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Morning Briefing for pub, restaurant and food wervice operators

Fri 28th Feb 2020 - Friday Opinion
Subjects: Leaves on the line, creating sustainable drinks categories, when is good news really bad news?, and jack of all trades
Authors: Glynn Davis, Tim Clay, Paul Chase and Festus Asante

Leaves on the line by Glynn Davis

Living in an area of north London that’s awash with Turkish restaurants – we live in the closest thing to “kebab land” in the UK – would be even more wonderful if my family and I were big meat-eaters. There’s no problem, though, because all those restaurants serve the most delicious zinging salads to accompany the mountain of barbecued meat that make up core Turkish dishes.

It’s fair to say we are more likely to leave meat on our plates at the end of one of these meals (and doggy bag it) than salad. Clearly the salad plays a supporting role but as we’re all taking a more righteous road in life – if you believe the surveys – a growing number of operators are looking to lift the humble salad into the limelight. They see an opportunity to tap into the healthy, wellness phenomenon that grips the nation.

The major supermarkets spotted this one years ago when they introduced salad bars as part of their early food-to-go offers – but they knew the trick of which ingredients to lay out. The reality is if you inspected the contents of many people’s self-serve bowls you’d be more likely to find pasta in mayo-heavy sauces with a sprinkling of leaves on top than a bowl of virtue. We all know virtue neither fills you up nor cheers you up during a hard day at the office.

The most progressive salad bar chain in the US, Sweetgreen, has fully embraced this way of thinking and has grown to more than 100 outlets. During its growth Sweetgreen has gained a valuation of almost $1.7bn following its most recent $350bn fund-raise, which placed an incredible $17m price tag on each restaurant.

Such a high multiple clearly hasn’t been built on leaves alone and the founders have developed a menu of “meal-like” salads. These incorporate what they term “the wink”, which is an element that evokes something people find appealing and is un-salad like. For example, its longest-standing menu item is Guacamole Greens, which includes roasted chicken and tortilla chips sitting amid the well-oiled avocado and various salad items.

This sounds similar to one of my favourite salads – the Caesar. I used to frequently order it in restaurants for lunch as I deemed it a lighter, healthier main course. My (slightly) enlightened self now recognises any thoughts of it being healthy is patently ridiculous. The Caesar contains cheese and croutons, while the tasty sauce it comes slathered in comprises mayonnaise or egg yolk and oil – rendering it anything but a virtuous option, even less so when it comes with more chicken than iceberg lettuce.

As Sweetgreen rolls out its proposition and seeks to pull in more people to justify its lofty valuation, it seems to be taking its offer further away from a core salad focus. It has introduced non-salad items at its New York restaurants and has a new category of “greenless bowls” featuring dishes such as rice, trout and teriyaki noodles. At delivery-only company Galley Foods, which it acquired a couple of years ago, Sweetgreen has even started to trial sandwiches with meat fillings. These could well be introduced into the mother ship’s offering.

To further juice things, Sweetgreen has positioned itself as a technology-led operation that appeals to a millennial audience. More than half (55%) of its orders come through the company’s app, a figure that’s way ahead of another leader in the mobile-ordering field, Chipotle, which sees a mere 18%. Sweetgreen has also introduced digital screens, self-order kiosks and iPad-wielding employees accepting orders at its New York outlets. 

British operators looking to focus on salads or beef up their salad-like offerings can certainly learn from Sweetgreen, the key takeaway being a foodservice operator can’t live by leaves alone – just like the customer.
Glynn Davis is a leading commentator on retail trends

Creating sustainable drinks categories by Tim Clay

It’s time to acknowledge premiumisation is no longer a “trend”. Consumer demand for premium brands and experiences has arguably been the single biggest driver to shape our industry in recent years, and is here to stay. 

The desire for better experiences and products has become hard-wired in our psyches and premiumisation is everywhere, not least in the grocery aisles, restaurants, pubs and bars. Everything we see in the markets we serve tells us premiumisation will continue to be the driver of healthy businesses and profit growth for the foreseeable future, especially across key drinks categories such as coffee, soft drinks, wine, spirits and, not least, beer.

The word woven into premiumisation conversation is “value”. Not so long ago “value” was interchangeable with “cheap” but, as with many consumer brand businesses, we believe it can now be defined as the point where the “experience meets or outweighs the consumer’s expectation when weighed against price”. 

CGA’s recent report found almost half (47%) of consumers are willing to pay more for a better-quality drink and it’s clear premium pricing is driving value in pubs, enabling operators to pass through the essential, incremental margin gains that are so important against a challenging backdrop of well-documented cost pressures. 

During the festive period we saw a number of large listed pub groups report significant and impressive like-for-like sales growth against a backdrop of tough trading conditions and challenging year-on-year numbers. Given we know people are tending to drink less but better today, it’s no surprise these like-for-like performances are coming through value and pricing rather than increased volume on the foundation of investment, more aspirational pub environments and premium brand experiences. 

This week’s excellent report from the All-Party Parliamentary Beer Group entitled Unlocking Pubs’ Potential concluded the sector had “innovated and adapted” to the challenges posed by increasing costs, business rates and competition for the leisure pound, with a rise in mid-market openings, increased quality and standards across the board, and a growing range of craft beer, artisan spirits, and low and no-alcohol options.

However, the report also stated those pubs that failed to adapt risked falling by the wayside. The study quoted some striking analysis by CGA vice-president Peter Martin, who found “lower quality-rated pubs” – those dependent on standard lager sales and lower-than-average sales of world and premium lager – accounted for 75% of all net closures during the past five years. Of course, the point here isn’t that stocking policies in isolation is a root cause but highlights the differing drinks ranges and brands available as indicative of differing approaches and levels of proactive venue management. Those pubs and bars being driven forward and whose management were creating vibrant, welcoming environments and sustainable businesses were typically listing the premium brands consumers demand and were succeeding in a way others were not. 

For our part, we are committed to the pursuit of premium brands – it’s why we exist and why we have worked to build and shape our beer portfolio, most recently fortified by the Fuller’s family of premium brands. We are, of course, committed to championing the individuality and identities of every brand in our portfolio but, more than that, we believe we exist to help our commercial partners build or realise higher value from the beer category through the power of premium brands and ever-better drinking experiences. We think this mission is an important part of helping our partners create and shape sustainable businesses.
Tim Clay is managing director of Asahi UK

When is good news really bad news? by Paul Chase

The answer to the question in this title is partly a problem of definition – it depends on how you define “good news” and who “good news” might be bad for! I don’t mean to be cryptic so let me explain. Sheffield Alcohol Research Group (SARG), which produced the flawed model used to justify minimum unit pricing, has published an article entitled The Problem With Good News: How Should Public Health Actors Respond When Alcohol Consumption Declines? 

The knotty problem for these activist academics – including M Oldham, C Angus, H Fairbrother and J Holmes, who wrote the report – is falling population levels of alcohol consumption, particularly falls in consumption among young people, makes it more difficult for them to pester government into draconian alcohol-control policies. They cite the fact per capita alcohol consumption in the UK fell 18% between 2004 and 2018 as “good news” but the fact alcohol-related hospital admissions and health harms have nevertheless risen undermines their claim that population levels of consumption drives harm. 

They write: “This apparent mismatch between improving consumption trends and criticism of government action raises questions about whether public health actors’ calls for stronger intervention were misplaced and, more generally, how these actors should respond when the prevalence of addictive behaviours declines.” What’s this? Calls for government intervention may have been misplaced? 

It’s by no means certain the prevalence of addictive behaviours has declined merely because overall consumption has – and why should we regard falling levels of alcohol consumption as good news if overall harms are rising? 

Then the authors write this: “Moreover, the decline in alcohol consumption in the UK did not coincide with a decline in alcohol-attributable harm. Instead, alcohol-attributable hospitalisations and deaths increased. This is striking given many argue population-level consumption and harm trends typically move in the same direction over time.”

The “many” who argued there was a connection between population levels of consumption and harms was principally them!

As Duffy and Snowdon pointed out in their paper Punishing The Majority (June 2014): “Campaigners cite the ‘total consumption model’ as justification for implementing policies that affect all drinkers, rather than just the heavy-drinking minority. The theory was devised in the 1950s based on a statistical correlation between average alcohol consumption and rates of harmful drinking.

“As researchers have long recognised, this theory is deeply flawed and has little predictive power. Per capita alcohol consumption largely depends on the amount of heavy drinking in a population, not vice-versa. The mathematical model is simply wrong. Numerous real-world examples, including the UK in recent years, show alcohol-related harm doesn’t necessarily correlate with overall alcohol consumption.

“Empirical evidence supports neither the total consumption model nor the policies on which it’s based. These policies bear costs on moderate drinkers while being largely ignored by at-risk drinkers. Alcohol policy would be more effective and equitable if it targeted excessive drinkers, alcoholics and those who require help rather than the whole population.” 

Ouch – the flaws in SARG’s approach were pointed out almost six years ago – but wait a minute, if they got it wrong about the link between population levels of consumption and harms, they can always take refuge in the details. 

SARG wrote: “Notably marked disparities in consumption trends can emerge between age groups, partly explaining contrary trends in consumption and harm. While there has been a decline in youth drinking in many high-income countries, there has also been concurrent increases in consumption among middle and older age groups. Despite the latter age groups typically accounting for the majority of alcohol-related harm to health, their drinking tends not to be pathologised in the same way as youth drinking.”

So despite their previous obsession with youthful binge drinking, it’s really the oldies we should worry about! SARG suggests public health actors should target instead the “demographic groups that continue to exhibit the most risky behaviours or experience sustained high levels of harm”. This sounds suspiciously like my argument for more than a decade – that policy shouldn’t focus on per capita consumption but on the minority of people who have a drinking problem.

The denizens of the public health racket were never going to give in to the onset of intellectual maturity without a struggle – but better late than never!
Paul Chase is director of Chase Consultancy and a leading industry commentator on alcohol and health

Jack of all trades by Festus Asante  

The phrase “jack of all trades, master of none” is usually an insult suggesting someone is an all-rounder who’s far from an expert. In a technological setting this translates to the popular theory companies should implement a suite of best-in-class software, each expert at a particular thing, rather than opting for a single, catchall solution. 

However, the full phrase “jack of all trades, master of none, though oft-times better than master of one” is complimentary – the suggestion being “jack” may also be a master of integration, able to bring cohesion and consensus to the mix. If we think back to our technological setting, the theory becomes one of interoperability and the idea a non-expert ecosystem of compatible components is greater than the sum of its expert parts.

The key message here is one of compatibility – of software and systems and the businesses behind them being willing and able to work together.

As a provider of order-and-pay solutions, Wi5 is in the business of interoperability, working with all manner of operators and suppliers, from POS and CRMs to SCVs and loyalty platforms. 

Wi5 chief technology officer Lionel Martin says: “The safest way to add technology to your business is to make sure each system is open and can be connected to the next. This will enable you to build workflows specific to your organisation’s needs. If your core systems aren’t open, your workflows will be restricted and you risk falling behind your competitors’ future innovations. And by using modern, specialist providers and products, you’re adopting a healthy and sustainable tech culture for your business; one that comes with easier implementations, reduced risk and seamless integrations.”

Irrespective of technology, the hospitality industry is built on relationships between suppliers, operators and customers. These relationships are as important to the interoperability of your systems as any API. We have found technology suppliers’ attitudes in this respect to be wide-ranging and sometimes at odds with their business practices. 

The example we see most often is that of POS which have developed their own technologies to be interoperable, yet formed business models and pricing structures that prevent operators from readily leveraging these to all parties’ mutual benefit.

To future-proof our industry, best engage with new technologies and above all succeed, we must ensure our goals are aligned and the spirit of interoperability is embraced wholeheartedly. As purveyors of technology, let’s start by being transparent with operators about how we manage integrations so they can choose their tech partners wisely and with confidence and avoid any unwelcome surprises.
Festus Asante is head of delivery at Wi5

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