Propel Morning Briefing Mast Head Propel Hospitaliity website Paul's Twitter Link Subscribe Unsubscribe Web Version Forward Email Swifty Banner Morning Briefing Strap Line
Fri 3rd Jul 2020 - Friday Opinion
Subjects: One more sleep, why track and trace is key to recovery, in defence of landlords, and restoring control
Authors: Ann Elliott, Victoria Searl, Catherine Johnstone and Malcolm Muir

One more sleep by Ann Elliott

I literally can’t wait for Saturday and the reopening of pubs and restaurants post lock-down. I have booked a meal for six of us, including my 90-year-old father, at an Oakman pub, The Three Locks in Stoke Hammond, near Milton Keynes, at 4pm – an odd time but that was all they had left, which says something about demand.

I really wanted to support Oakman Inns’ proactive stance on opening on 4 July come what may and the role it has played in bringing the government to the table. Peter Borg-Neil has been fantastic throughout the crisis, not least because of his amusing fancy dress dinners posted on Facebook that have prompted many a question regarding his constant supply of outrageous outfits. He has been one of the significant voices in the industry, relentlessly giving interviews and speaking to the media about the need for clarity and decisiveness.

Is reopening the right thing to do? I honestly don’t know. I will make sure my dad has a mask and hand sanitiser and keeps well away from other people – but what more do I need to do? I have asked him if he wants to stay at home while the rest of us go out but, unsurprisingly, he doesn’t want to. He has had quite enough of playing solitaire and scrabble on his iPad during the past few weeks. I suspect he has cabin fever like the rest of us.

This week I’ve been talking to operators that have already opened and many that are about to. Those that have opened outside the UK (Charles Wells in France and Huggler in Jersey) have been more than pleasantly surprised by the return of trade to their pubs and restaurants.

For reopenings they have focused on ensuring their guests both feel safe and are safe. They needed to practise what they preached. Their teams have had to be seen to be taking this seriously – no high-fives, hugging or body contact whatsoever. They simply couldn’t risk any breakdown in behaviour being seen by customers and causing a disastrous backlash. In France they have had to wear masks, in Jersey I think it has been voluntary.

I love the fact Peter Wells’ pubs in France have been asking neighbouring shops and offices if they had any external space they could use and then filling that space with tables and chairs. Could that work here?

Track and trace in Jersey doesn’t seem to have been too onerous. Guests haven’t minded giving their details, the table reservation system has been used to capture data and walk-ins have been treated in the same way. Huggler has also used a manual system and even this hasn’t proved too difficult. Social distancing has been relatively easy to maintain, although some customers seem to have believed it didn’t apply after 10pm. The teams have been used to managing challenging customers and this situation has been no different.

Both management teams have planned comprehensively, trained their teams consistently and have had clear visions of how they wanted their sites to run. Team safety has been important but reassuring customers the teams are in control of the situation has been paramount. Not being complacent as weeks of opening turn into months is going to be important. In France and Jersey, knowing what’s going on and managing the situation has been critical. Teams have had to know what has been expected of them and that it has been non-negotiable.

Customer profiles have been slightly younger than previously. Once customers have visited three to four times they become used to the situation and seem to relax – but not too much.

Like-for-like business has been variable but a pattern of minus 20% year-on-year seems to have settled. This fits with the view of Andy Hornby, of The Restaurant Group, who says operators need to plan through to Easter on these levels of like-for-like sales and cut overheads accordingly. That sales are not settling at minus 50% is room enough to rejoice but not room enough to celebrate.

I was impressed with both managing directors. They have been calm, considered and communicative – with their teams and customers. Expectations have been clear. They are making a very difficult situation work for teams and customers alike. 

One more day to go and I’m there – masks, gloves, gel and ruler to hand. Enjoy!
Ann Elliott is chief executive of Elliotts, the leading integrated marketing agency in the hospitality and leisure sector – www.elliottsagency.com
Elliotts is a Propel BeatTheVirus campaign member

Why track and trace is key to recovery by Victoria Searl

As hospitality businesses around the UK edge closer to reopening, details surrounding the mandatory participation in the government’s track and trace initiative remain vague. 

At a time when businesses are fighting to open as quickly and safely as they can, the added pressure (and uncertainty) of track and trace must feel like a stress many could do without. 

As we come to terms with reduced capacity and confidence and a market already starting to feel battered by redundancies, cutting costs will become a defining factor of many hospitality survival stories. 

But what has this got to do with track and trace? According to Frederick Reichheld, of Bain & Company, inventor of the NPS system, retention is anywhere between five and 25 times cheaper than acquiring new customers. I know where I’d place my marketing bets right now. 

So how do we know which of our customers are most valuable to us? We have to think like that at the moment because, with some businesses running at a fraction of their usual capacity, we want to make sure we’ve got our most valuable customers taking up chair space, even if it’s just to buy us the freedom to support those without the spending power we’d like. I’ve seen some truly beautiful examples of this in brand opening plans.

While we have a continued responsibility to protect our customers and teams – something that comes naturally to an industry as heavily regulated and passionate as hospitality – there’s a once in a lifetime opportunity hiding in plain sight.  

Collecting data from as many people as possible makes the track and trace system as robust and effective as possible, reducing the chance of a second wave, which would surely be fatal for many of our businesses. 

And there’s an additional silver lining. Most businesses are capturing only a fraction of their footfall data and few are using the insights that data can provide to drive strategy or action. By being proactive about track and trace, every customer could in theory leave a digital footprint, offering businesses an unprecedented level of insight (and growth opportunity when used in the right way).

While the details have yet to be finalised, track and trace providers are leaning towards collecting names, email addresses, phone numbers and visit times and durations. This enables you to identify and, if the user already appears in your data somewhere, profile your most valuable customers – defined by their frequency, most recent visits and loyalty to your brand. 

A percentage of new users will also opt-in to marketing communications, giving you a golden opportunity to enhance your understanding of the behaviours, preferences and motivations of those first customers to come out and enjoy everything hospitality has to offer. Remember, this first wave of visitors will lead and convince the rest to follow.

It’s vital we protect our customers’ trust in us and the systems surrounding data protection as well as their health. You must decide for yourselves the most appropriate balance between proactivity, legal requirement and customer comfort. Speaking to the Information Commissioners Office, it confirmed that by anonymising (removing any information by which an individual can be identified) the data remains compliant.

In some cases data must be disposed of within the 21-day time-frame, meaning we have a narrow window through which to grab this opportunity. This means we can’t just gather it and sit on it until data becomes a hot topic in the boardroom. We must, and should, use it now. 

Hospitality is a unique business, built and run on passion and gut instinct more than any other sector. Management consultant company McKinsey states: “We have vaulted five years forward in consumer and business digital adoption in a matter of around eight weeks”. To survive what will be one of the most fundamental shifts in society since the dawn of the digital age, we must continue to drive this pace and equip our brands with the clarity, certainty and direction only data can provide. 

So don’t just fling open the doors on 4 July and beyond and accept whatever comes your way. Think carefully about the data you’re likely to already have sitting within your business, whether from Wi-Fi, CRM, payment or social media, and the data you have the opportunity to gather now. This isn’t about coercing people into giving you their precious data under the guise of caring for their well-being, it’s about grabbing it when it’s offered. 

Use the insight that lies within to plot your strongest possible recovery. 

Please get in touch if you’d like some help with this. I wish you all a very strong and speedy recovery.
Victoria Searl is founder of DataHawks, a hospitality data consultancy that organises, analyses and monetises your data. Email victoria@wearedatahawks.com

In defence of landlords by Catherine Johnstone

Four words I never thought I would say. I may even be contradicting the spirit of a preceding article in which I – some would say fairly – labelled commercial landlords as “unscrupulous and unforgiving” (How To Run A Successful Restaurant, 11 May 2020).

However, as the date for reopening our hospitality venues draws near, the onus to ensure our beloved pubs, bars, restaurants and cafes remain profitable, and therefore open, is disproportionately falling to the landlord.

We all recognise rent as the gravest concern for hospitality businesses and the longevity of their future after lock-down. However, if they are to survive the challenges ahead there must be a fair and reasonable apportionment of responsibility between a landlord and the flexibility of its rental expectations and a business owner’s own commitment to driving enhanced efficiencies and cost-saving practices.

Covid-19 has disproportionately affected hospitality businesses by reducing the number of guests that can be served within the same operational space and increasing the number of staff it takes to serve them safely. The financial implications of the ‘new normal’ are therefore significant and must be mitigated by the business owner, irrespective of rental commitments.

Rent is a fixed cost
Having a discussion with the landlord about managing rental payments in the coming months could bear results that alleviate some of the strain. However, business owners should exercise extreme caution before agreeing any long-term changes to their lease terms. While a turnover rent might look an attractive option in the short-term, once social distancing is no longer required turnover rents could represent upwards of 20% of monthly revenue and be in place for the next three to five years, draining profit margins and blocking the road to recovery.

An informal agreement to apportion the rent according to sales projections for the remainder of the financial year, for example, would be a more dynamic solution that could protect the business in the long term and represent a viable option for the landlord and its creditors.

Shock absorbing
Most hospitality businesses have had ample time to reconfigure floor plans and calculate the cut in sales capacity. UKHospitality chief executive Kate Nicholls estimates social distancing of one metre will result in roughly a 30% drop in sales capacity of most hospitality venues.

A 30% drop in sales capacity represents about a 5% increase in the rental expense of a food and beverage business when expressed as a percentage of turnover. Despite seeming unfair to the tenant, especially in cases where the landlord has provided little to no good faith in shouldering some of the burden, the 5% rental spike can be absorbed.

Having a complete set of financial and operational tools in place to manage and maintain the most efficient business practices will generate at least a 1% improvement to food, beverage and labour costs. The remaining 2% must be saved from other expenditure to comparatively break even or taken straight off the bottom line as a loss for as long as covid-19 remains a threat.

Implementing enhanced sales strategies, costings worksheets, recipe cards, stock and inventory control procedures, better training for staff and consolidating suppliers to drive prices down on volume purchases are just a number of ways to achieve small but consistent improvements across the P&L. Operators must invest the time and resources required to implement the full range of these tools rather than looking to the government and landlord to magic away their financial worries.

Summary
The good news for growth-led operators is the pandemic might inspire a rental revolution that has arguably been a long time coming. The supply and demand of prime real estate could invert as working from home becomes the new normal and commercial office blocks stand empty. Lease structures of the future are bound to offer greater flexibility for the tenant – rent fixed at a standard rate for longer with fair and equitable rent reviews and without early escalation clauses.

But for those operators with years left to run on their leases, driving enhanced efficiencies within the business will be far easier and yield far greater results than achieving a rental reduction from an understandably nervous landlord.
Catherine Johnstone is a consultant in the pubs, bars and restaurant sector and a non-practising commercial property solicitor who owns Vigour & Vice

Restoring control by Malcolm Muir

As the hospitality industry reopens under new trading restrictions, many operators are still uncertain about the future. Of particular concern is the expected cut in footfall due to social distancing guidelines and continued risk and fear surrounding the pandemic. The good news is there are worthwhile steps operators can take to regain control of where their business is heading.

During this time, which has been coined by many as a “reset of society”, it’s important for businesses to review the past and be prepared to make radical changes to the way their business operates. That’s not only in terms of finding creative solutions to trading safely within covid-19 measures but also about making operational changes that could be the difference between running a loss-making or profit-making business.”

How can operators make a profit despite fewer customers? The devil is in the detail as well as in the data. Here are my top tips:

Promote upselling and customer service
With fewer transactions it’s essential to make the most of every customer who steps through your door. The quality of the customer service and upselling skills of your staff will be key to achieving higher sales for your business and bigger tips for your staff. Making sure staff are confident and knowledgeable will not only keep customers coming and spending more but staff will also gain greater job satisfaction from increased earnings.

Train staff on operational best practice
Don’t just focus on training your staff on the new covid-19 safety guidelines. Staff returning from furlough is the opportune moment to remind them of key operational best practices that help your business tackle shrinkage and make more profit. These include proper dispensing practices, recording practices such as wastage logs, till practices and more.

Benchmark sales performance and revise product lines accordingly
Delve deep into every product line’s profit calculation, especially those that account for your highest sales volumes. Consider their cost and selling price and don’t forget to include an accurate assumption for preparation costs, wastage and loss. Once you’re able to review margins in terms of cash, it’s worthwhile renewing your focus on your highest-performing product lines. 

Review your stockholding and keep it minimal 
Your product performance data should result in you making ruthless choices. It will determine which product lines to strip out from your stockholding. Aim to sell through slow-moving and low-margin product lines quickly via marketing initiatives and offers. The process of reducing stockholding decreases business risk and releases cash that would otherwise be tied up in your business.

Reassess supplier contracts and product agreements
After three months of interruption to services, suppliers have also had to adapt to the new status quo. They may have changed their product and service offerings and could even be offering savings or opportunities that weren’t available before. It’s a good idea to get in touch with them to revisit your agreement and any associated arrangements.

Review internal policies that affect your bottom line
Being generous and trusting is a great attribute of hospitality businesses but forgoing some basic internal principles can seriously affect your bottom line. Things you should consider reviewing include a reduced menu option for staff meals, security protocols to prevent stock and cash losses, and the enforcement of full delivery checks prior to acceptance.

Monitor sites regularly
Support your teams with health checks – physical and operational. Site management is going to find reopening stressful, not just implementing covid-19 restrictions but running sites within tight budgets. A one-to-one health check can monitor stress points within the operation and allow staff to report problems without fear or favour.

The whole world has had to wake up to the fact post-pandemic life will never be the same. Turning this into a positive mindset will be key to our industry’s survival. It means approaching everything we knew with fresh eyes and seeing the great opportunities operational and financial practices offer to keep your business running better and more profitably than ever. 

For more information on how to optimise profits and controls, visit www.venners.com
Malcolm Muir is consultancy director at Venners
Venners is a Propel BeatTheVirus campaign member

Return to Archive Click Here to Return to the Archive Listing
 
Punch Taverns Link
Return to Archive Click Here to Return to the Archive Listing
Propel Premium
 
McCain Banner
 
Zapaygo Banner
 
Matthew Clark Banner
 
Deliverect Banner
 
A2Z Masks Banner
 
Pub Plants Banner
 
Yoello Banner
 
Ei Group Banner
 
OrderPay Banner
 
TipJar Banner
 
Trail Banner
 
Odamo Banner
 
Arla Foods Banner
 
Nestle Waters Banner
 
Yumpingo Banner
 
Camile Banner
 
Pepper Banner
 
The Leisure and Hospitality Collective Banner
 
LunchMate Banner
 
Biff's Banner
 
Zonal Banner
 
Swifty Banner
 
Yudu Banner
 
Orderbee Banner
 
Startle Banner
 
Pago Banner
 
Access Banner
 
Ten Kites Banner
 
Prestige Purchasing Banner
 
IOL Banner
 
COREcruitment Banner
 
Punch Taverns Link Punch Taverns Link
Wi5 Banner
ALMR Web Link Web Version Unsubscribe Subscribe Propel Info website