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Morning Briefing Strap Line
Fri 18th Sep 2020 - Friday Opinion
Subjects: Let’s not cancel Christmas yet; not another QR code; pigs, chicken and fish – in a soup of uncertainty; why subscription models will change hospitality 
Authors: Kate Nicholls, Gary Goodman, David Read, Prask Sutton 
 

Let’s not cancel Christmas yet by Kate Nicholls

With the enforcement of “curfews” and reintroduction of specific restrictions such as local lock-downs likely to be more prevalent in the coming weeks, the challenges the industry face are not going away anytime soon. In some ways, the sector still has hurdles to overcome that are just as big as they were back in March. But, as we did earlier this year, hospitality will continue to show its ingenuity, collegiate spirit and strength to persevere and overcome. 

Working together with a unified voice has been an integral part of our ability to tackle the challenges of this pandemic and success in lobbying government effectively, and it will be equally important over the coming months as we round off this most turbulent year. Our campaigning and asks of government will be concentrated on pushing for targeted employment support to protect jobs as furlough tapers down; the continuation of hospitality-specific policy measures such as the VAT cut and business rates holiday and for a roadmap so the “forgotten” parts of the sector can reopen.

We’ll also continue to extol the tremendous work by the sector to ensure the safety of guests and amplify the timely words this week from Dr Justin Varney, director of public health at Birmingham City Council that, with safety measures in place, there is no safer place to socialise than in hospitality venues. 

On the issue of curfews, I know from my conversations that operators are working extremely hard and taking every precaution to keep everyone safe, ensure social distancing is maintained and deliver effective test-and-trace data capture, every day. Our sector is very willingly taking these important steps to help tackle covid-19, and is doing so at great expense. It’s difficult to see how an arbitrary cut-off helps; what is more certain is the very serious harm and damage it will do to businesses and the impact on jobs. Nonetheless, it is vital that all businesses do all they can to comply with government rules to stave off further restrictions on trade.

We are experts in keeping guests safe, and with stringent measures in place, hospitality should be allowed to return to full force. It’s also why – when the science says it is safe to do so – social distancing measures that are restricting both capacity and revenue should, when the time is right, be reviewed and refined to enable the sector to return to sustainable profitability. This is the argument we are putting to government, particularly on the urgent need to provide a roadmap to reopening for parts of the sector, like nightclubs, that remain closed. Until we are allowed to reopen fully, further targeted support is required. A third of hospitality workers are still on furlough, equating to almost one million people. As I told the House of Lords Employment Committee this week, a huge number of jobs remain at risk and we must protect as many of those as possible, as far as we are able to.

Of course, we have already lost a significant number of jobs and, for the sector to play a meaningful role in the economic recovery, we need to get back to a position where we are able to create jobs, as we did in the decade following the global financial crisis. As we saw with the potency of the Eat Out To Help Out scheme, stimulating consumer demand and maintaining confidence is crucial for this. The restrictions put in place by the “rule of six” and local “curfews” have damaged the feel-good factor achieved through the scheme and risk further harm as we approach a key trading period. Our message to ministers is “let’s not cancel Christmas just yet”. 

Looking further down the line to the start of 2021, an extension of the VAT cut is integral to recovery. The prospect of a hike in January, already a difficult month for the sector, would shatter consumer confidence and restrict the potential for a sustained path back to health. An announcement in the Autumn Budget to extend the cut would help business plan ahead for 2021, protect more jobs and bolster the prospects of domestic tourism for the coming year. We will be pressing the case for this with more to come soon.

The extension of the business rates holiday is equally important; the prospect of this ending next April along with a rise in VAT would put many businesses in an extremely perilous position. With the social distancing restrictions that are currently in place, the return of business rates would cut deeper into operating margins. It would also hit those hospitality businesses in city centres hardest, which are already under extreme duress due to rent costs and low footfall. 

Targeted support in these areas, to reinforce this week’s welcome announcement of the extension of the eviction moratorium, would allow us to move through the next six months with a fighting chance. It’s still incredibly tough out there but with hospitality coming together and speaking with one voice, we can get back off the ropes. 
Kate Nicholls is chief executive of UKHospitality 
UKHospitality is a Propel BeatTheVirus campaign member
 

Not another QR code by Gary Goodman

From Friday (18 September), it is a lawful requirement that hospitality venues take every guests’ details for the NHS Test and Trace programme and, as of next week, they will need to do so via the NHS’ own Test and Trace app. 
 
Under the new guidelines, operators will need to display a QR code at their door linking to the NHS app, in order to gather guests’ details. But, with operators in Scotland and Wales required to also use a back-up service, and many businesses also implementing their own track-and-trace systems since reopening, does the requirement of yet another QR code muddy the water and complicate the process for both operators and guests, at a time when we know the success of the customer experience is absolutely paramount?
 
One of the many effects of the outbreak of covid-19 has been an increased need for simplicity. With restrictions on what we can and can’t do, where, when and with whom seemingly ever changing, the need for clarity and to provide reassurance has never been more critical. This is especially true for a covid-secure hospitality sector. Our own insight has backed this up, revealing that 60% of customers want simplicity when dining out.
 
Similarly, the latest data from the We Hear You campaign, a collaborative initiative driven by Yumpingo, CGA and UKHospitality to help the industry navigate the new normal by using guest feedback, also revealed that more than a third of diners felt their experience was negatively impacted by the new covid-19 safety procedures, but understood they were necessary. The balance between providing a reassuringly safe guest experience, and providing a seamless high-quality, memorable one is becoming an increasingly precarious challenge for operators. 
 
It is also vitally important that hospitality businesses continue to build on the positive guest experience delivered during Eat Out To Help Out and do not jeopardise it by complicating the customer journey. We have a real responsibility to keep our guests, our teams and our communities safe and well. NHS Test and Trace is a powerful way to do just that. It shows teams and guests the hospitality sector is professional, proactive and caring. It will enhance the sector’s reputation. Hopefully, this will also underpin the message that the industry is one worth the Government giving its continued support to.
 
With this in mind, we designed and launched a platform called Yumpingo Central to enable all operators to easily introduce new digital services that enhance and complement the guest experience across the hospitality industry. This means the guest only needs to use one QR code to access all the front-of-house digital services they require, such as the NHS app; a back-up track-and-trace app; menus; order and pay; and guest review facilities, to name a few.

Meeting the demand for concise signposting to vital information does not only streamline the guest experience, it also gathers actionable insights that will drive loyalty. This will be more important than ever as the industry navigates what everyone believes will be a tough period as we enter autumn and then winter, with government support schemes coming to an end.
 
Yes, the sector has adapted swiftly to the new norm, but that doesn’t mean, in the rush to do so, it hasn’t made mistakes. While this has happened, the guest’s digital experience has, in some cases, become congested with multiple QR codes, something that will be further exacerbated by the new track-and-trace requirements, and online touch points causing confusion and further impacting the anxiety some consumers are still feeling when going to dine out. Now we have got them back into premises again, the need to uncomplicate the digital journey has never been more important. 
 
This is a challenge the industry needs to tackle collectively. We’re passionate about working side-by-side with technology partners, operators, agencies and industry associations to participate and support in an orchestrated and united industry response to the challenges we face. It was this focus that led to the development of the We Hear You campaign, something that we plan to continue evolving over the coming months to generate actionable customer insight for operators. We’d very much like to speak to partners who’d like to collaborate with us. To register for Yumpingo Central for free click here and for the latest insight from the We Hear You initiative click here
Gary Goodman is chief executive and founder of Yumpingo
Yumpingo is a Propel BeatTheVirus campaign member
 

Pigs, chicken and fish – in a soup of uncertainty by David Read

In mid-December 2019, in an outrageous and almost unnoticed piece of irony, Public Health England announced there could be a large spike in flu cases over the holiday period and urged people to get a flu jab. Within days, the news of coronavirus in Wuhan emerged, and here we are nine months later – GDP having fallen by more than 20%, 370,000 UK cases, and over 41,000 official deaths. Flu typically kills about 10% of that number in the UK. Hospitality and foodservice has borne the brunt of the damage to profits and job losses, despite government support during the lock-down. We remain the most deeply impacted sector alongside travel, leisure and the performing arts.
 
Last month, referring to the huge problems in the food system caused by the sudden and almost complete shutdown of our sector, a report from the Environment, Food and Rural Affairs Committee criticised the UK government, and warned: “This disruption largely came from changing patterns of demand caused by government action, which is an unusual situation. Disruptions that reduce the supply of food to the UK, for example, because of a disorderly end to the Brexit transition period or climate change effects, will pose different, and potentially greater, challenges altogether.”

As we draw breath after our much-needed summer breaks, we would be well advised to note that the transition period has now just 15 weeks to run, and that “trade” is now very much back in the news, with (yes, you’ve guessed it) food very much up front and centre. A disorderly Brexit will bring with it availability and cost issues that will disrupt an already highly stressed supply chain. 
 
The desire to “take back control” of British waters was one of the key themes of the Brexit campaign, based on a long-standing view that quotas are stacked in favour of other EU nations within British coastal waters. Yet if things continue on the current track it could yet scupper a Brexit deal with the EU. 
 
The government wants to reverse the tables so that the vast majority of UK coastal fish will be landed by British fishermen, but neither has the capacity to catch all the fish now caught by EU fishermen, or enough patrol boats to police its waters. The most valuable part of the fishing industry is processing (mostly in pro-Brexit Grimsby), which, ironically, relies heavily on free trade. A recent study concluded that, without an EU free-trade deal, Britain would lose more from tariffs and non-tariff barriers on fish trade than it would gain from exclusive access to its own waters.
 
Either way, the very real possibility of fish (a sector worth just 0.1% of GDP) causing a no-deal Brexit now looms.
 
An American trade deal looks unlikely to come to the rescue at least in the short term. The US is particularly keen to export pork and chicken to the UK, but many of our consumers do not like the idea. As is so often the case, the problem has been simplified by the media to the words “chlorinated chicken”. But this is not the real problem. After all, we already drink water and eat lettuce treated with chlorine. The real problem is different approaches, philosophies, even values. Americans take a simple approach – if studies have not shown that practices like hormone injection to raise weight are harmful to the consumer then it is safe to eat. The evidence is there to support this stance as well – safety rates are broadly similar between the two nations. We continue to use a precautionary principle that looks not just at health, but also animal welfare, impact on soils, use of chemicals and the potential for issues from genetic interventions. We are moving towards harmony rather than competition with the land and natural systems in our nation. As a result, if a trade deal does bring cheap US meat to the UK, our own farmers will struggle to complete, which will drive them towards producing smaller quantities of much higher priced product, as has begun to happen already with beef.
 
All of this is set against a highly stressed food supply sector that is not even trying to cope with the new normal – it’s one step further back – simply trying to work out what the new normal really is. Ranging, volumes and drop sizes have been yo-yoing all over the place since the July restart and our suppliers have, at times, performed miracles to stave off complete meltdown. 
 
Efficient and low-cost supply relies on relative predictability. And between 2010 and 2020, we have enjoyed a decade of remarkable supply stability. But with more covid-19 uncertainty, a recession looming, weakened supplier balance sheets, international trade instability, a potentially weakened exchange rate, climate change impacts on supply, changes in food science and technology, and a real possibility of a no-deal Brexit, we are now well and truly into a period of fundamental change. It’s not just pigs, chicken and fish that are in a soup of uncertainty. 
 
There are too many moving parts to forecast the outcome at this stage. And, of course, it’s not all bad news. But what I can say with confidence right now is that we will see more change in our food system in the next few years than we have seen in decades.
David Read is founder and chairman of Prestige Purchasing
Prestige Purchasing is a Propel BeatTheVirus campaign member
 

Why subscription models will change hospitality by Prask Sutton 

A few months ago, which – let’s face it – is a lifetime in the current climate, I took part in one of Propel’s Supplier Perspective video interviews. I was asked about the growth in mobile ordering during the pandemic; what this will mean for businesses; as well as the likely future of the industry. I answered that both operators and the end-user would adapt to embrace technology more, but also, that it would lead to different ways for bars and restaurants to engage with their customers in terms of their frequency of visitation. I said we’ll see a shift in how people are paying for the things they consume regularly. 
 
I’m excited to see this come to fruition this week as Pret launches what it says is the UK’s first in-shop coffee subscription. Essentially, the YourPret Barista subscription coffee service will give customers up to five coffees a day for a £20 per month fee. 
 
Subscription models are nothing new. Apparently, they were first introduced as far back as the 17th century by authors to sell atlases, geographies, histories and works of literature. According to YouGov, an estimated 58 million people in the UK now buy into at least one subscription service — that’s about 90% of the adult population. Entertainment services such as Netflix and Amazon Prime lead the way in this space, with music and audiobooks through the likes of Spotify and Audible also being popular. But consumers can also join wine clubs; buy cosmetics; have monthly subscriptions to razors and beard oils; have clothes and sportswear sent to them; get hot and sweaty with an at-home gym class; the list goes on. So with the retail and digital industries effectively educating consumers on a new way to consume and pay for their services, in my mind, it was never much of a leap to see how the hospitality industry could follow.
 
What Pret has done is extremely clever. They’ve tapped into people’s buying behaviours at a moment in time when it feels most relevant. As people begin to take tentative steps in returning to their old routine, it acts as an enticement back to their regular coffee-run haunt. It gives the customer reassurance of a set price they can budget for (at a time when clearly every penny counts) but still gives them that “I’m getting a good deal” feeling. More than a stamp on a card or points on an app, Pret isn’t just ticking the “doing loyalty” box, but really questioning the status quo and being innovative in looking at how to improve its CRM programme. It has really considered the way things have been done before and thought about the problems that it wants to solve and what behaviours it needs to drive from its customers in order to solve them. In this case, it’s about driving footfall and repeat purchase at a time when people need a bit of a nudge. This is a great way to win at loyalty in a way that’s not been seen before in the UK and could be a game-changer in the world of CRM. 
 
I’ve watched with interest as models like this have grown in popularity in the US and I’m excited about the future of subscriptions within our sector in the UK. They offer a “no-brainer” to operators as they will have more control over their revenue with guaranteed repeat payments and deeper data and insights into their most loyal customers’ behaviours. A loyalty programme like this can become part of operators’ technology ecosystems, connecting customer data from various streams like never before. In essence, the CRM system will be able to connect to real-time ordering data, alongside data from Wi-Fi, social media, vouchers, loyalty, payment and customer feedback to help enhance the customer experience in previously unrealised ways. When done well, subscriptions are a win for the end-user too. In time, mobile transactions will become less functional and lead to much richer, more personalised experiences and interaction with the brands they choose to engage with, which is, of course, a huge driver of loyalty.
Prask Sutton is founder and chief executive of Wi5
Wi5 is a Propel BeatTheVirus campaign member

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