-styled nation’s chief nanny Dame Sally Davies retired while calling for plain packaging on junk food. Meanwhile, a new study was published showing how badly pubs were hit by the smoking ban. 

David Aaronovitch published an article in November stating Prohibition was a success, which I replied to in an open letter in Friday Opinion – spoiler alert, Prohibition wasn’t a success. In December, everything went quiet apart from vexatious adverts about a need to prepare for Dry January.

I’m struggling to find silver linings here except to say whatever else may be said of the current government, at least it appears to be sceptical of nanny-statism and one can only hope it doesn’t inflate Public Health England with any more taxpayers’ cash to fund its crude anti-capitalist agenda. What a time to be alive!
Paul Chase is director of Chase Consultancy and a leading industry commentator on alcohol and health

Digital maturity by Tim Davis

Food and beverage businesses can no longer simply compete on offering, price and scale in the next decade. The service that restaurants and bars provide is becoming increasingly customer-centric and beyond the floor or front of house. This focus creates a requirement to invest in digital maturity. 

As a brief overview, digital maturity is the scale at which companies implement the digital elements required to automate the customer experience and operating processes to drive improved performance. For a restaurant, raising performance could mean increasing demand for table bookings and converting that into improved table turnover and, therefore, more sales. In the previous decade this was ring-fenced to marketing activities but has now shifted to services and the customer experience. 

Digital natives in the food and beverage industries such as UberEats and Hello Fresh are reaping the rewards from this business requirement. However, incumbent organisations that invest in digital maturity will see the following benefits: 

Improved productivity: Through digital processing, streamlining efforts and optimising internal processes, organisations become flexible, efficient, innovative and highly competitive. 

Enhanced brand reputation and management: Brand reputation is better managed in a company that has a higher digital quotient as their systems work together to make information readily available and easier to deploy. This helps to support marketing brand consistency by providing the capability to control content and be proactive across channels.

Winning business from digitally empowered and well-informed customers: Digital maturity is driven by the customer who is “always connected” and expects a customer-centric focus. Being digitally mature enables businesses to engage with consumers and offer them relevant choices, which means they are more likely to return.

Establishing customer loyalty: With more than half the world’s population connected to the internet, technology has created greater transparency of business practices. Customer experiences, positive or negative, are amplified to reach millions of potential customers immediately. The stakes are high to create lasting relationships and the initial contact tier of the service model should take a leading role.

Competitive edge against digitally stagnant organisations: Businesses don’t have to be technology natives to achieve digital maturity. By increasing digital quotient, organisations are able to gain relevancy for customers as well as market share. 

The higher the digital maturity, the higher the revenues: A high demand increases occupancy, which will convert every extra dollar of revenue to 65 cents of profit.   

Improvements to the employee experience feeds back to customers: Staff interaction with customers can be improved by providing better customer insights, enabling staff to better empathise with patrons and route their enquiries directly to the staff member empowered to address guests’ needs.  

Companies that grasp digital maturity with discipline and speed can take advantage of the great shift in consumers and businesses moving to buy-in digital channels. Learn more about digital maturity in PACE Dimensions’ white paper entitled Digital Maturity: A Key Enabler For Success In Travel, Leisure And Hospitality.
Tim Davis is managing director of PACE Dimensions

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