When Carlsberg launched an advertising campaign with the strapline “Probably the best lager in the world” in 1973 we knew what it was really implying was it was producing the best lager in the world. There was no probably about it. The line cleverly reflected Danish understatement because the country apparently doesn’t really do bragging.

 

The fact is it is absolutely impossible to say one beer is the best in the world. But at the time of that famous ad line hitting the market Carlsberg was producing a world leading beer because we were judging things on criteria such as clarity (and consistency) at a time when many brewers were failing to deliver on both these fronts. These were key aspects by which we calculated the quality of a beer. Although this is still true for some beers today we are now in a world where murky unfiltered, unpasteurised beers of myriad styles containing a cornucopia of ingredients are finding great favour with drinkers and are being classified as the new world leaders.

 

What led Carlsberg to be uncharacteristically bullish about its clear golden lager back in the seventies was it really had been pioneering in its scientific work, which had fed into its beers and helped it push boundaries and set new benchmarks. It had cultivated pure yeast for the first time – and shared this knowledge with the brewing world in what was a very early example of open source thinking, developed the pH concept, and manipulated yeast at single cell level.

 

These groundbreaking achievements set it apart but in recent years these long-established aspects are not necessarily going to be the driver by which people buy a beer today. This situation has led to some deep thinking at Carlsberg (which is already a deep thinking company – as seen by the fact it has its own Foundation, which was formed in 1876 to funds arts, culture, and base research work among many other things).

 

There has been a feeling at the company the beer industry has been going through a revolution (the craft beer revolution) but that Carlsberg has still been living in a world of old eras. Previously, it had been a disruptor but today it could be seen as being a bystander or even a victim. Like many brewers it has found itself fighting to maintain relevance in the market. It will certainly know how things have been changing because it shares its home town of Copenhagen with arguably the most disruptive of modern day brewing companies, Mikkeller.

 

What made Carlsberg relevant, and the maker of probably the best lager in the world, is its Carlsberg Laboratory, which was founded in 1875. And it has in recent years been undertaking some very interesting work. Among its achievements has been finding the genome of barley. This work is now gradually feeding into Carlsberg’s latter day output, with the brewery starting to release some interesting experimental beers.

 

On a recent visit to Carlsberg in Copenhagen to celebrate its 170th anniversary I witnessed the unveiled of a single malt lager that had been brewed with barley from a single field in New Zealand. This clearly plays on the terroir dynamic in the same way that wine does. Next up was a red lager, which had been produced with unique red barley that had been sourced from Asia and grown in New Zealand after propagation with a traditional variety.

 

Much more interesting was a young lager that had been harvested six weeks early when still green. It had to be pushed through a juicer in order to release the sugars, which had a very different composition to those found in fully grown barley. This latter beer was particularly interesting in that it highlights how barley could be grown in much colder climates and still be used in the production of beer.

 

Such thinking is firmly in the minds of the lab-coated scientists in the Carlsberg Laboratory because they recognise some of the seismic changes taking place globally including – climate change, the shift by more people into urban cities, overall population growth, and the increasing pressure on water supplies around the world in order to satisfy the thirst of this rapidly rising population.

 

These macro aspects are arguably going to mean provenance, sustainability and other factors will be playing an increasing part in contributing to the production of probably the best beers in the world today and tomorrow. These complex elements will be very different from those of yesterday.

With foodservice inflation running at 7% in July, consumer confidence at an all-time low and Brexit around the corner, we might be forgiven for thinking the future isn’t bright. With the price of oil and fats at 12.4%, wholesale milk, cheese and eggs up 10.6% year-on-year, this unprecedented foodservice inflation looks set to continue. This is underpinned by Office for National Statistics data, which reports 3.0% menu price inflation, suggesting volumes are down circa 2.5% year-on-year. 

Separately, a continuing difficult trading environment makes for a bleak outlook with the Coffer Peach Business Tracker for July showing like-for-like sales growth of 0.6% (prior year 0.3%). But it doesn’t have to be all bad news. Prudency and strong management are key if operators are to survive the rocky road ahead. And, the key to protecting any foodservice operation in the 21st century is the ability to tightly control costs and margins.

In my role as director of online commerce for Zonal, it would be fair to say I’m obsessed with detail because it’s detail that makes the difference between success and failure. In fact, with the continuing pressure on costs, the old adage that “every penny counts” is more relevant than ever before. 

Operators need to approach the price increase jigsaw from the perspective of the aggregation of marginal gains. It’s all about small incremental improvements in the purchasing process, culminating in a significant improvement when they are all combined. The concept was made famous by the performance director of British Cycling, Sir Dave Brailsford, who set about breaking down the objective of winning races into its component parts. He believed it was possible to make a 1% improvement in a whole host of areas, the cumulative gains of which would end up being hugely significant. He saw each weakness not as a threat, but as an opportunity to make adaptations, and create marginal gains. Rapidly, they began to accumulate.

And, it is access to real-time data on purchase volumes, stock levels, pricing and margins, together with full visibility of supplier activity and the ability to control the purchasing of every outlet that will give operators the ability to make the incisive decisions needed to achieve these cumulative gains. When consistently implemented, I have seen improvements on margins ranging from anything between 3% and 8%. Who, in this climate, can afford not to search out every marginal gain?

Achieving these levels of visibility and control, almost by default, further protects against the often insidious aggregation of marginal decay. Small errors and omissions – orders not added to stock on the day of delivery, using the wrong supplier and paying sub optimal prices for a high volume product, inaccurate reports going to the wrong recipients – quickly add up. When the going gets tough, this stuff really matters – burying our heads simply isn’t an option.

Implementing a comprehensive supply chain system can unlock the real potential of your business and protect against external cost pressures, helping to combat the kind of unprecedented inflation we are facing. But it doesn’t need to be difficult or costly – every improvement, no matter how marginal, contributes. It’s about using the tools you already have at your disposal to implement the processes and controls you need to quickly give you the right information to make informed choices.

In this climate, moving to a data driven culture is the key to survival. “Knowledge is power” and without this knowledge, the reality is operators are powerless to make the right decisions to future proof their business. Improving efficiency is more urgent and important than ever. It is no secret that true competitive edge is gained by those operators with flair, creativity and vision. The talent that is so crucial to the success of our industry is attracted by virtue of this very fact. But this flair is a rare and beautiful thing, which must be nurtured to flourish. 

However, the real winners know the “boring stuff” – comprehensive systems, underpinned by solid process, delivering accurate, timely information, which is constantly reviewed and regarded – has to be the foundation upon which the “sexy stuff” is built. Getting the basics right may be dull, but it is relatively easy – and there are plenty of people out there who can help. More than ever operators owe it to themselves to get these fundamentals right so their talent can be applied to the far more difficult task of driving the top line. 

We need to open our eyes and have a detailed picture of all our operations in order to manage costs effectively from utilities to ingredients to people. Never has it been easier to paint this picture through integrated technology, so data can be aggregated quickly to create real-time data analysis and comprehensive reporting in an easy to understand format. 

In our brave new world, it’s all about having the right level of detail to watch the pennies and make sure that all of those small changes add up to make sure your slice of the cake keeps on growing. 

On the train to Milton Keynes the other day, I met the chairman of one of the leading businesses in our sector, off to spend the evening going around his sites and those of his competitors. I was impressed someone with so much to do and so little time (he is heavily involved in charity work) found the space to see what was happening on the ground.

 

It made me think about how important it is for managing directors, chief executives and chairmen to see what’s going on at grassroots level (and for them to be seen to be interested). Is it imperative or just a nice thing to do? Is it more critical they spend their time in head office with their senior teams, investors and stakeholders than with team members? There are a number of company leaders in the sector currently who appear to focus on the latter and don’t seem to go out much with their operations team, visit sites or talk to managers. Does it matter?

There is a very real argument for saying it doesn’t – that the role of the chief executive (just to pick one of the senior roles) is to develop the vision, the strategy and the direction for the business with their board colleagues and each board member is then responsible for communicating and delivering the plan to their own teams. The chief executive doesn’t necessarily need to understand operations, any more than any other function, to lead this process. They don’t need to have empathy, or emotional intelligence, for those who serve customers to be successful in running a business in our sector.

 

There is also an argument if chief executives do spend their time visiting sites (be it restaurants, pubs or bars) with any sort of frequency they inevitably become more involved in the day-to-day, in the minutiae and the detail than they need to. I have seen, as we probably all have, chief executives comment directly back to managers on their operation – from the delivery of operational standards to the fact they don’t like the notices pinned on noticeboards. Chief executive presence “in trade” can, therefore, even if well intentioned, be irritating at best or demotivating at worst. Chief executives wouldn’t necessarily spend a day working from a desk in HR or finance commenting on how they work so why do it in operations?

 

My own experience in both marketing and operations in Whitbread, however, has led me to believe it is incredibly important for the whole board, not just the chief executive, to get out into the business – frequently – to see what’s happening. They need to understand how their board level decisions impact their customers and those who serve their customers. If they cannot demonstrate emotional intelligence when dealing with the operations team, how can they expect their teams to use it when serving their customers? Certainly, in restaurants, pubs, bars and hotels, this is an “experience” based sector. It is not a transactional or functional one (on the whole).

 

As industry commentators keep saying, this is now an oversupplied, oversaturated and increasingly undifferentiated market place – brands are blending and merging in the eyes of the customer. They can’t tell them apart. Menus look the same to them. The food looks the same to them. Everyone now has reasonable coffee, craft ales, flavoured soft drinks and good quality lager – they all look the same to them.

 

The one thing though that sets one brand apart from another is the experience it offers a customer. This is delivered person to person through a smile, a gesture, a kind world or a generous act. It’s through making a customer feel better when they walk out versus when they walked in. Chief executives have to lead the way in this (in my mind) and that’s done by walking around, listening to and talking to every level of the operations team. They have to get out and see it all for themselves and swop the boardroom for the kitchen regularly – whether they want to or not.