Two things before I start. Firstly, remind me to tell you what Sheila (that’s my lovely Mrs) told me the other day when she arrived home after lunch out with her sister. Secondly, apologies to any accountants called Colin.

Right, on to today’s subject: value engineering. This is the scenario – a pub company serves a really good gammon, egg and chips. Nice cut of gammon, two free-range eggs, and a decent portion of hand-cut chips. When the plate arrives, a customer can often be seen picking up a single crisp, piping-hot chip, dipping it into the golden, velvety yolk before popping it into their mouth – a hand mimes waving a fan. Then they rub both hands together with a child-like glee and get stuck in. Lovely. Sales of gammon, egg and chips are strong, and there are some lovely Instagram posts. All is good.

But hold on. Oh no, accountant Colin has just had a eureka moment. He has created a spreadsheet that reveals if the two large free-range eggs were changed to medium-sized grade B eggs, the company would make big savings.

Riding on the success of his first egg-related saving, keen-to-impress Colin is on a roll. He creates another spreadsheet that reveals serving only one egg would save even more.

Colin’s boss, also called Colin, is feeling left out, so he comes up with his own spreadsheet, revealing that if the chip portion is cut by 5.75%, the saving would help mitigate the headwinds and perfect storm of whatever the current sector crisis is.

The result of this accountant-based jiggery-pokery? The company is saving, the headwinds are dodged, value engineering has umbrellaed the storm, and the really good news: with each small change, nothing bad happens. The spreadsheets look good, and sales of gammon, egg and chips remain buoyant. Nice. 

And that’s often the case with accountant-based value engineering – nothing bad happens. Oh, until bad things start happening.

In the real world, the jiggery-pokery is beginning to be rumbled. The customer’s subconscious brain is picking up on the changes – the shift from a rich, golden-orange yolk to a slightly muted yellow one, the smaller portion of chips, or the lesser cut of gammon. The customer’s conscious brain takes longer to spot what’s going on, but as sure as eggs is eggs, boom, one day, the customer’s conscious brain catches up. And that’s when the “nothing bad happens” shifts to “bad things start happening”.

Customers stop dipping a single chip into the yolk and popping it into their mouths as an impromptu starter, and their hands are not rubbed in gleeful expectation before they eat. The sales of the once-star performer start to dip, there are fewer return visits, Instagram posts become unflattering, and as a result, there are fewer new customers in through the door. And then what happens? Colin suggests to mitigate the falling profit contribution from gammon, egg and chips, the price is increased.

That is spreadsheet value engineering with no emotional connection to the customer. A better approach may be to create an emotional attachment between the egg and the customer. Ask marketing to choose words to describe the rich, golden yolk in such a way that they tell customers: “We chose these top-quality eggs because we think you deserve them. They are a little more expensive, but you really do deserve them.” Marketers are good at creating emotional connections.

But what about the financial savings of reducing the two eggs to one? It does make financial sense. In this instance, can a second egg be offered at a price that is irresistible and satisfies both Colin and the customer?

And the fewer chips proposition? You could do the exact opposite. A “baker’s dozen” approach, like they do at Five Guys. There it gives you a full portion and adds another half shovel more for good measure. This delights its customers and must be a factor contributing to keeping customers coming back and the business expanding from one UK branch in 2013 to 150-plus today.

In summary, a reductionist, margin-driven mindset without an innovative emotional connection to customers can pay dividends in the short term but rarely in the long term.

That’s it for this Friday Opinion. Thanks for reading, and see you next time.

“What about the story of your lovely Mrs?”

Oh yes, thanks for the reminder.

Sheila returned home from her bi-weekly lunch with her sister and remarked that the restaurant they always go to “has really reduced its portions”. I know that’s a microscopic poll of my lovely Mrs and her sister, but to me it illustrates first-hand, that customers may not tell the operator they notice, but they do tell their friends and family. 

It’s not often I get to talk about the two loves of my life in the same sentence, but, today, the opportunity has arisen and I’m grabbing it by the proverbials. Music and hospitality, in case you were wondering…

The newly announced Oasis reunion tour hit the headlines for all the wrong reasons after tickets went on sale because of so-called “dynamic pricing” – though, strictly speaking, in this particular situation, it should be referred to as surge pricing. According to Britannica (which is now online, who knew?!), “dynamic pricing” is not the same as surge pricing. Contrary to popular misunderstanding, dynamic pricing isn't just about raising prices when demand exceeds supply – that's “surge pricing”. Dynamic pricing also includes lowering prices, “both when demand declines and during supply overages”. (is overages even a word?) Now, just to clear a couple of things up on behalf of the Gallagher brothers, the decision to use this pricing model won’t have been theirs – pricing sits with management, promotors and venues – it’s highly unlikely that Liam and Noel sat down with a calculator and ran through the figures. But, the counter argument is that they should have made it their business and should have “read the room” better and protected the fans from being ripped off by asking the question of their management at least.

But what has this to do with hospitality? Apart from the massive boost that pubs, bars and restaurants near the gig venues will get on gig-day, of course. Well, I’ve long been interested in how dynamic pricing could work in pubs, bars and restaurants – and yes, I do mean dynamic, not surge pricing. In my mind, we don’t use pricing enough in hospitality to drive footfall – not without just discounting our way to the bottom, having time-specific great value offers or margin-eroding promotions. 

Price has clearly become a bigger driver of customer behaviour over the last three months, with nearly half of those surveyed as part of KAM’s quarterly Plan to Plate study, conducted in conjunction with Paytronix, saying they’ve consciously tried to spend less money when they’re out in pubs, bars and restaurants, and one-in-three saying they are choosing cheaper food items and one-in-four picking cheaper drinks as a direct result.

It’s an age-old problem in the area of eating out – most consumers want to eat out on the same days and at the same times – meaning that the week can be a bit feast/famine – with dead periods and super-busy times. According to the Plan to Plate study, Friday and Saturday are still the most popular days of the week to eat out although Sundays increase in popularity as the winter months draw in, no doubt influenced by the great British Sunday lunch. We see the weekdays also being popular with the 55-plus age group and Fridays particularly popular with 18 to 34-year-olds.

So, what if we implemented “airline-style” pricing? KAM asked 1,000 consumers whether they would be willing to move their dinner reservation to a less popular time for a discount – and the response was overwhelmingly positive – particularly with the younger demographic. A total of 71% of 18 to 34-year-olds said that they would be likely/very likely to, while 51% of 35 to 54-year-olds and 37% of those aged 55-plus would accept a less popular dining time in exchange for a discount. 

Clearly this won’t work for every business – and hospitality must realise that there is an incredibly thin line between dynamic pricing and ripping off customers. A recent move by a pub in the Midlands to charge more for a pint after 11pm has gone down badly with locals who see it as opportunistic – complaints have included allegations that the owner thinks that once several beverages have been consumed on a Friday night, customers won’t notice the additional cost. The owner counteracts that by saying that, after 11pm, there are additional costs – door security for one.

Any pricing adjustments are likely to attract public scrutiny, making it essential that such strategies are fair, transparent, and mutually beneficial to both operators and customers. The last thing we need in this tough economic climate is our customers looking back in anger on their hospitality experience. 

As the 17:48 train pulled out of Paddington station on a recent Friday evening, my family and I were as far removed from a typical commuter train journey as could be. We’d taken this particular train because it is a very rare beast indeed in still including a Pullman dining car.

They operate only on weekdays for three lunch services and three dinners per day in and out of Paddington for operator GWR. With table clothes and waiter/waitress service it is the only smart restaurant-on-wheels you will find today beyond the likes of the Orient Express, The Royal Scotsman, the forthcoming Britannic Explorer, and other similar high-end luxury trains.

I know from personal experience that these famous trains are superb experiences and they have prices to match. For mere mortals they are certainly in the category reserved for celebrating extremely special occasions. They are not your regular timetabled service out of Paddington. My wife and I took the Orient Express to Venice as part of our honeymoon and it certainly set the standard for train travel and onboard dining. 

We’d also experienced some less high-end, but equally memorable, dining occasions when using European sleeper services including journeys to Vienna, Nice, Moscow, Barcelona as well as the service up to Scotland. My wife is no great fan of flying but I – and then also our children – have been more than happy to veto planes and instead travel by sleeper trains across Europe and enjoy a dinner in the dining car.

Such was the demand for these services 20 years ago that they typically employed two sittings. Since the later was invariably too late for us, and the service more erratic than the first sitting, my task was to seek out the attendant with a clipboard and put our names down for the earlier dinner sitting. While my wife took the luggage to check into the sleeper car, I’d dive straight into the bar and grab a couple of seats for a pre-dinner drink before the bar car became mobbed 20 minutes later.

Sadly over the years the sleeper services declined but I’m pleased to see they are currently enjoying something of a renaissance as a result of a combination of environmental priorities and also the fact it is simply such great fun. It’s so superior to the increasingly inconvenient and painful experience of flying. 

But what these returning trains have been lacking has been the dining experience of old. The restaurant-on-wheels experience that was commonplace across Europe has been replaced with more non-bookable café type set-ups with boring fast food. The cuisines used to reflect the country of the operator but this has become more homogenised over time with predictable food.

The fact the GWR Pullman dining cars fully reflect our earlier experiences makes them so exciting. And the fact they are on regular train services makes them even more of an enticing proposition. They remind me of the times when I would catch the train from Doncaster to London with my mother and we would always have the full English breakfast in the dining car. It was a not inconsiderable £7 per head (in the 1970s/1980s) but it was full-on silver service and we could generally keep things going for the bulk of the one hour 45 minute journey and into the smoke and avoid being sent to our seats in Standard.

The seasonal menu we experienced on our 17:48 service out of Paddington involved prices, with inflation, akin to those breakfasts all those years ago I reckon – with two courses for £37 and three courses for £44. The Panko breaded salmon with a half bottle of Chilean Sauvignon Blanc followed by a selection of British cheese accompanied by a glass of Reserve port and a coffee was a delightful way to spend an hour and 15 minutes made all the more appealing by the lovely service. 

It was a great shock to have to join the real world again as we disembarked at Bristol station while the dining car and the rest of the train trundled on to Swansea. It’s not often nowadays that you wish your train journey could be longer.

We largely had the dining car to ourselves on our trip, which undoubtedly partly reflects the fact the Pullman dining services seem to be an unknown phenomenon to most people. Shockingly GWR seems to do little to publicise this great dining experience beyond the announcement on the train that the dining car is now open – music to my ears. It’s clearly not something you would do every week but if I was a regular on those services then I’d have to partake every now and again – as a friend of mine does when journeying to and from Swansea.

All the talk nowadays is about the demand for richer experiences when people dine out. What can be richer than having scenery constantly change around you as you eat? More people need to know about it and hopefully this could lead to a move towards more proper on-train dining and the Pullman dining car-type services develop something of a following. I’d highly recommend it to anyone who wants to move beyond the trolley and at-table service with QR codes that predominate today. Back to the future please.