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Morning Briefing Strap Line
Fri 9th Sep 2016 - Friday Opinion
Subjects: The changing dynamics of the UK burger market, A lesson from history not learnt, Brexit – hospitality entrepreneurs can benefit on both sides of the pond, and How to get retail design right
Authors: Glynn Davis, Paul Chase, Dan Einzig, and Georgia Hall

The changing dynamics of the UK burger market by Glynn Davis

When US burger chain Wendy’s pulled out of the UK in 2000 it looked like this town wasn’t big enough for three burger chains. The mighty McDonald’s and Burger King simply had things sewn up. However, for those people who believed the humble beef patty and bread bun combo would remain the domain of a duopoly couldn’t have been more wrong. Having just celebrated the fourth annual National Burger Day, this simple meal has, in recent years, delivered a trajectory of growth nobody could have possibly foreseen. Rather like the naysayers who have been calling the top of the coffee outlet market for years, the burger-selling industry has continued to defy gravity and grow beyond all intelligent forecasts and expectations.

But it has not been from the two super-sized incumbents. Rather it has been driven by the emergence of what are interchangeably described as gourmet, better, artisanal and premium burgers. Like pretty much every other mainstay dish of British restaurant and takeaway food – pizza, curry, fried chicken, and fish and chips – there has been an expansion of the market to encompass high-end newcomers offering products with superior ingredients and a wholly different proposition to that delivered by the often a little too tired established operators.

Personally, I’m still rather enamoured by brioche replacing the traditional heavier bread buns at many burger outlets – never mind what is put between them. Older customers especially have lapped up the opportunity to enjoy a long-established favourite youth cuisine that has grown up to meet their more exacting demands that come with age. While Burger King and McDonald’s can be a little too focused on the young/children’s end of the market, the likes of Gourmet Burger Kitchen, Byron, Patty & Bun, Five Guys (I could go on for some time here but I’ll stop at that) have created experiences that hold greater appeal to a more adult audience. They’ve made it acceptable for all ages to take their partners out for a meal of burger and fries.

The upshot of this activity has prompted the rest of the market to up its burger game. Pub chains, hotel dining rooms, the likes of Harvester, general high-street cafes and even football grounds have had to adapt to the changing dynamics of the burger market. This upgrade in quality and the broadening of the burger market has driven an insatiable appetite for the dish, with the result the market is now worth an incredible £3.3bn annually compared with £2.7bn in 2015, according to recent research from Mintel. That is a massive 22% increase and is fuelled by the startling fact that 60% of people in the UK have visited a burger outlet in the past three months. And in London, clearly ground zero for high-falutin’ burgers, 20% have even visited a gourmet burger outlet during this period.

With this growth it looks like the burger providers are sitting pretty. But sitting is not the best position to be in because competition is intense and the ever more demanding customer already has some expectations of what they want from burger flippers in the future. The big one is personalisation. We are certainly seeing it with clothing, gifts, cars and many other consumer products. You’ve heard of Build a Bear, well we’re now into Build a Burger territory. Mintel found 41% of fast food diners want to see customisable dishes on the menu whereby they can select the style of bread bun, type of meat (not necessarily beef), toppings, and dressings, as well as type of side dish to go with their burger. A core part of the proposition of newly launched Stock Burger Co, which is being rolled out to Holiday Inn sites around the UK, is the “craft your own” section of the menu. And the mighty McDonald’s is also on the case with its plan to roll-out its cooked-to-order premium burgers across the UK.

What this all adds up to is greater options for customers. But the need to keep adding things to menus to appeal to a broader mix of customers has posed problems for a number of large operators. They have recognised the need to constantly simplify their menus rather than keep adding greater complexity. Perhaps this is partly behind the revelation in the latest Horizons bi-annual Menu Trends survey that although beefburgers remain among the top three most frequently listed menu items around the country, the number of listings has decreased 7% since last summer.

Can we possibly read into this thin sliver of evidence that we have reached peak burger? Who knows, but calling the top of the burger market is certainly not something an amateur burger eater like myself is going to undertake. I rather liked Wendy’s burgers...
Glynn Davis is a leading commentator on retail trends

A lesson from history not learnt, by Paul Chase

The era of the legal prohibition of alcohol in the US that lasted from 1920 to 1933 is both the subject of history and the stuff of legend. The era of the cultural prohibition of alcohol in the UK that began in 2005, and hasn’t yet ended, has a history up to this point, but will probably never create an Al Capone to compete with the American legend. But there are lessons to be learnt from both.

The main lesson from the American experience is the law cannot successfully suppress a mass market in an open society. The attempt to do so led to the corruption of police, judges, politicians and public officials on a massive scale. It led to the rampant gangsterism that spawned Al Capone and helped finance the Cosa Nostra’s diversification into illegal drugs. Drinking alcohol didn’t fall by much either, although the quality of it did – some 10,000 people are thought to have died from drinking poisonous moonshine during America’s era of prohibition.

Lesson learnt? Well, not quite. India is now embarking on an experiment in alcohol prohibition that is truly breathtaking in scale. More than 200 million Indians now live in “dry” states, where the sale of alcohol is banned. That’s approximately twice the population of the US in 1920. I say “embarking on” but in the state of Gujurat alcohol has been banned since 1958. However, contraband alcohol is readily available there. A thriving industry making moonshine has become established, as have bootleggers smuggling in alcohol from “wet” states, ensuring Gujurat’s booze ban is ineffective.

But the ban has been spreading rapidly. Bihar, India’s third most populous state, brought in a complete ban on the consumption of alcohol in April this year. And, no doubt learning the lessons of Gujurat, it doesn’t mess about when it comes to deterrent punishments. You can now be sentenced to death in Bihar if you make or sell alcohol, and you can be sentenced to life imprisonment for drinking it! And the state authorities aren’t above instituting a bit of collective punishment either. The new law holds all family members over 18 years old guilty if anyone has been drinking in a house, and you can get up to ten years for failing to inform police of an offence. Despite these draconian punishments, it seems alcohol is still widely available in Bihar.

It appears India has a growing alcohol problem, even though only about a third of Indians drink. Mostly, Indians consume spirits and an increasing number of people just drink to get drunk. Sound familiar? The impetus for legal prohibition has come from women’s groups and ambitious local politicians – just as it did in America with the Women’s Christian Temperance Union and agitation from local political activists. It seems many more will die or be imprisoned before the outcome of this experiment in prohibition is determined. I think one of the reasons why successive generations have to relearn the lessons of history is that very few people read history any more. Watch this space.

In the UK, anti-alcohol health zealots know they can’t call for the outright legal prohibition of alcohol because the public will then recognise them for the cranks they are. So, in the UK over the past ten years we have seen a much more subtle campaign of cultural prohibition by stealth. This has culminated in the chief medical officers’ new, low-risk drinking guidelines of 14 units a week – about three-quarters of a pint of beer a day. Protests by trade organisations and published research by the Campaign for Real Ale detailing the rejection of this advice by GPs and the public at large has convinced the government to soften the language around this. So, out goes “there is no safe level of consumption” and in comes “the risks are similar to that of driving a car”.

But our cultural prohibitionists haven’t finished yet. The media around the chief medical officers’ drinking limits is all about establishing the link between alcohol and cancer as a means of discouraging people from drinking. And experience in other contexts shows this works. Do you remember the headline a couple of years ago “A bacon sandwich a day raises your risk of colon cancer”? Recently published research shows this had an extraordinary effect on public perception and levels of consumption (of bacon).

A World Health Organisation (WHO) report that classified processed meat such as bacon and sausages as carcinogens had a big impact. A survey showed nearly 50% of people in all age groups were aware of this conclusion and about a third of people said they were trying to cut consumption. And this was reflected in sales figures. In the four weeks subsequent to the publication of the WHO’s report and the headlines accompanying it, sales of packs of bacon in the UK fell by 8.5% and this appears to have been a stepped change that hasn’t reversed itself.

Anti-alcohol campaigners have latched on to this tactic and you can expect a lot more junk science linking alcohol with cancers, even though the evidence is extraordinarily weak. The temperance movement is quite prepared to tell “noble lies” if it advances their cause. The lesson we need to learn is that we have to engage the drinker in the alcohol debate. When we do, government backtracks. I have written a lengthy piece on alcohol and cancer in CPL’s magazine Aspire. Do have a read.
Paul Chase is a director of CPL Training and a leading commentator on on-trade health and alcohol policy

Brexit – hospitality entrepreneurs can benefit on both sides of the pond by Dan Einzig

Calling all overseas operators and investors! Now is your chance to take a strong foothold in London! That’s the rallying cry we’re hearing from a number of recent client enquiries at Mystery. With the pound at an astonishing low against the US dollar, the opportunity to acquire or establish a brand in London has never looked so appealing. Not only does the exchange rate mean the cost is nearly 20% less than a year ago, but the capital market in the UK seems to be temporarily paralysed by the Brexit aftershock, which means businesses in need of funding for expansion will need to put their plans on hold or grow out of cash flow (at a far slower pace).

In the past few weeks, Mystery has been contacted by three international restaurant operators looking to make the most of the financial advantage and seize the opportunity to develop business, in London and the wider UK.

Their concerns are as you would expect:

“Where are the right locations to launch and grow?”

“How will the local market react to their brand?”

“Who are the right people to work with to establish and run the venture?”

An established market, Britain shares many of the cultural eating habits with Americans particularly and with the growing number of US brands thriving in the UK such as Five Guys and Shake Shack, the low “pound” means the restaurant and hospitality sector, in London particularly, will see a boom in tourism customers during the next year. However, having been based in the US over the past couple of years, my foreign perspective has illuminated some of the key cultural differences with the UK when it comes to eating out in the mid-market casual dining sector.

One worth mentioning is the size of the menu. The US market seems to demand huge amounts of choice and customisation from its restaurants while, conversely, the British seem to prefer help when making their decision. We helped turn around a struggling New York bagel concept that had launched in the UK by adapting its menu from a build-your-own offer with a dozen types of bagel, a choice of fillings, and another choice of toppings – which in New York had been the de facto format – by simplifying the offer to its eight most popular orders. The speed of sale dramatically increased and it stopped losing customers from the back of the line, driving a similar increase in sales.

Flavour profiles are also worth considering. We have had to tweak the recipes for a UK concept we recently helped launch in the States. The cultural differences are subtle, but worth taking seriously. However, judging by the number of enquiries we get at Mystery, there is still a strong appetite for American concepts here in the UK, with operators considering barbecue and smokehouse concepts in particular.

There is always an opportunity to profit from an economic downturn, you just have to position yourself and know where to look for the right opportunities…

In short, if you’re a foreign investor looking for hospitality or a food and beverage retail opportunity, the UK is the place to search! And if you’re a startup with a great idea or an independent looking to move to the next level, make use of the Brexit fall-out while you can. It’s a great time to pitch for foreign investment.
Dan Einzig is chief executive of leading restaurant and brand design agency Mystery – www.mystery.co.uk

How to get retail design right by Georgia Hall

I’ve worked for more than ten years with world-class architects and designers on the restaurant designs for global casual dining brands, including YO! Sushi, Café Rouge, Belgo, Pod, Marco Pierre White and Strada. As a retail refurbishment can cost anything from £250,000 and a new-build from £500,000, here are my top ten tips for getting it right.

Exterior – great logo signage shows off the “name” and illumination for night-time is necessary. Ensure stand-out with a dramatic awning, real glass fascia, theatrical light bulbs, antique hanging sign or neon. Outside seating is great with light and heating. Use real plants only.

Entrance – the doorway, and access to, is the most important part of any building. Opening hours, entrance and exit to be signposted. Oversized menu to be beautifully displayed in a mounted wall box; consider a lectern or an A-board too. Ceiling-to-floor curtains are cool.

Window – always as large as possible with the ability to open out. Retain real wood casings and decorate internally with sheer neutral linen roller blinds or modesty curtains to keep the sun out and light in.

Lighting – variety of options for opulence and interest. Pendants, neon, chandeliers and antique lights are all very much in vogue. Real candles are great attractors too.

Wall – whether matt-white gallery style, uncovered brick or designer wallpapers, don’t forget artwork, photography, mirrors and textures.

Floor – real materials (wood, concrete, tiles) are best and designing different floor areas with contrasting elements adds interest.

Bathroom – minimum of one toilet per sex please and doorway to be far from entrance eyeshot. Mandatory features include great functional bathroom fittings, mirrors and good wall-mounted soaps.

Open kitchen – whether fully functional or display, an open kitchen looks authentic and makes chefs feel front-of-house too.

Bar – to be in entrance eyesight, fully stocked and with a great top, for example zinc, space to sit at and lots of overhead lighting. Think theatre and decorate with squeaky-clean glasses, kilner jars/olives/popcorn/nuts, baskets of bread, hanging hams, eclectic bottles of wine, beer, spirits; champagne in buckets, cakes in domes, gorgeous displays of packaged coffee, tea, cocoa, sugar, fresh fruit and cocktail makers.

USP – whether it’s the amazing ornate gold ceiling, secret garden, video wall or hand painted mural by a local artist, always have at least one great memorable feature and talking point.

My design “wow” recently was when visiting Hix Bankside and discovering bespoke films shown on full-length light boxes in the bathrooms. While for easy consistent everyday casual dining decor style I would always recommend Cote, designed by Martin Brudzinski, which always has an appreciation of the original building architecture and an eye for feminine detail such as rounded corners, amber lighting, many mirrors and layers of simple wall furnishings. The chain that always gets the bathroom right is Carluccio’s, whether in a station concourse or high street, it has consistently high design standards and considers the customer first.
Georgia Hall is former brand director at Café Rouge and founder of independent brand, digital and marketing consultancy GH Brand – www.ghbrand.co.uk

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