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Fri 28th Aug 2020 - Friday Opinion
Subjects: Eat Out To Help Out customer behaviour, how to make the most of your marketing potential, smart operators have teased customers back, to tech or not to tech in a post-lock-down world
Authors: Ann Elliott, Victoria Searl, Glynn Davis and Sebastien Sepierre

Eat Out To Help Out customer behaviour by Ann Elliott

I think customer behaviour during Eat Out To Help Out (EOTHO) has been fascinating and has fallen into three main categories:

The loyalist
This customer has used the scheme as an opportunity to visit their usual pubs and restaurants, and spend more. This has happened, I suspect, across the whole of dining spectrum from quick service restaurants to high end.

I see this very much though in the gastro-pub/high-end casual dining space, particularly in those where the atmosphere hasn’t changed much in response to covid-19 precautionary methods. They haven’t introduced masks for their teams, temperature checks, roundels on the floors, in/out for toilets or stripes marking one or two-metre distancing, but they have allowed for social distancing and hand sanitisers. They are trusting their customers to take personal responsibility for keeping themselves and others safe.

Dining in these places still feels like an experience but with better value than before because the EOTHO discount has helped customers to eat/drink more, including starters, desserts and more drinks) for their usual spend per head. The end of the EOTHO scheme is not going to discourage these customers from visiting again but they may go back to their old frequency patterns.

Operators here need to be very creative in making these guests feel special – not by giving them discounts but by offering value and uniqueness.

The mover
EOTHO has given this group of customers the opportunity to trade up to somewhere they may have gone to only infrequently previously (or events, special occasion and celebrations) rather than a regular monthly visit. So, Café Rouge customers may have traded up The Ivy (if they were able to get in) or Pizza Hut customers might have booked at TGI or for… well, you get my drift. They are spending what they would do so regularly but are now having a very different experience for that money.

This has meant that many brands and businesses have seen brand new customers appearing during EOTHO. One operator told me that more than 40% of their customers were new to them due to the initiative – fantastic for CRM and marketing activities.

Without these activities, they are very likely to fall back into their “old” dining-out habits but potentially keep some spend in reserve to go back to their memories of August 2020. Marketers need to remind those who have traded up to their brand how wonderful their business is and how it is worth the additional spend in normal times – or discount back to something like EOTHO.

The realist
This scheme has given millions of people, the opportunity to eat out (not necessarily drink out) for the first time, not only for many months, but maybe for many years.

A twin pack of rib-eye steaks is £6.89 in Aldi, chips are 90p a bag and peas are currently at a sale price of 55p a bag. So a rib-eye steak meal for two from Aldi is £8.34p. A rib-eye steak meal for two from Beefeater is £38.58p. That’s more than £30 difference. That’s a pair of shoes or a coat or a school uniform.

In my personal experience, Beefeater has taken all personality out of its restaurants in its desire to be “safe” – it’s a very functional experience. I am sure they are not the only casual dining chain to have done so and to have de-personalised the experience. Why would anyone sit in an impersonal space with no atmosphere and spend a minimum of £38 for a meal for two? Almost five times more than they would spend at home… and what does that say about the margins being expected in some businesses?

EOTHO though has taken this meal for two down to £18.58 – about £10 more than cooking at home. That suddenly becomes relatively affordable. It’s worth paying even if the occasion is “I have had enough of cooking at home – get me out of here”.

The moment EOTHO is withdrawn though and customers have to pay a “normal” price, it seems unlikely they will flock back. They will revert to norm. Certainly while the current crisis continues and the customer experience is devalued in some chains, discounts here are going to have to be the norm. If not, the customer is likely to perceive that they are simply not affordable or good value for money and they will not visit.

EOTHO has been terrific for this sector, for our teams and for our customers. The purists would say that it only devalues the market. I don’t think it does but it must make us stop and think why customers eat in our restaurants and pubs and how much they think it’s worth paying for that experience.
Ann Elliott is a hospitality strategist, connector and adviser

How to make the most of your marketing potential by Victoria Searl

In real estate, there’s a term used to describe the value of different investments – their “capitalisation rate” – often calculated as the ratio between the net operating income produced by an asset and the original capital cost or it’s current market value. Essentially, measuring the potential of return.

In his Revisionist History podcast, Malcolm Gladwell discusses the concept of the human “capitalisation rate” – defining it as “the percentage of people in any given situation who have the ability to make the most of their own potential”. Despite the odds against them, these people find a way to compensate for their shortcomings.

And it occurred to me that we could apply this concept very easily to hospitality marketing and answer – once and for all – the question of whether Eat Out To Help Out (EOTHO) is our only option – a necessary blessing or an impending curse.

To answer this, we must look at our businesses and honestly decide whether we are making the most of our potential and assess whether, despite the odds against our industry at the moment – particularly in areas dependant on offices, we are making the most of ways designed to compensate for our shortcomings.

I’ve heard countless pleas for the extension of EOTHO through September, and even more talk suggesting EOTHO will be even more crucial as the appeal of outdoor dining wears thin and an unpredictable British Autumn and Winter sets in.

And while I completely understand the instant impact of EOTHO and empathise with the comfort it brings (I’ve sat in enough boardrooms debating how to drive covers – and fast), there is massive potential in so much of what we already have available. And if we take action now, we can see the benefits before the first Halloween displays go up.

So, before you push the button on another few months of EOTHO-style discounts, ask yourself whether you’re making the most of your business’s marketing potential.

1. Are you optimising your acquisition?
Your data can tell you who is most important to you as a customer, and “test and trace” is likely to be driving unprecedented levels of insight. By defining your most valuable customers, according to their frequency, recent visits, loyalty and other desirable behaviours, we can find others who share the same characteristics – who may not have already engaged with your brand. Even if you’re already absolutely nailing it and capturing 5% of your market that gives you 95% of opportunity. And because targeting your advertising through social, SEO and digital ads (and I mean properly targeting, not just using the broad ‘generic targets’ offered by Facebook, etc), is so effective, your ROI could be as attractive as your sales numbers.

2. Are you set up for conversion?
You’ve probably got tens or hundreds of thousands of contacts sitting in your CRM, but how often do you segment them by behaviour to ensure they’re receiving the content most likely to get them to hit the ‘book now’ button? Your CRM is an absolute oasis of opportunity, able to drive both frequency and spend when it’s used correctly. And are you automating your communications and optimising your online customer journey to push people along the booking or purchase funnel? Whether you’re aiming for bums on seats, or pork chops in the post – automating your journey can turn interest into action – in an instant.

3. Are you prompting people to return?
Assuming your ops are on point and your customers had a brilliant time, communicating immediately afterwards when the warm and fuzzy feeling is still fresh in mind is the ideal way to keep your brand in your customers’ thoughts. And by using your data to get to know your customers really well, you can offer the perfect mix of inspiration and incentive to revisit, in the most discreet of ways.

We have an opportunity now to look within our businesses, and make the most of the potential lying in our marketing technology and data, setting us up for success despite the odds against us.
Victoria Searl is the founder of DataHawks, a hospitality data consultancy that organises, analyses and monetises your data. Contact victoria@wearedatahawks.com

Smart operators have teased customers back by Glynn Davis

When growing up in Yorkshire, ordering the ‘scallop’ – a deep-fried, layered fish and potato cake – was the value option at my local fish and chip shop because it was significantly cheaper than going for a cod or haddock with my chips.

Only later, when frequenting smarter restaurants, did I come across the alternative scallop, the softly textured mollusc that you will no doubt be more familiar with. Now, just imagine you’d ordered this shellfish variety and then found, to your dismay, the waiter delivered you the fried battered potato cake. I’m guessing you’d be pretty shocked, feel a bit short-changed, and never return to the venue.

When the Eat Out To Help Out (EOTHO) scheme was announced, I harboured some concerns about similar own goals when various venues began to promote menus specifically created for the scheme. Would they be looking to engineer out any value in the meal and deliver something that was merely imitating a great deal?

Such a scenario was played out some years ago with Groupon. For many restaurants, their offering with Groupon involved a menu created specifically for the promotion. This often meant it bore no relation to the dishes typically found on the restaurant’s regular menu. I once ended up being served much smaller portions than normal while, on other occasions, I was given vastly inferior dishes to what the restaurant would typically serve. Ultimately, it was all a complete waste of time for all concerned.

Clearly in the case of EOTHO, the chancellor is chipping in £10 but these are very tough times so I still held some concerns. Hawksmoor was quickest out of the traps with its steak and chips offer for £20, which set the customer back a mere tenner when the 50% discount was applied. This is a classy operator and it made it clear this dish was on its regular menu for £30 and the meat would weigh the same 300g, so it was pretty clear this represented a terrific deal. This was recognised by the public and an incredible 15,000 bookings were taken for the 13 days of the scheme.

I was too late to take up this particularly tempting offer but I did book dinner at Trishna in London’s Marylebone where a special EOTHO offer had also been devised. This was a three-course set menu priced at £20 and, therefore, cost the customer a mere £10. This seemed an incredible deal and even more so when it also included a variety of poppadoms with chutney’s and petit fours to finish.

Like Hawksmoor, Trishna is run by a top-notch operator, JKS Restaurants, so I needn’t have worried about this offer being a watered-down affair in any way whatsoever. But to make it stack up the business was very clever with the menu. It was a world away from swapping seafood scallops for Yorkshire chippie scallops but its three courses – comprising aloo chat, chicken biryani or mushroom pilau along with dal, naan breads and raita, as well as a dessert of kulfi – were economically very well constructed. And, with its excellent spicing, it was one of the best value, tastiest meals I’ve eaten in a long time.

It has been very pleasing to find my initial concerns were very wide of the mark and I’ve not come across any operators being overly cute with their menus and trying to take advantage of the scheme. In reality, it has not really been about the food at all, it has been about prompting people to venture out and gain confidence again in eating and drinking out of home. To this end, EOTHO has been a phenomenal success, with many operators achieving record levels of trade in the early part of the week and for some it has helped their businesses return to levels not dissimilar to those enjoyed pre-covid.

Never would I have imagined having to queue for breakfast at 9am on a Monday morning outside the JD Wetherspoon in Sittingbourne, Kent. But, for once, I was more than happy to join the line and again play my very modest part in EOTHO. And with no fried potato scallops masquerading as shellfish on any menus, I know it is clear the foodservice industry has played its part exceedingly well in the scheme and maybe some things will be learned from the exercise that can be applied in the future.
Glynn Davis is a leading commentator on retail trends

To tech or not to tech in a post-lock-down world by Sebastien Sepierre

There’s much cause for renewed optimism in the hospitality sector. Great numbers of sites are reopening across the country and the Eat Out To Help Out initiative has been an overwhelming success, driving people back into restaurants, pubs, bars and hotels.

Crucially, the Eat Out To Help Out initiative gives us an opportunity to reinstate consumer confidence in the experience of eating and drinking out of home. Hospitality operators are far better equipped to deliver safe socialising than the unsupervised gatherings that were happening in back gardens, parks and homes. It’s fair to say the outstanding, diligent work of the vast majority of hospitality businesses up and down the country has irrefutably proven this point.

Technology has a fundamental role to continue building customer confidence in the sector and many predicted lock-down would accelerate the technological evolution of the industry, putting an end to manual processes and paper for good. But that hasn’t happened and the question: “To tech or not to tech?” in a post-lock-down world isn’t as clear-cut as some suggest.

The importance of implementation
The week before restaurants and bars reopened, more than half of respondents to the CGA Business Leaders survey stated technology was a priority for their business. Interestingly, from what we’ve seen, this sentiment hasn’t yet transpired into mass implementation of digital solutions at every stage of the customer journey.

For example, many operators have opted for disposable printed menus over a digital solution, while others have chosen pen and paper test and trace systems over a digital approach. This isn’t necessarily a bad thing. If implementation is rushed, without proper consideration, processes and staff training, it can negatively impact service delivery and disrupt operations.

As we enter an accelerated period of digital transformation, it’s more important than ever people adopt and implement technology for the right reasons – to enhance the guest journey – or else it will fall flat on its face for both employees and customers. We know if customers have a bad experience with an app they will be swift to judge and slow to forgive. Something introduced to enhance the customer experience could, in fact, hinder.

Enhance the customer journey
Fourth is a long-standing supporter of the hospitality industry and its message today is very much the same as when the business was formed more than 20 years ago – technology should give time back to employees to focus on great service. And there are many operators that have excelled at this since reopening.

Several businesses have turned to technology and gamification to enhance the customer experience – with several operators using a TV to display the temperatures of customers as they walked through the door. The gamification adds an element of engagement and fun along with security and ease into what can be a very sterile start to the dining experience.

Many operators are also gleaning insights from the first reopening weeks of trading to inform staffing levels across their business. Even in these unprecedented times, every data set you track will have a set of absolute truths that can be used to inform smart business decisions. This is a vital tool operators should have in their arsenal, and use, to ensure customer service isn’t sacrificed by fluctuations in demand.

But it’s not all plain sailing. There have been reports of challenges and frustrations from customers and team members about the introduction of new technology. Something that is exacerbated at certain touch points during the customer experience, such as waiting or paying for the bill. While a lot has changed, the core principles of hospitality, such as paying particular attention to the start and end of the customer journey, are just as important as ever. Any new procedures or technical solutions introduced by operators should take all this into consideration, as well as being fully tested prior to all and any customer interaction.

What’s next?
Clearly, hospitality’s digital transformation journey has been accelerated by the pandemic. But, the extent to which it continues on its current trajectory will be determined by the successful implementation of the technology and the quality of the customer experience it delivers. In the end, it boils down to technology streamlining and enhancing the customer journey, along with giving teams more time to make guests feel welcome, special and delivering an experience that can’t be replicated at home.
Sebastien Sepierre is managing director – EMEA at Fourth

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