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Morning Briefing for pub, restaurant and food wervice operators

Fri 30th May 2014 - Friday Opinion
Subjects: Old thinking, ignore teenagers and don’t write off the Cornish pasty, the pleasure principle and do’s and don’ts of executing loyalty programmes to enhance footfall
Authors: David Martin, Martyn Cornell, Paul Chase and Ben Chesser
   

Old thinking by David Martin   

It’s high time for some new old thinking, time for some age concern.
   
Baby Boomers – the so-called demographic “lump in the snake” – have exercised a disproportionate influence throughout their adult life. They’ve somehow always been centre-stage. From 50 to 68 years old this year, they’re a critical consumer group for restaurants – they were the first generation accustomed to eating out.
   
In the USA the share of foodservice traffic coming from older consumers has grown steadily in the last five years, while visits from Millennials (usually defined as those born since 1980) have declined, according to The NPD Group. The change is so marked, it says the 50+ population in the States is now eating out more often than younger diners, particularly affected by unemployment in the economic downturn.
   
I confess. I’m one of 15.3 million people in the UK the Boomer band. We account for around 30% of the 18+ population. Further up the line, there are another 6.3 million aged 70-84. And if you think they are past it, they include Keith Richards, and (despite it all) he is certainly no ‘broken hipster’.
   
In ten years’ time, the Boomers will contribute to a 28% projected increase in the number of 70-84 year olds compared to 2014, part of a fundamental shift in the structure of the population, where the number of pensioners in the UK is expected to grow by one third in the next 25 years, that’s an extra four million.
   
But that’s nothing compared to the 85+ population which in 25 years will hit 3.6 million, compared to only 1.4 million in 2012. How often do you ever consider them in your thinking? Meanwhile my parents, still occasionally dining out at the age of 90, both still happily visit a Vintage Inn – although I’m not sure they get the irony.
   
With my research hat on, I may be clinging onto the ‘Frisky Fifties’ but I am also sadly slipping into the highest age band in many surveys – age bands that have changed little if at all in my working lifetime, despite the massive change in the demographic structure of the population.
   
To take a high-profile and much-respected example, YouGov. Like any other research house it routinely breaks out data for the 18-24 population, which accounts for 12% of its total sample. But its top age band is 60+, which accounts for 28% of its survey samples.
   
We are supposed to be living in an era of one-to-one communication. So what logic is there for lumping together almost one in three of the population? That’s big data alright, but of no use at all. Not only that but many older consumers are not even included in market research because of the upper age limits applied. 
   
In a 2013 YouGov survey on pubs, of the people who said restaurants were where they most often go for social occasions, 36% were 60+. Yet this market is so often deemed not worthy of finer breakdown, or deeper insight. It’s a convention that’s outmoded.
   
Meanwhile the established conventions of work and retirement are crumbling. For many Boomers’ their finances (and their hopes of a long life) mean they are less willing (or able) to leave the workforce. Life expectancy at birth for their parents’ generation was around 60, but for Boomers it is around 70, and for children born today, it’s 80.
   
Society needs increasing numbers of older people to remain in some kind of paid work, and the hospitality sector will hopefully do its bit. By 2037, it is forecast there will be 2.74 workers for every retired person, compared to 3.21 last year. Unglamorously termed the Dependency Ratio, this time-bomb will be one of the most challenging political issues of the coming decades. 
   
But it’s not just a financial issue, it is also about attitudes and behaviours. Many Boomers, feel too young to fully retire (even if it is notoriously difficult for them to be rehired). As media man Mike Luckwell, who recently acquired the Readers Digest brand notes, “Over-50s have a very different life than they did 20 years ago. People over 65 are jumping out of aeroplanes now, it’s a younger type of audience with a ridiculously high proportion of the wealth and only ten percent of advertising.”
   
The older population in future will therefore increasingly be in what’s been called a ‘hybrid retirement’, mixing work and leisure into their 70s in many cases. For that reason, it’s time to challenge our conventional way of viewing these age groups. It’s no longer good enough to lump them all into a 60+ bucket, particularly when they are such a fundamentally large and influential market for so many eating out sectors – not least pub dining.
   
A recent report by the Centre for Economic and Business Research, commissioned for Saga, said over-50s spending accounted for 47% of UK household expenditure in 2012, (and well over 40% of restaurant and hotels spending). Saga clearly has an agenda, but in its response to the report, it observed that the generation born between 1945 and 1965, which began to reach state retirement age during the financial crisis, had “played a crucial part in lifting the UK out of recession.” And that’s despite the progressive deterioration in pensions in recent times. Maybe some of them are those notorious selfish SKI-ers (spending the kids’ inheritance) but it’s worth asking how the out of home food and drink market would have fared since 2008 if it had depended only on those ‘hard working families’ beloved by politicians, or on those under-employed young adults – many of whom are the Boomers’ own boomerang kids, who’ve returned to live at home since graduation.
   
So, when you next survey your customers, or analyse your customer data, remember to so some new-age old-thinking. Ask your agencies for more discrimination and insight into this large, vital and growing market.
   
Some say 70 is the new 50. (I’m banking on it). We Boomers aren’t going to go quietly. We’ll be bringing our own wheels to your meals. The booming population of older consumers will still be centre-stage. Ignore them at your peril.
David Martin is a director of market insights firm Red Circle 
   

Ignore teenagers and don’t write off the Cornish pasty by Martyn Cornell

In the course of a lengthy article in The Observer on Sunday about how BBC Radio 1 chooses its playlist, one particular fact stuck out, at least to me. The station is criticised for having too old an audience – but Radio 1’s head of music, George Ergatoudis, revealed that if you look at the list of the 1,000 favourite artists for today’s 13-year-olds, and the 1,000 favourite artists for today’s 60-year-olds, there is a 40% overlap. The implication is that two out of five songs the station plays will be liked by both 13-year-olds and their grandparents.
   
I don’t know what it was like when you were 13, but I hit my teens when the Rolling Stones and the Beatles were causing maximum outrage among the older generations, and I feel pretty confident that while I – and my contemporaries – rejected any music much older than a couple of years, and reviled the musical taste of my parents, never mind my grandparents, similarly those in their 60s in the 1960s had no time for that decade’s contemporary music. There was no overlap at all. Someone who was 60 in 1967 had been 13 in 1920, when the top musical artists were Paul Whiteman, Al Jolson, Eddie Cantor and the Original Dixieland Jazz Band: names no 1967 13-year-old had ever heard of. Conversely, 1967’s big hits held no appear to 1967’s 60-year-olds. But if you look at 1967’s best-sellers – Procol Harum’s Whiter Shade of Pale, the Monkees’ I’m a Believer, the Doors’ Light My Fire, the Beatles’ Strawberry Fields Forever – you can, I think, imagine one of today’s 13-year-old appreciating any of them much more than I would have appreciated Al Jolson singing “I’ve got my Captain working for me now”.
   
The reason why 50-year-old music today is far more acceptable to today’s young audiences than 50-year-old music in the 1960s would have been acceptable to 1960s teenagers, I believe, is because somewhere around 1945 or so there was one of those rare caesuras in taste, a complete break, where everything changed, so that what was popular before among all age-groups was no longer popular among those who followed. You can see those kinds of historical breaks in all sorts of phenomena: in fashion, where, for example, trousers replaced breeches in the early 19th century, and hat-wearing as a general habit vanished some time around 1955, or the way the duvet totally replaced the multiple layers of blankets on British beds from the 1970s, or the way British drinkers switched in only 15 years or so from mild and bitter to lager. And if you believe a survey by the hotel company Travelodge, the same phenomenon is about to happen with food: dishes such as Cornish pasties, Cumberland sausages and black pudding will become like Al Jolson, breeches and blankets, spurned by the young, vanishing from sight, to be remembered only by social historians.
   
According to the “Flavours of Britain” survey of 1,000 children carried out by Travelodge, almost six out of ten British children have never eaten a Cornish pasty, while three out of four have never tried a Devonshire cream tea (with nearly half not knowing what a cream tea is, and nearly a quarter of children thinking a cream tea is a cup of tea topped off with whipped cream), seven out of ten have never tried a Cumberland sausage, nine out of ten British children have never tried haggis, the national dish of Scotland (nearly half admitted they had never even heard of haggis) and eight out of ten children have never tried black pudding.
   
Instead their favourite foods included among the top ten pizza, chicken tikka masala, Chinese stir fry, burger and chips and waffles: none “traditional” British dishes. According to the Daily Mirror, the result is that “the Cornish Pasty faces extinction”.
   
But is this really one of those breaks in history, where a generation suddenly abandons everything its parents and grandparents had held irreplaceable, like breeches and pints of mild, and takes off in a new, trouser-wearing, lager-drinking direction? Are many British foods really set for extinction, to be replaced by what were, to our grandparents, either totally unknown or strange and rare? (back when the Beatles were getting started, pizza still had to be explained on British menus as “Italian Welsh rarebit”). Let me give you another snippet on the tastes of young teenagers. My daughter, now just 15, assures me she will never, ever drink tea or coffee – can’t stand the tastes. Should investors in Caffe Nero and Starbucks sell up now? No, of course not: I’d put a very large amount of money indeed on her being a committed caffeinophile by the time she is in her second year at university.
   
Young tastes change. Of course children today haven’t eaten foods like black pudding, or haggis, or even Cornish pasties: they haven’t drunk single malt whisky, been to the opera or gone to a five-day test match yet, either. They’re children. You cannot tell from what a 13-year-old likes now what they are going to enjoy as adults. As it happens, I ended up appreciating much of the music my father enjoyed – Frank Sinatra, Ella Fitzgerald – as I grew older, and I even bought a Paul Whiteman record, once I discovered Bix Beiderbeck. The Cornish pasty is safe yet.
Martyn Cornell is managing editor of Propel Info
   

The pleasure principle by Paul Chase

Nothing illustrates better the confusion between medicine and morals than the controversy over e-cigarettes. Are they a gateway to smoking the real thing, or do they help you kick the butt? Does “vaping” renormalise smoking because the user is engaging in a smoking-like activity? And will the sight of this lead to children who have never smoked taking up the habit?
   
According to ASH (Action on Smoking and Health), the number of people in the UK who use e-cigarettes has tripled over the past two years to 2.1 million; it says that just over half of current smokers have tried e-cigarettes, compared with just one in 12 in 2010. ASH, which surveyed 12,000 adult smokers, said that some 700,000 e-cigarette users are thought to be ex-smokers and 1.3 million are using them alongside traditional cigarettes and roll-your-own. Use of e-cigarettes among people who have never smoked is just 1% of the total. Study leader Professor Robert West said: “Despite claims that use of electronic cigarettes risks renormalising smoking, we found no evidence to support this view.” And e-cigarette use is now overtaking patches and nicotine gum as a means of cutting down or giving up.
   
So, you would think that if even ASH is putting a positive spin on this, then the public health community, and our various parliaments, would be embracing this as a private sector solution to a public health problem. Well, this is where the New Puritans in and out of parliament start to get twitchy. Using nicotine is something that gives people pleasure, and therefore inherently suspect. And nicotine is an “addictive substance”, so the default position is to reach for the regulations, get e-cigs licensed as a medicine, and therefore free on the NHS. But people are perfectly happy to pay – particularly as they are much cheaper than tobacco products – so why burden the NHS and ultimately the taxpayer in this way?
   
It seems we cannot get away from the proposition that if people use a substance for pleasure it must be bad for them, even if most of the nasties contained in tobacco are eliminated by this new delivery system. I attended the Pro-Retail Show in Telford last week, and one of my colleagues, who is a smoker, got samples of seven different types of electronic cigarette. They ranged from those that looked like traditional fags to those that looked like a mini-hookah or the type of cigarette holder that Noel Coward used to sport! I think public opinion is way ahead of political opinion on this one, and that the public is simply turned off by finger-wagging claims from those who fret about the messages all this sends out.
   
For the licensed trade, I think that vaping provides an opportunity to win back some of the business lost through the smoking ban. But how many pubs have signs outside them saying “Vapers welcome here”? I understand the issues about confusion between tobacco smoking and vaping, and should we ask vapers to go outside with their tobacco-smoking comrades, but surely we can tell the difference between the two? I suspect that the more popular vaping becomes, the more difficult it will be for the authorities to regulate this activity.
   
Meanwhile the regulation of alcohol continues to exercise those trying to save us from ourselves. The much-heralded ban on below-cost selling comes into force on 28 May. Touted as an alternative to minimum unit pricing (MUP), this measure is unlikely to appease the neo-prohibitionists, for whom the achievement of MUP has become a battle whose symbolic significance is as important as its practical consequences. They remain frustrated and angry at the referral of this measure to the European Court of Justice (ECJ) and so we see a shift to localism. Some 30 local councils have consulted together over the introduction of a bye-law in their respective jurisdictions that would see a minimum price introduced locally. The Welsh Assembly is consulting over the introduction of MUP, a measure they do not have the authority to introduce in any event. The absurdity of the localism approach, at a time when the highest civil court in Scotland has referred this matter to the ECJ, just illustrates what can go wrong when small minds wrestle with big problems.
Paul Chase is a director of CPL Training and a leading commentator on on-trade alcohol and health policy 
   

Checklist – do’s and don’ts of executing loyalty programmes to enhance footfall by Ben Chesser

Customer loyalty marketing is undoubtedly having a profound effect on the revenues of businesses in a variety of arenas. The 21st century consumer is more empowered and influential than ever before – studies show that customers want to be loyal and want to be rewarded for their loyalty, so loyalty schemes have not only become more prevalent but also entirely expected by consumers, with expectations high.
   
Loyalty schemes work well across many sectors, including hospitality. Programmes have become much more sophisticated and can serve a variety of functions – but there are some fundamental rules that underpin loyalty marketing which should be considered for any pub or restaurant owner or operator. Ben Chesser, chief executive at the leading loyalty marketing software provider Footfall123, provides the definitive checklist.
   
Keep it simple
Implementing overly-complicated loyalty schemes that customers don’t quite understand will simply cause them to disengage. Our experience is that while “tiered” loyalty or clever point systems work well in some sectors, customers generally respond better to clear, simple, and what they perceive to be immediate rewards.
   
Communication across multiple channels is vital
Loyalty sometimes can be a fickle area and consumers need to be regularly reminded of great offers and benefits. Social media is a powerful medium but utilise emails, apps and whatever else you feel will allow you to spread the word.
   
Staff engagement is as crucial as customer engagement
They are the ones who drive enthusiasm and help communicate the rewards. Clients in the pub sector have found that incentivising their staff to sell loyalty cards through monetary “prize” rewards or early finishes has worked very well.
   
Strike a balance to achieve appeal without impacting too much on gross profit margins
“Buy ten pints and get the 11th pint” free is a proportionate offer, encouraging people to drink more as they creep towards the reward, but makes only a slight impact on gross profit margins. We have seen this prove hugely popular with our clients and their customers; to highlight just one, the Portland Arms in Cambridge reported seeing a 16% uplift in like-for-like sales using this tactic.
   
Get off to a flying start
When launching a loyalty scheme, a strong start with bold offers is best. Flying starts produce valuable word-of-mouth promotion, achieve customer buy-in on the loyalty concept from the outset and get customers used to looking out for fantastic rewards. Stuttering starts are hard to recover from.
   
Go for popularity at launch
Launch offers need to be relevant for people to buy in, so stick with increased sales on products that already prove popular. Once a scheme is established, offers can be more targeted, and look to change and steer future buying behaviour towards higher margin products. By the established stage, many consumers will be emotionally loyal and more receptive to some gentle direction.
   
Include customers en masse at launch
Include all of your customer base with launch offers, whether they be a food or drink customer, to cross-sell your offering (for food/drink outlets). With mass buy in/sign-up, there is an opportunity to later target and steer a variety of groups. Pubs, for instance, often look for ways to improve sales on their profitable restaurant food, and running offers to bar drinkers works well. Higher bar footfall and improved loyalty engagement among drinkers would give staff opportunity to highlight the food promotions and drive through and convert more people into restaurant lovers.
   
Test your offer technology
Choose a product which allows for the setting up of creative and secure promotions. After creating an offer, best practice would be to test and ensure everything is set up as you would like.
   
One-off offers for newcomers
For all new people signing up throughout the life of the loyalty scheme, the offer needs to be a no-brainer in the eyes of the customer, to encourage signup there and then (and in turn secure their details for your database). A 50% discount on a pint or glass of wine is a tried and tested tactic resulting, in our experience, in a huge demand for cards, even where customers had no intention to return up until that point. The relatively small cost to run this could provide the starting point to some profitable customer relationships.
   
Avoid time restrictions
Time restrictions on offers are distracting; customers should be thinking about the great offers they have access to, rather than thinking about the others and whether they are likely to be running.
Ben Chesser is chief executive at Footfall 123, which he founded in 2011 to provide industry-leading loyalty marketing software to help clients develop deeper, more loyal relationships with their customers and brand advocates. He has more than ten years’ experience in the promotional marketing field

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