Propel Morning Briefing Mast Head CPL Learning Link Paul's Twitter Link Blacksheep Brewery Banner
Morning Briefing Strap Line
Fri 3rd Sep 2021 - Friday Opinion
Subjects: Show up for hospitality, connections, four key foundations for a resilient recovery, safeguarding your business in a cashless society
Authors: Olivia FitzGerald, Ann Elliott, Graeme Smith, Malcolm Muir

Show up for hospitality by Olivia FitzGerald

As the summer season ends, industry focus inevitably turns to Christmas. And one thing we can say with a degree of confidence in these uncertain times, is this Christmas really can’t be any worse than the last one. 

In fact, working on the assumption we have seen the end of government enforced hospitality lockdowns, it should be a whole lot better than 12 months previously. Pubs, bars and restaurants will hopefully see a return of the group parties and bookings that are responsible for such a huge slice of their annual profits. 

However, with advance bookings comes another issue that has been thrust under the spotlight since closed signs have been flipped to open – the dreaded no-shows. 

Through our own insight and research and in partnership with CGA, we found the cost of customers simply not turning up amounts to a staggering £17.6bn in lost revenue over the course of a year.

The survey found since hospitality reopened in April, 14% of customers who have made a booking failed to turn up for it without so much as a phone call or an email to cancel. And that’s before we even mention the cost of potentially perished stock, overstaffed businesses and the loss of goodwill from the customers who do bother to show, and wonder why you have empty tables in prime positions. Or, worse still, are turned away because you are expecting the arrival of a profitable group booking. 

It is a monumental issue and one that has to be addressed. 

That’s why at Zonal we have launched the #ShowUpForHospitality campaign and we hope individuals and businesses from across our sector will unite with us to tackle a very real problem. 

We have two aims with this initiative. Firstly, and most crucially, to educate customers. We know post-pandemic many have sympathy for the troubles the industry has endured and we want to seize this once-in-a-lifetime opportunity to harness this goodwill. Secondly, we want to help operators combat no-shows by providing insight, tools and tips to try and minimise the damage.

So, who are these customers that book but then leave you in the lurch? 

Well, without wanting to be overly critical of a demographic who have missed out more than most in hospitality’s total lockdown, the truth is the younger customers are, the more likely it is that they will be a no-show. 

Our research found 28% of those aged under 35 who booked since venues reopened in April have failed to show up for a booking. Compare that to those aged 55 and above and the figure drops to less than 2%. 

There are many factors driving this, but our research highlights the nature of your relationship and communication with these customers is key. While over the past 18 months the vast majority of people have experienced a rapid advance in their tech skills, it is still the younger generations who are more likely to find you, book, review, and even cancel via digital channels – rather than by picking up the phone.

It figures that if this is where they are spending their time, then to build loyalty and a relationship with them and ultimately prevent no-shows, businesses need to be present and active in the digital space. A simple interaction such as sending a text or email to confirm a booking a few days ahead of their arrival could make a world of difference – four in five consumers (83%) told us they prefer the personal touch and do not mind being contacted once they have made a booking.

And once you have started a digital interaction ahead of a booking you should maximise your opportunities to incentivise attendance through offers, tailored events or loyalty perks, be that through offers, tailored events or birthdays. 

Another method that can significantly reduce no-shows is taking a refundable deposit ahead of a booking. While many operators may instinctively feel taking cash in advance somehow goes against the spirit or traditions of hospitality, especially when it comes to casual dining, our recent research tells a different story post-pandemic.

It turns out most people (51%) would be happy to pay a deposit or “no-show fee” to secure a table with you. Another option would be to open-up pre-orders for any booking (not just the big occasions), these days consumers are often happy to pre-pay for their selection and even view this as improving the overall experience.

It ultimately comes down to building loyalty and taking full advantage of the technology tools available. Get it right now and not only will Christmas be fully booked with tables that you can rely on but the foundations will have been laid for many more repeat visits. 

Join the #ShowUpForHospitality campaign to make no-shows a thing of the past.
Olivia FitzGerald is chief sales and marketing officer at Zonal
Zonal is a Propel BeatTheVirus campaign member

Connections by Ann Elliott

I absolutely love the five non-executive roles I have – they provide challenge, critical thinking, comradeship and a sense of achievement – and I feel blessed to have them. Even with these roles though, I have had a sense that something has been missing in my working life since merging Elliotts with Fleet Street Communications more than a year ago. I didn't really know what this was and couldn't articulate it.

Then I had a chat with my brilliant ex-chairman Steve Wilkins, talked to my business coach, Sharman Hague, and spent some time at The Findhorn Foundation, a spiritual centre near Inverness. What has come through loud and clear is my need to connect people with one another. This brings me huge joy and deep personal satisfaction. Of course, I have done this all my working life but I hadn't realised quite how critical it was to my well-being, or how much I had missed it during covid, or appreciated how not being able to connect people because of covid led to feeling so low at the start of the third lockdown. It doesn't matter if it's one on one or groups of people, being able to connect others is part of who I am.

I know I am not alone in feeling this. Hospitality is full of those who want to connect. At its most basic most customers who come out to eat want to have some form of connection with those that serve them. And those that serve them are good at their jobs because they also like this sense of connection. Hospitality is an emotional experience – it's not just about the food, the service or the environment, it's about all these elements coming together so that guests feel better when they leave than when they arrived. Its human instinct and human emotion.

It's a sector too whose leaders tend, on the whole, to enjoy meeting others. That's probably why this crisis has hit many so hard on both a professional and a personal level.

Ages ago, at an industry event, I introduced the chief executives of the three leading coffee chains in the UK to one another. I remember feeling slightly uncomfortable as I did so thinking they would all laugh and say: “Thanks but no thanks, we already know one another well.” They didn't though because while they had all been at the same events at the same time in the past, they were always surrounded by other people – most of whom wanted to press a business card in their hands and say their piece. They had never really had the opportunity to talk among themselves without being disturbed. I learned a valuable lesson about making assumptions that day.

It's not always that easy either connecting suppliers to operators. I was once asked by the organiser of a sector lunch if I would introduce the chief executive of a potato products company to the chief executive of a multi-site operator. I thought the supplier knew the rules and wouldn't do the usual business card trick. Not a chance. When I introduced him, his opening gambit was: “Hi Richard, where do you get your chips from?” Another important lesson on assumptions.

So, connecting people can be a bit hit and miss. When it works though, and you can introduce people purposefully to one another who genuinely see the benefit in talking, then it's really wonderful. One-on-one connections can only really be made when there is a great deal of trust, understanding and genuine motivation. With group connections they work when there is a shared sense of purpose among like-minded people and those introducing clear out of the way, don't seek personal benefit and understand it's not their show.

This need to connect others is one of the main reasons I am looking forward so much to the Propel Multi Club Conference next week. It will just be fantastic to see so many people again who I haven't seen in so long and to connect them to others – hopefully.
Ann Elliott is a hospitality strategist, connector and adviser

Four key foundations for a resilient recovery by Graeme Smith

The welcome return of normal trading activity that followed after the removal of covid restrictions has been offset in recent weeks by staff shortages, supply chain issues and continued discussion of covid issues such as vaccine passports. This means the sector is far from out the woods and that, in our view, resilience will be a key watch word as businesses look to rebuild.

The government’s recently launched Hospitality Strategy highlights while structural issues and the unprecedented nature of the pandemic left the sector facing many challenges, it also demonstrated an incredible adaptability and resilience. As the sector recovers, the focus for management teams must be to build upon some of the positive and necessary changes implemented over the past year – and put in place strategies to increase business resilience in the face of future challenges.

There are many aspects to building resilience, but four key areas that we believe management teams should be focusing on are: 

1. Refining estate strategy
Many months of home working and the reality a more hybrid working model will be adapted by many businesses has placed even greater focus on operators’ estate strategy. At the same time, accelerated trends, such as delivery and click and collect, greater technology adaption and the move into retail, has meant a resilient estate strategy needs to take into account not just location but also physical site configuration due to the impact of omni-channel sales. 

How permanent the shift to hybrid working patterns will prove to be is not yet certain, but this crisis has highlighted the risk in prioritising one location type such as city centre business districts. The search for new sites can now be broader to add diversity but operators will need to be consider what changes may be necessary to their operating model to trade in, say, suburban locations compared with city centres. Expansion can now also come from the use of dark kitchen space (although the use of dark kitchens started before the pandemic and central production units have been around for a long time) either through collaboration with delivery groups or on a self-owned basis. Drive-thrus are also enjoying a renaissance with more and more operators in the quick service restaurant space exploring this location type. 

The growth of delivery and click and collect revenues has created the opportunity to increase sales density per site through reconfiguration. It is no longer the case that more covers equal more revenue. Having a larger kitchen area that can increase output at the busiest times can increase total revenues due to serving more off-premises sales, even if this comes at the expense of tables. 

It may even be possible to offset internal covers loss with the use of outside space, which became licensed during the pandemic. Nick Collins, chief executive of cafe bar operator Loungers, said recently the business is coming out of the crisis with a “better-balanced estate” and investment the group had made on outside space over the course of the crisis would benefit sales for the long-term.

2. Leveraging technology
Technology was already beginning to play a significant part in the sector’s development, but the pandemic has increased its adoption and scope of influence. Consumers have embraced enhanced mobile order and pay services, along with click and collect and digital menus, for example, and for many this tech is here to stay. I was struck by a stat I recently saw that well over half of 18 to 24-year-olds would prefer to continue ordering online even after the country has been vaccinated. Companies such as Pret and Itsu have invested in “stores of the future” to remove friction from the consumer journey and enable operational efficiency. Operators are learning digital channels should enhance, rather than replace, traditional models and also becoming more sophisticated in how they use the data they are mining to facilitate better scheduling to reduce labour costs and plan supply chains. 

The use of all this extra data to drive business improvement is only just beginning and we expect this to be a key area of focus in the coming years. Subscription models such as those recently introduced by Pret and Leon are further examples where technology has helped create new revenue streams and gain a greater understanding of customer behaviour and spend. The effective use of technology and data can help to make businesses more agile so they can adapt to changes in the market as they arise. 

3. Organisational resilience
A powerful spotlight has been shone on how companies treat their teams. The crisis provided the opportunity for many to reassess this crucial part of their business and discover whether their corporate culture was healthy or otherwise. A key part of this is how operators recruit, retain and reward staff – particularly in light of the current well-publicised labour shortages. Gastropub group Peach recently introduced a new profit share initiative changing the way it rewards its managers following the pandemic; Honest Burgers, the Active Partners-backed brand, has launched a scheme to help employees develop their own food and beverage concept ideas; premium bar operator Arc Inspirations is running an incentive trip to New York if the company hits its Ebitda target. There will be many more examples across the sector but never has the phrase “people are our greatest asset” rung truer. Having alignment between leadership and their teams has never been more important as this enables companies to react and adapt to changing markets and operational challenges. 

A great example of this is the current disruption being caused by supply chain issues. Whether this is down to covid, Brexit or industrial action is a moot point, the fact is it is a material problem facing many businesses and they need to adapt to deal with it. Higher product prices and restricted availability are causing issues at the coal face. This issue can’t all be solved centrally so companies where site level teams are empowered and aligned with the leadership team are better able to react and adapt at a local level. Actions we have seen taken at a site level include simplifying menu choices, finding alternative local suppliers, switching out ingredients or simple honesty with customers that for a short time certain items will just not be available. It has also thrown into sharp focus the need to have strong supplier relationships, many of which will have been damaged or bolstered during the crisis through operator behaviours. You need to look beyond your own company to assess resilience fully. 

4. Scenario planning
Businesses should be well versed in the need for scenario planning given the circumstances of the past 18 months. Restrictions may have been lifted but many senior sector figures are reporting volatile trading as consumer confidence remains shaky. No one really knows how it might bounce back and how consumers might behave as we move beyond summer and into autumn and winter. A further national lockdown would appear unlikely given the success of the vaccines in preventing serious illness – but this will be our first winter post-vaccine roll-out so it is not inconceivable that more local action might be taken. 

Operators should have in their drawer their contingency plans in the event of further disruption so they know the steps they need to take to cut costs and deal with their operational and financial stakeholders so that any bumps in the road can be absorbed. Less drastic scenarios should also be considered where certain revenue streams are slower to recover than expected such as city business districts or travel hubs. If this is the case, do further decisions need to be taken on site closures and a pivot to different location types in any expansion plan for example. 

The pandemic has been described as the ultimate test of resilience the sector has ever faced. All facets of individual businesses have been challenged, stretched, broken and reassembled – including the reputation of many a management team, brand and customer offer. The resilience shown by many operators over the past 18 months has been remarkable – more will be required as we enter the recovery phase.
Graeme Smith is a managing director and head of hospitality and leisure at AlixPartners
AlixPartners is a Propel BeatTheVirus campaign member

Safeguarding your business in a cashless society by Malcolm Muir

The sharp increase in the roll-out of contactless technologies such as ordering apps since the start of the pandemic, continues to evidence the wider trend towards cashless payment systems in hospitality. Where faster payments, secure transactions and better data collection were already great reasons to migrate, government guidance, which discouraged cash handling for the sake of customer safety during the pandemic, may have been the tipping point for many businesses to join the already enticing cashless trend. 

UK Finance predicts by 2026 cashless payments will be so popular that just 21% of all transactions will be made in cash. It all looks promising, yet as the industry edges closer towards the creation of a completely cashless society, it would be unwise for operators to jump on the bandwagon assuming they will now be free from all troubles and losses. The truth is, no matter how popular these contactless payment methods have become, there is a dark side to going cashless that many fail to recognise. 

Even cashless transactions are never 100% safe from losses
Although cashless systems remove risks associated with cash handling, revenue collected through cashless systems is still vulnerable to gaps in financial controls. Most operators would be shocked to see how easily abuse is missed unless they regularly monitor operational activities. 

As hospitality auditors, we have witnessed countless sites go cashless. Sadly, some continue to be exposed to perpetrators who simply find new ways to cheat the system because their fraudulent behaviour funds their extra income. Manipulation of service charges and tronc, as well as the insertion of rogue card machines, are just some of the latest methods through which fraud is committed. The only real way to spot anything untoward like this happening, is by specifically monitoring till variances and to dig deeper whenever anomalies or unusual activities are identified.

Cashless transactions cannot account for losses caused by human error 
Having collected quite some data during our observation audits, whereby we investigate and uncover underlying causes of serious stock losses for businesses, we have found 42% of recorded losses were due to staff error rather than any malicious attempt to extract money. 

Now more transactions are completed via delayed payment instead of an immediate revenue transaction, human error is having an even bigger impact on stock results than before. Most frequently it can be linked back to food and drink being left off bills by accident. Since the recruitment crisis, this has been exasperated by the introduction of less experienced staff who are even more likely to miss extra products and drinks from a table bill.

The lesson to learn is that reliance on automation does not always deliver the best results because all too often it can hide any traces of human error. To ensure these errors are uncovered before losses are incurred, my advice would be to task senior managers with the checking of bills before they are handed out to tables. Frequently checking compliance of service standards would be an additional step that would help to promote best practices and determine any training needs. 

Going cashless does not eliminate the use of cash in your business
While cash is still an option in society, any business that decides to go cashless will continue to be threatened with losses through the “convenience” of paying in cash. One common trend we have come across is some guests still want to pay with cash and will actively persuade staff to accept cash from them. With no means to enter it as revenue, it is simply pocketed by the staff. 

Tightening up internal policies, keeping close track of stock and cash movements, as well as escalating excessive stock losses to hold managers to account, would all be beneficial in eliminating the use of cash for payments. 

Portable card machines are a gateway to diverting money from your bank account
Card transactions may seem secure, but in our experience the direct access that managers are entrusted with, in combination with the frequent portable use of credit card machines can result in exploitation. During my time as a consultant, we have discovered tens of thousands of pounds worth of losses build up over the space of a year in some of the cases we investigated. 

Although relatively uncommon, the general lack of security that allows managers to use card machines to credit refunds to their own account can easily go unnoticed. Machines left in cupboards can give opportunists plenty of time to exploit a secure cashless system in obscurity. To reduce these risks it is wise to implement strict credit card protocols. Card machines that are integrated with tills can help too, but even then staff are able to bypass these processes. Adding levels of accountability and extra checks to monitor credit card statements regularly is certainly worth any operator’s time.
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
 
Knorr Banner
 
Trail Banner
 
Commercial Kitchen Banner
 
Strykk Banner
 
Knorr Banner
 
Greene King Banner
 
Jacuna Banner
 
Molson Coors Banner
 
Transition Banner
 
Amstel Banner
 
Zonal Banner
 
Casual Dining Show Banner
 
Propel Banner
 
Toggle Banner
 
Bizimply Banner
 
Zonal Banner
 
Heineken Banner
 
Taylors of Harrogate Banner
 
Sky Banner
 
Sharps Brewery Banner
 
KAM Media Banner
 
Access Banner
 
Startle Banner
 
Pago Banner
 
Veneers Banner
 
Just Eat Banner
 
Wireless Social Banner
 
Yapster Banner
 
John Gaunt Banner
 
COREcruitment Banner
 
 
Punch Taverns Link Punch Taverns Link
Stint Banner