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Morning Briefing for pub, restaurant and food wervice operators

Fri 1st Oct 2021 - Friday Opinion
Subjects: Times are changing for traditional trading patterns, don’t dive back into discounts, five tech innovations set to transform hospitality
Authors: Glynn Davis, Ann Elliott, Jon Woodforth

Times are changing for traditional trading patterns by Glynn Davis

When growing up in a village just outside Doncaster in Yorkshire it was always very exciting to hear of any new high-quality restaurants opening up in the surrounding area, and my family and I would always make a beeline for them. It felt like we were getting a little slice of London’s dynamic food scene in our part of the world.

They’d often have head chefs and maître d’s who had done time in the capital’s restaurants, and these new establishments were their stab at going it alone in their home region. So often the food would be of incredible quality and great value for money, but sadly they would all gradually fall by the wayside. While they would invariably be rammed on Friday and Saturday nights, they’d then be bereft of any trade on the other days of the week. This was never a sustainable scenario.

Far too many high-end provincial restaurants have traditionally suffered from everybody wanting to eat at around 7:30pm on Friday and Saturday evenings, and sadly abandoning such places on every other day. London and other major cities have been able to enjoy more of an even level of footfall throughout the week, although not as much as they would have liked.

But times are changing, with covid-19 having thrown things up in the air. The gradual build-up through the week to peak trading on Friday and Saturday nights has changed markedly for many restaurants and pubs. At Trinity restaurant in London’s Clapham area, the dining room was reduced from 57 to 36 covers during the pandemic, and since then it has resulted in a more even spread of people throughout the week, which has placed less stress on the team and fuller bookings across all services.

There have also been changes to the times at which people now go out for an evening, which has caused some major rejigging of the way establishments operate. These new dynamics are having positive and negative effects. At Trinity, the dinner service now begins at 6pm and last orders are taken at 9pm as a result of the enforced curfew brought in during the pandemic. That went down rather well, and some people have found they actually prefer eating out earlier. 

This shift has also been felt by pubs including The Lord Nelson in Brentford and The Dodo Micropub in Hanwell, who have found people visiting earlier and leaving earlier, and the late weekend licence has not been put to use for some time at The Nelson. Andy Hornby, chief executive of The Restaurant Group, reckons this shift is, to a large extent, being driven by the work from home phenomenon. People are no longer arriving back home at 7pm post-commute and slumping on the sofa, but are already at home primed for an early trip to the pub or restaurant.

This new way of working is, however, also leading to some erratic behaviour by customers, with some pubs finding random Wednesdays can be their busiest night of the week. Certainly in city centres with office concentrations, Thursday has replaced Friday as the big night out of the week as many people are now frequently settled in their home offices on Fridays.

What is positive about the work-from-home scenario at this early stage is there is evidence of people still doing as much hospitality spending during their time in the office, despite spending fewer days there. Hawksmoor has found workers in London are maximising their face-to-face time with colleagues and clients by frequenting hospitality venues on their days back in the office, and there has also been an increased spend per head. A concentrated spend across fewer days is also recognised by Allister Richards, chief operating officer at CH&Co, who very much believes fewer days in the office won’t reduce the revenues generated at his various food and beverage venues servicing office workers.

There are clearly still many questions to be answered as hospitality operators grapple with the various levers at their disposal in the hopefully latter stages of covid-19, but what is clear is it’s all parts of the country that are having to deal with the changing dynamics of demand. Major cities are now in the same camp as provincial towns like Doncaster in not having the luxury of consistent trade throughout the week, and a smooth easy-to-manage upward curve leading to the traditional Friday and Saturday peaks.
Glynn Davis is a leading commentator on retail trends

Don’t dive back into discounts by Ann Elliott

Budgeting has always tended to be as much an art as a science, and I suspect the budgeting for next year’s sales and profit will be considerably more art than science. Gone are the days of being able to predict sales, covers and spend-per-head growth reasonably accurately and it always coming in on budget – I don't think we ever missed a budget when I worked at Whitbread.

Or maybe I am just looking back through rose-tinted glasses. I hesitate to say it, but hospitality life really was easier and much less stressful then. What's concerning me now is being able to predict consumer behaviour for next year with any sense of certainty. What they did in 2019 is no predictor of likely behaviour in 2022 – indeed, consumer behaviour this year really isn't giving us much clue about next year. 

Consumer confidence, as we all know from both our professional and business lives, is a very fragile thing. I feel positive about jobs and employment generally, and about the fact that wages will continue to rise. The Scottish Widows UK Household Finance Index in September said that UK households, in the third quarter of the year, recorded a further steep upturn in business activity at their workplaces which included utilities, energy, transport, finances and business services. They also recorded the first rise in their employment incomes since the first quarter of 2020 as skills shortages meant employers were paying higher wages to attract and retain talent. Consumers feel more positive about their job security than they have for a while, particularly 18 to 34-year-olds.

I am just not certain that disposable income will rise next year. Indeed, all the signs seem to suggest that it will fall. The report goes on to say that third-quarter data highlighted a further reduction in the amount of cash UK households had available to spend, with the rate of decline quickening slightly. So, despite rising employment incomes, higher costs of living did offset the gains. This is surely going to be the case in 2022 too.

Most operators I speak to are seeing strong increases in spend-per-head but a decline in covers. Thankfully, leading casual dining chains have moved off the discounts merry-go-round, ditching the incessant use of Meerkat Meals and the like. This has no doubt led to reduced covers and thousands of discount-led diners either leaving the sector or finding cheap food elsewhere. Hallelujah! I do hope though that this really is the reason for covers decline and that it's not a result of consumers having less money to spend, or not wanting to spend their money on eating and drinking out. Operators themselves will know what's happening in their own business and be on the case.

Anecdotally, it would appear that consumer demand is strong. I tried ten restaurants around King’s Cross last night before I could find one who could take a booking for four at 8.30pm that night. I tried six places for a Saturday night booking near Alfreton in Derbyshire and had to settle for a 5pm dinner, and I contacted more than ten restaurants around Skipton for a meal on Christmas Day before Bistrot Pierre (and Gusto, I have to say) came to the rescue. It could be that capacity has been reduced because of staff or stock shortages, but I prefer to think that it’s due to buoyant consumer demand.

All I'm saying is it may look very positive now for next year – and it's hard not to be optimistic when sales are strong – but if spend-per-head growth starts to falter and covers continue to fall then we need to be agile and flexible in our strategies and plans. We must resist the urge to re-introduce blanket, non-discriminatory discounts to plug the gap and continue to be obsessed with ensuring our guests – no matter what they are paying – believe their experience is worth it, recommend it to others and keep coming back.
Ann Elliott is a hospitality strategist, connector and adviser

Five tech innovations set to transform hospitality by Jon Woodforth 

Hospitality technology adopted during the pandemic has proved it solves pain points, drives sales and improves customer experiences, so why stop here? As the recovery begins, operators should be looking at tech that will help them to build back better, drive sales, improve margins and exceed customer expectations. 

As a leading partner to the industry that prides itself at being at the forefront of innovation, here’s just some of the technology areas we’re currently exploring to help drive the sector forward.

1. ‘Just Walk Out’ tech
One of the biggest and long-standing pain points in the average customer journey is around payment, as highlighted in our recent GO Technology report in partnership with CGA. 

Contactless payment, Google Pay and Apple Pay have already removed some of the friction around this but imagine being able to dispense with it altogether? A pub, bar or restaurant in which customers simply finish their meals and drinks and walk away when ready, later receiving an email or message with a receipt and confirmation their account has been charged. It’s not that farfetched – after all it’s already used in retail.

In Amazon’s “Go” stores, customers are free to pick what they want from the shelves and leave. Called “Just Walk Out” tech, it uses similar tech to that used in self-driving cars. This is a space developing at pace so we can expect the tech to become more and more sophisticated relatively rapidly, making it fairly likely that we’ll see this in hospitality sooner rather than later.

2. Voice recognition 
It’s really only a few years back when asking a speaker in your kitchen for a chocolate cake recipe would have been considered borderline deranged but these days it’s a common enough occurrence.

Booking is one area where this tech could make a difference in our industry. One of the legacies of the pandemic is an increased preference to reserve tables. Our Plan to Plate research found one in six consumers say they are more likely to book when visiting pubs, bars and restaurants now compared with pre-pandemic times. Furthermore, one in three said difficulty making a reservation was one of the key reasons they might decide to stay at home.

Making this step in the customer journey as easy as possible should be a priority. As a result, we are seeing an uptake in voice booking technology, which is powered by Interactive Voice Response or IVR. To be clear – there is a broad spectrum of voice recognition technology from basic IVR style, where a phone call from a customer can be automatically answered and processed, to modern systems powered by cloud technologies (it is this that powers the likes of Alexa).

Beyond this, we have been looking into developing voice recognition technology so customers will be able to – for example, book a table or a meal delivery via Alexa or Google Assistant. Our GO Technology research shows one-in-seven consumers are already very interested in exploring this option, and although the tech still needs to improve for it to work smoothly, it is a channel that will grow in future.

3. Cloud tech
My experience in the retail sector has demonstrated how cloud tech is increasingly used to enable retailers to extract more revenue from, and cope with, the demands of big events such as Black Friday or Cyber Monday. Hospitality has similar spikes around key trading occasions – big sports matches, Halloween or Mother’s Day, for example – not to mention Friday and Saturday nights following pay days and so this tech can be adapted for use in our sector. 

Cloud technology isn’t just about infrastructure to deal with spikes in demand any more, however. As it becomes more sophisticated it is being used to enable the use of modern AI technology – such as voice recognition (as above), augmented reality and computer vision (how computers gain information from images and video), as well as for mining data and predictive analysis. Many – if not all – of which have obvious benefits for hospitality operators and we predict they will become more common in our sector – once they become more affordable.

4. Augmented intelligence
Not artificial intelligence, a term more widely used, but “augmented” intelligence – the systems in the background that process data and can make suggestions to improve operations or efficiency, which are facilitated by the shift to cloud tech mentioned above.

If you think about it, a lot of what happens in-venue is now initiated from outside of the bricks and mortar building, such as click and collect or delivery orders. In the past if you wanted to know if you were busy, you could just look at how many tables were filled, now there is little way of predicting with any great certainty as to when orders might suddenly come flooding in. Except there is.

Augmented intelligence can look at the number of customers in-venue and the number of orders arriving in the kitchen, plus data from any other sales channels, and make predictions and suggest solutions. So, it might recommend that you consider closing off a particular delivery channel because the level of orders is threatening to overwhelm the kitchen; or it might suggest you focus efforts on a channel that has been lagging behind in profitability for a number of weeks; or it could be used to help forecast required staffing levels, highlighting that because of an upcoming big event combined with a favourable weather forecast, you will need more staff than currently scheduled to work. This is technology we are looking very closely at.

5. Blockchain
At its most simple, a blockchain is a digital system for recording transactions among multiple partners in way that is tamperproof and its usefulness to the supply lies in how it can enable trusted suppliers to complete seamless and secure transactions.

The way blockchain works also creates trust, transparency and traceability. It can enable faster and more cost-efficient delivery of products, improve co-ordination between all partners in the chain and the flow of cash between them. It will, for example, enable your chefs to know not just what farm your flat iron steak comes from, but from which cow and which field. With consumers demanding far greater transparency around sustainability and the sourcing of food, this level of detail will become crucial in terms of providing competitive advantage. 

The pandemic has accelerated the requirement for technology and proved its value. With further exciting developments that can drive smoother, leaner and more profitable operations, in tandem with delivering enhanced experiences, hospitality is heading into a new era when it comes to tech adoption.
Jon Woodforth is chief technology officer at Zonal

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