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Morning Briefing Strap Line
Fri 12th Aug 2022 - Friday Opinion
Subjects: Pre-order is a major missed opportunity for foodservice companies, the mess we’re in, customer experience has never been so important, the importance of hospitality in workspaces of the future
Authors: Glynn Davis, Paul Chase, Dan Hawkie, Charlotte Wild

Pre-order is a major missed opportunity for foodservice companies by Glynn Davis

A friend once told me about his parents who, rather bizarrely, dined for a couple of decades at the same Indian restaurant in West London every Sunday lunchtime, seated at the same table, and eating exactly the same dishes. While this sounds a little extreme to me, I understand there are many people who enjoy pretty much the same takeaway meals at the same time each week from their preferred restaurants.
 
When David Buttress was running Just Eat, he expressed great surprise to me at just how predictable so many of his customers were with their timings and menu selections, as well as loyalty to certain brands. If their order failed to come in as expected, it was pretty much the case that they had gone on holiday.
 
What’s surprising is that this widespread habitual behaviour in the takeaway food industry has not been harnessed for the economic benefit of restaurants and helped them make food delivery more of a financial success rather than something that seems to predominantly involve them handing over commissions to the delivery companies and losing the relationship with the customer.
 
People have simply become conditioned to the on-demand scenario. It’s become the norm to place an order with the expectation that there will a knock on the door in about 30 minutes from a courier bearing hot food. Does it have to be this way? What if pre-orders could become part of the mix, with customers placing their orders for a specified time the following day, or even some days into the future?
 
Such a scenario certainly offers various potential benefits to foodservice companies, including the ability to more easily plan ahead and thereby reduce waste as a result of the greater visibility of future orders. This can be factored into prepping times, and the more efficient management of people within the kitchen. There is also a greater certainty for customers of being able to secure a delivery slot for their preferred day and time, which can be problematic on Friday and Saturday evenings.
 
The visibility of future orders would clearly make it possible for restaurants to plan their logistics with more certainty, and potentially even invest in their own delivery couriers. This has been the case with Crosstown Doughnuts (sister company of online ordering platform Slerp), which uses its own fleet of drivers for pre-orders within London, but for on-demand orders, still relies on Deliveroo couriers.
 
JP Then, founder of Crosstown and Slerp, reckons pre-order is a major missed opportunity for foodservice companies, especially as it is a way to drive-up orders directly from their own websites rather than via those of the likes of Deliveroo and Uber Eats. This clearly comes with financial benefits of cutting out the hefty commissions, and it gives the restaurant control of the link with the customer. 
 
Within Crosstown and at other Slerp customers, the pre-orders are often linked to the marketing calendar, whereby special dishes and limited-run menus for forthcoming events like Father’s Day and The Fourth of July have all sold out on pre-order. Limited edition menus and specials are clearly a great way to tempt customers into switching some of their on-demand orders to pre-orders. There is also the opportunity to incentivise customers to pre-order by offering rewards via loyalty programmes, or how about a subscription-type proposition, where four Friday night Indian meals ordered ahead comes with a discount or other reward?
 
Crosstown has also found pre-orders are, on average, higher value than on-demand because they typically involve more thought put into the selection of dishes. The average might also be helped by the fact large catering orders have to be pre-ordered. This is also the case with Azzurri Group, where each of its brands, Coco di Mama, Zizzi and Ask Italian, require large orders to be placed at least a day in advance, but the company does not currently see a place for pre-ordering of smaller orders within its brands.
 
Clearly, pushing pre-orders will not suit every business out there. But with the many operational and financial upsides they can bring to the economically fragile delivery channel, it must be at least worth an investigation by more restaurants and food brands.
Glynn Davis is a leading commentator on retail trends
 

The mess we’re in by Paul Chase

Inflation stalks the land like an economic plague that is eroding the value of earnings and savings and raising the cost of doing business. When people from our sector ask me what the answer is, I always reply that it depends on what they think the question is. Short-term measures like VAT cuts for the sector may provide much needed temporary relief, but they don’t address the root cause of inflation. It is my contention that the Bank of England (BoE) does not understand the root cause of inflation, which is their own mismanagement of monetary demand. Instead, they blame cost-push price rises from abroad, which provide handy excuses for their own failures and those of their political masters.
 
The cost of dealing with covid, which included, but was by no means limited to, the cost of lockdowns, couldn’t be financed from Treasury tax receipts. So initially, the BoE undertook direct monetary financing through the government’s Ways and Means ‘overdraft’ facility at the bank, but then used quantitative easing (QE) as an indirect form of monetary financing. Government then fired this money into the bank accounts of households and businesses like pubs and bars to keep them going during lockdowns and restricted periods of trading. 
 
In normal times, the quantity of money expands by about 2-4% a year. In 2020-21, it expanded by 15%, and 18 months down the line, this has manifested as inflation – a rise in the overall level of prices. The only economists who predicted this from the outset were the monetarists. The Keynesians, sitting in their comfortable swivel chairs in the BoE, consistently underestimated both the scale of the inflation problem and its likely duration. They lacked, or rejected, the intellectual tools needed to get it right. So below, I publish an open letter to the Tory Party leadership contenders, and to Andrew Bailey, the hapless governor of the BoE:
 
Gentlemen and Madam,
 
When you get to grips with inflation, please concentrate on the quantity of money rather than the price of it. And be honest about the trade-offs – there are no pain-free solutions to double digit inflation. Recognise that BoE mismanagement of the growth of money – necessary though it was to get us through a short-term crisis – is the core of the problem. Re-examine the Quantity Theory of Money and let this be a guide to your economic policy decisions. To help you, I’ve provided a simple explanation:
 
NODDY’S GUIDE TO THE QUANTITY THEORY OF MONEY, or… INFLATION FOR DUMMIES – IN FOUR EASY STEPS
 
So, monetarist economists believe that the root cause of inflation is excessive monetary growth – ‘broad money’ growing faster than growth in the output capacity of the economy, or more money chasing fewer goods. That’s the only thing that can cause an increase in the average price level, apart from an increase in the speed money moves around in exchange (the velocity of exchange), which tends to be stable long term. In the absence of excessive monetary growth, supply shocks – like a rise in the cost of oil and gas – can only increase relative prices. Here’s how that theory works:
 
1. Suppose we have an economy in which energy is 25% of total things bought, and other costs are 75%. And suppose this economy has 100 gold coins and each gold coin is permitted to be used once a day (so, now we know the quantity of money, and the speed it moves around in exchange).
2. So, the price of energy is 25 gold coins, the price of everything else is 75, and the total price level is 100.
3. Then suppose the price of energy doubles, so instead of it being 25% of all costs it becomes 40% (50/125 x 100/1 = 40). Will there be inflation – an increase in the average price level? No! What happens is that 40 gold coins are used to pay for the energy and 60 to pay for everything else. 
4. Hang on! 60 to pay for everything else? So, the price of everything else goes down because the energy price went up? Yes – all that a sectoral cost increase does is redistribute a percentage of the existing stock of money from one set of expenditures to others. The quantity of money hasn’t changed, so the price of other things must fall.
 
DISINFLATION FOR DUMMIES – IN THREE EASY STEPS
 
1. Suppose someone said: “We think we need to cure inflation – to ‘disinflate’ the economy by reducing the quantity of money. So, let’s halve the number of gold coins to 50.” A smartass responds: “Ah, but energy price rises didn’t happen because of inflation – that Putin’s fault, so cutting the number of gold coins can’t make prices fall!” Is he right? 
2. Answer: No. If the number of gold coins falls to 50, then 20 will be used to pay for the energy and 30 will be used to pay for everything else. The fact energy costs rose doesn’t tell us anything about whether cutting the money stock would affect the price level.
3. The same is true for inflation in the UK today. The fact energy prices have risen does not mean that tightening monetary policy (e.g., by raising interest rates or the amount of money banks must keep in reserve) will not affect inflation. Energy price rises are relative price rises. The inflation rate measures the movement in average prices.
So, when you hear the Governor of the Bank of England blaming Russia’s invasion of Ukraine and the external shock of increased energy costs for inflation – but forgetting to mention that he facilitated the UK government’s over-spending on Covid with over £400bn of QE money printing – then you know you’re listening to utter bunkum.
 
You’re welcome.
 
Yours sincerely
 
Paul Chase
 
Final thoughts: Firstly, my thanks to Andrew Lilico – journalist, executive director and principal of Europe Economics – whose recent Twitter thread provided the basis for the simple explanation of inflation used above. He, and fellow economists Prof. J.B. Hearn and Tim Goldfinch, ought to be on the Bank of England’s Monetary Policy Committee, and the first job of whoever wins the Tory leadership race is to clear out the whole cabal of Keynesian economists at the BoE who have spent their entire careers getting things wrong.
Paul Chase is director of Chase Consultancy and a leading industry commentator on alcohol and health

Customer experience has never been so important by Dan Hawkie

Arguably one of the hardest hit industries following coronavirus, hospitality has been faced with hurdle after hurdle over the last few years, each one seemingly higher than the last. The cost-of-living crisis, staff shortages, Brexit and the war against Ukraine have all been factors leading to 64% of the biggest restaurant companies currently making a loss, according to the accountancy firm UHY Hacker Young.
 
The constant setbacks over the last few years have been understandably tiring for many hospitality venue businesses. But now, more than ever, the industry must come together and ensure customer experience is prioritised, to demonstrate just how valuable hospitality venues are for communities and the wellbeing of individuals – and crucially, to secure repeat businesses during these challenging economic times.
 
Each year, we at Feed it Back conduct our industry pulse survey, where we assess consumer attitudes and sentiment towards food and drink venues. We question almost 60,000 consumers on everything from their preferred booking experiences to the type of service they like or don’t like, and how they feel about relevant government policy such as this year’s calorie labelling requirements. Given the uncertainty around the rising cost of living, the results this year were highly anticipated.
 
So, what were the biggest bugbears facing customers this year that venues should be aware of and act upon? With the rise of online booking systems, this was a considerable factor in the process of eating/drinking out for consumers, as well as the in-person interactions customers had once they arrived at the restaurants. 
 
The booking experience
It is becoming more apparent that not having instant online booking set up is becoming a disadvantage for venues. No longer a unique selling point in hospitality, the study revealed that six out of ten guests were less likely to book a venue if it didn’t offer instant booking on the website. Now an expected feature on websites of hospitality venues, more streamlined and accessible booking systems not only increases the amount of covers they’re able to serve by optimising placement and timings of bookings, but will also increase footfall due to convenience in the dining out experience. Similarly, as 82% of consumers questioned book venues on their mobile phones, with 25% of guests wanting to see the menu before booking, having the digital infrastructure to allow this is no longer a nice-to-have, but an absolute must to attract consumers. 
 
The argument for deposits
Deposits divide opinion. On the one hand, they have been instrumental in curbing the issue of no-shows since the pandemic, which otherwise would have led to unnecessary staff working shifts, walk-ins being turned away in expectation of bookings and overestimation of how much food is needed each week/month. On the other, however, its apparent deposits can impact consumer bookings. In our research, we found that six out of ten guests are less likely to book a venue when a deposit is required. There is no arguing that deposits are a valid practice when utilising online booking systems to protect your business from these risks. However, deciding whether it’s right for a venue must be done on a case-by-case basis. By effectively and clearly communicating why your venue has implemented deposits, and clarifying that deposits are refundable if a booking needs to be cancelled, this can improve perceptions of deposits and make potential consumers more open to paying them to secure their booking.
 
Five-star service is still key 
While 31% of guests research venues on Google before deciding to book and attend, the real experience and reputation building begins once customers walk through the door. While online features are a strength when getting customers to book, once at the restaurant, it’s clear that people want a more hands-on approach. Safety is, of course priority number one. But after two years of lockdowns and restricted socialisation, we have seen that older demographics are more apprehensive to adopt order and pay systems, and there is a common misconception that this will take away from the service experience. However, it is important to highlight that utilising technology can improve the speed and overall experience of customer service if the right balance is found between the two. 
 
McDonald’s is a key example of this, as the company introduced digital ordering not to save on costs, but to improve the customer experience. Customers now have the choice between ordering at the counter, via kiosks or ordering ahead via their mobile phone, even enabling McDonald’s to offer table service – something not available some five to ten years ago – and many families have embraced this. Knowing your customers and what they want is key to driving five-star service. Pubs with outdoor seating implementing digital ordering and/or paying can improve service levels and drive sales. The same for quick service restaurants where people want to be served quickly and efficiently, whereas premium dining outlets with complex menus and offerings may not be front of mind when implementing this kind of technology.
 
The impact of calorie labelling
Another potential bugbear we questioned consumers about was calorie labelling on menus. The publication of calories on menus was a heavily discussed and controversial move in the UK, with concerns about the impact on those battling eating disorders and people choosing to avoid dining out due to the new information. However, it has been revealed that the availability of low-calorie dishes doesn’t impact most customers, with 74% stating low-calorie options on the menu don’t make them any more or less likely to book a venue. It appears that while visible calorie information is impacting choices within a restaurant to a degree (with 31% stating they’d be somewhat likely to change their dish based on viewing the calories), it isn’t reducing the amount many people are dining out, which will no doubt provide a sigh of relief for many food venues.  
 
As venues across the UK battle staff shortages while maintaining high speed of service with good quality food, communication with customers is crucial in order to learn how to cope with the constantly changing landscape of hospitality. While government support is desperately needed, until these issues are solved, it appears restaurants, bars and hotels must make sure customer experience is prioritised more than ever before.
Dan Hawkie is managing director of Feed it Back
 

The importance of hospitality in workspaces of the future by Charlotte Wild

At Bruntwood Works, hospitality has come to form an integral part of our workspace offering. It’s long been clear that hospitality is absolutely key in terms of what customers want and expect from their workplace community. That’s why we’re so excited to be launching the biggest hospitality offering that we’ve ever created within a workplace setting, at The Plaza in Liverpool.
 
As our reimagined building nears completion, our partners, independent operators Graffiti Spirit Group (GSG), are gearing up to open a very special restaurant and bar on the ground floor later this year. The GSG-operated restaurant and bar will take over the entire ground floor of the building, creating an impressive arrival experience that’s built entirely around food and drink. It will be a destination in its own right – a beautiful restaurant and bar which will join their Bold Street Coffee shop (opened earlier this year), all on the same site, and all delivered by one the city’s most innovative independent operators.  
 
This ambitious project showcases just how central hospitality is to our workspaces of the future. Since the pandemic and the huge increase in flexible working, people expect even more from their place of work and have a much bigger expectation in terms of what they get out of their time in the office. Far from being a daily grind, for many, the voyage into the office is now a valuable experience – a social escape, a chance to catch up with teams, and as part of that, hospitality is even more important.  
 
The Plaza will be our first “Pioneer” building in Liverpool.  This is our £200m programme of forward-thinking workspaces blending work and lifestyle, and all include an elevated hospitality offering in collaboration with an independent partner. From the community we have built at Bloc in Manchester, which includes a cafe and sourdough bakery by Trove and a BrewDog Bar and Hotel, to rooftop restaurant Climat at Blackfriars in the same city, these partnerships are a key pillar in creating the communities that are at the heart of our workplaces of the future.

We were already heavily invested in hospitality pre-covid, and now we’ve taken it all to a new level. Not only with ambitious projects such as The Plaza, but by elevating certain aspects of the existing hospitality experience. For instance, employing community hosts with a hospitality background, and with other lifestyle additions like gym/studio space, physio, massage, coaching, relaxation spaces and even a sleep pod (at our Bloc building in Manchester). 

Wellbeing has always been absolutely central to what we do at Bruntwood Works, way before the pandemic, but an extension of this proposition also feeds into a wider trend and a shift in perception.

We are so much more focused on health and wellbeing as a nation, and hospitality is a huge part of this. 

People are more aware that it’s a good idea to take 30 minutes away from their desk, to share a nutritious lunch with colleagues and friends. It’s even more appealing if it’s produced with care by a local and independent business as customers have become more focused on shopping local and supporting indie operators. Across all our buildings, we’ve deliberately partnered with a local independent business, which in turn helps them grow in their own city. 
 
The Plaza will be incredible and a real game changer for Bruntwood Works as we bring hospitality right into the heart of the workplace. In design and style, it is also different to anything we’ve seen in Liverpool, with a 60s-inspired design mixed with modern textures. Mirroring our overall approach at Bruntwood Works, it’s learning from the past to be prepared for the future. 
Charlotte Wild is head of retail at property providers Bruntwood Works

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