Subjects: Letter from Detroit part two, the challenge of going out for the older generation, the future of hospitality is data-led, ten takeaways for better sustainability practice
Authors: Matthew Kirby, Ann Elliott, Mark Bentley, Stephen Nolan
Letter from Detroit part two by Matthew Kirby
Trading at both of our Detroit-based Fords Garage Cafés has been robust so far this summer. The cost of goods flattened off some months ago, and some protein prices are actually dropping slightly. As in the UK, labour remains the key challenge. We have invested heavily in back-of-house equipment to try to reduce ticket times and staffing levels. The new clam shell-style burger grills are doing a great job. A 9oz burger normally takes six to seven minutes on a conventional burger grill to cook to medium rare, but the clam shell provides the same level of heat to both sides of the burger, so now we are looking at three to four minutes. This might not sound like a major improvement, but 700 burgers a day times three minutes has a real impact. It’s 35 hours of cook time that doesn’t require labour, so potentially a 70-hour saving across the two stores when back-of-house labour is $17-$20 an hour.
Doing business in the US is not all plain sailing. In the interests of balance, I thought I’d share some of the not-so-great aspects of running restaurants in the States. The number of laws you need to comply with are mind boggling. Every time a new governor wants to get elected, they come up with five to ten new laws they promise to pass when they get elected. The latest Michigan governor promise is to remove what is known as tip credit. This allows us to pay our wait staff $5 an hour and for them to keep all their tips, which at an average of about 20% of the bill, means they all make more than $25 an hour. The proposed legislation would require us to pay the minimum wage of $12 an hour, so in effect, the wait staff would be earning $32 an hour. This completely screws the business model, and in the other states where it is already law, the result has been reduced wait staff employment, closed restaurants and lower customer satisfaction. In Michigan, the restaurant wait staff have set up their own pressure group to call on the governor to scrap the proposed legislation as they know it could be their job that gets axed, and $25 an hour is a lot better than what you get working in retail.
It’s political. The governor’s a Democrat, and the Michigan Restaurant Association is seen as a Republican body. None of the laws ever get repealed, it’s just one layer on top of another, and you need a lawyer to guide you round it. There are already too many lawyers and too much regulation. Sometimes, I wish I was rather dealing with the infamous Westminster Council business prevention department rather than our local US city council.
The Michigan Liqueur Control Board has a rigorous painstaking procedure for you to attain a licence to sell booze. A lot of these conditions date to the original 1920s prohibition laws. For me, despite being a multiple licence holder in Michigan for more than 20 years, I am still required to detail exactly where all the money came from to build the restaurant. This applies to every shareholder with more than 10% of the equity. Liquor licences often have to be paid for as each city or county has a set number available. Prices start at $10,000 and got up to $200,000 in certain areas. Add to that the $20,000 in lawyer fees for every application, and our UK solicitors look like great value. For those of us that have got a UK licence to sell alcohol, for the most part all you have to remember is that you are only allowed to sell alcohol to a policeman under the age of 16 who looks like a prostitute or something like that. In the US, it’s bank statements, credit and FBI checks.
It’s a fallacy that the US is the land of the free, and as George Bush once pointed out, unlike Americans, the French have no word for entrepreneur. The fact is you have to be able to spend a lot of money to open a business, and you need medical cover as the NHS does not exist. If you don’t have an employer to pick up the tab, you would pay around $7,500 a year in medical insurance for a family of four in the state of Michigan. This deters many from taking the step to start a business. So, next time your local council jobsworth comes round to tell you you’re only allowed 20 chairs outside on your patio rather than the 22 they counted, please spare a thought for the US business that’s just paid its lawyers nearly $10,000 to get its Michigan patio licence.
Matthew Kirby is a restaurateur and entrepreneur who founded and sold the Chozen Noodle chain. This article first appeared in Propel Premium, which is sent to Premium subscribers every Friday. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email email@example.com to upgrade your subscription
The challenge of going out for the older generation by Ann Elliott
I am in my family home writing this. Dad is asleep in his favourite chair overlooking the garden, a half drunk cup of tea and a Tupperware box of biscuits at his side ready for when he wakes up again. For once, the never silenced TV is off and the constant stream of Tipping Point, The Chase, Pointless and Catchphrase has ceased for the moment.
The diary with his spidery handwriting is open on the coffee table, the latter bearing the brunt of the scribblings of many grandchildren and great grandchildren over the years. The entry for today reads “Anne (sic) here” but he was surprised when I arrived through the unlocked front door. Photographs of mum, who died 12 years ago, are displayed on the mantelpiece, some gradually slipping down their frames as if unable to resist the pull of gravity.
It is peaceful. There is a hum of distant traffic, the gentle sigh of snores, the snuffle of my dog on the hunt for a hidden piece of wood she can chew and then leave unseen bits around the house to be stepped on by unsuspecting feet. I work on with these familiar noises in the background, noises that have come to represent a different segment of my life now with my dad at 93. It's not distracting but rather reassuring.
When he does wake, he will ask me once again about my journey up the M1 and how busy it was. He will ask me again about my work and how I am doing. He will ask, not for the first and not for the last time, where we are going for supper (or tea as he calls it). I will tell him I have bought something from M&S (where else?) for tea but he will continue to ask if we are going out.. and where?
It is calming in its repetition. Dad is living (not just existing I like to think) alone with a stream of helpers arriving at varying points during the day who treat him with care, kindness and love. For he is a good man. A kind man. His is frustrated at not being able to walk very far, see very well, hear properly, fasten fiddly buttons or put batteries in his hearing aid with fingers that will not do as instructed. Despite these, and other hindrances, he is uncomplaining and stoic. He is respected and deserves that respect.
I want that same respect for him when I take him out, as I might, despite his well-stocked M&S fridge. Deciding where to go can be a challenge. I want to be able to park close to an entrance, find him a wheelchair and be able to push him along a wide path with no bumps or blockages. Gravel is a nightmare. Ideally somewhere with wide doors that open easily, chairs with sides that can be flopped into and tables that can be reached by someone who used to be nearly 6ft and is now 5ft 4ins with a painful back. Not too hot and not too draughty.
The menu needs to be familiar, portions need to be small, food needs to come quickly and the server needs patience and empathy. Too much noise means he just can't hear what anyone says and conversation is one sided and almost impossible. Technology defeats him and he feels cross and frustrated with himself for not being able to understand what he has to do. Self-service is not easy. Carrying food and walking at the same time are impossible.
He goes out on his own to break the monotony of living alone ordering a taxi to pick him up and bring him back. He tries, he really tries. He does not want to give up or give in. My heart aches for him.
Maybe tonight we will just stay in, eat our M&S braised lamb, stay calm, talk and watch Bradley Walsh. Tonight we do not have to make life too difficult for a man who loves life and wants to live it.
Ann Elliott (she/her) is a portfolio non-executive director and board advisor
The future of hospitality is data-led by Mark Bentley
Most of my career to date has been spent working in retail, in the world of FMCG (fast moving consumer goods) where there is an abundance of data. When I started working in the hospitality sector in 2016, one of the first things I noticed was the relative scarcity of good quality data. While I initially found the limited availability of hospitality data liberating, providing plenty of opportunities for creativity in terms of filling in the gaps and making sense of complexity, I always felt there was a need for better data to help hospitality businesses make better decisions.
In general terms, the world of retail can be seen as being very data-led, while gut-feeling, intuition and entrepreneurialism arguably play a far greater role in the hospitality sector. Hospitality is undoubtedly more complex and fragmented than the retail sector, with the diversity of hospitality and its complex supply chains meaning its simply not possible to have the same types of data that the retail sector has. However, I believe good quality data is just as important for the hospitality sector as it is for the retail sector, especially in a world where the costs of getting things wrong are increasingly high.
“Retail is detail” is a well-known adage, and one that’s supported by the fact that statistical information is very much part of its DNA. Pretty much everything in the retail world can be accurately measured, with data underpinning decisions from whether a store should be opened in a particular area and which retail concepts/formats are best suited to it, all the way through to how space is allocated across different product categories and indeed which products are put on the shelves and how they’re merchandised. The range of different data sources is vast, providing operators and suppliers with a comprehensive understanding of who their customers are and how they behave, and ultimately enabling them to make better data-led decisions.
Many of the decisions that hospitality businesses need to make are the same or broadly similar to those made by the retail sector, and many of the challenges they face also have parallels. Let’s take the example of a restaurant or bar operator, operating several different brands or concepts. As they expand, they’ll want to identify suitable sites for future openings and decide which brand or concept is best suited to that location. When it comes to developing their offer, decisions will need to be made around menu development and pricing. And then when a site is up and running, they’ll want to assess how its performing, including being able to understand the reasons for any over or underperformance. Better data can help hospitality businesses do all these things, from choosing the right locations for their openings, optimising their customer offer and pricing strategies, understanding their performance against the local market context and so much more.
There’s no question that the worlds of retail and hospitality are very different. I recently read Peter Backman’s book, “Restaurants also serve food”, and he summarises the differences succinctly saying that the purpose of hospitality “is not, primarily, to provide food and drink, but to provide a service based on hospitality” and that “statistical information is not part of the DNA” of hospitality businesses. This is something that I wholeheartedly agree with based on my own experiences, but to what extent is this the best approach and to what extent are things likely to change in the years ahead?
Reflecting on the similarities and differences between the retail and hospitality worlds, I can’t help but think there’s a need for a more balanced approach – the retail sector could benefit from a more creative, entrepreneurial approach at times; while the hospitality sector could undoubtedly benefit from better data to inform its decision-making. The availability of good quality data is growing all the time, helped by advances in technology, and embracing this is something that will be critical to the success of hospitality businesses in the years ahead. It’s clear the world is changing – by 2030, millennials and Generation Z will represent 70% of the workforce and these are cohorts that have grown up with technology and who are well versed in data. It doesn’t need to be a choice of relying on gut-feeling or being data-driven in the world of hospitality – both have a role to play and finding the right balance is key. One thing is clear though; the future of hospitality will be increasingly data-led!
Mark Bentley is the business development director of HDI, provider of card spending insight and pricing data to the UK hospitality sector. He is a former category management controller at Molson Coors Beverage Company and a qualified beer sommelier
Ten takeaways for better sustainability practice by Stephen Nolan
We recently hosted a roundtable for a group of senior executives from across the restaurant, pub, bar and contract catering world, bringing together leaders to talk frankly about their achievements in sustainability.
We wanted to understand where they see the opportunities for more progress in the move to a zero carbon industry, and hear their approaches to communicating initiatives and progress, both internally and externally.
There is a nervousness in many companies about how much, and when, to communicate their green credentials to the public. Even when consumers say they want more information, operators are understandably extremely fearful of greenwashing. There is a sense in some quarters that sustainability initiatives need to be completed before talking about them, even if that means sacrificing potential consumer goodwill by sharing news about their journey.
Greenhushing – failing to share progress on sustainability initiatives – presents a new risk for the sector. The candour with which participants shared their sustainability pain points was notable, even by the standards of the hospitality industry. This transparency is vital for progress, so we hope that hospitality leaders will not give in to the temptation of silence, but instead continue to share their commitments and achievements with their peers, their teams and their consumers, for the betterment of the sector.
Our new report, “Sustainability Matters: What hospitality leaders want and how their brands can win”, includes more takeaways from an eye-opening session – below are ten key takeaways for better sustainability practice.
1. Look for marginal gains
Getting to zero-carbon status can’t happen overnight, so seek to achieve it in small increments. “You can’t turn a juggernaut around quickly. It’s about making little nudges... over time they’ll build and you’ll have made a big change,” said Su Cacciopo, of the Peta David Consultancy.
2. Keep it simple
Sustainability messages don’t always land as well as other communications because they’re not easily understood – so look for short, sharp messages. “When you get into scientific information you can turn people off. Make it interesting… and finding things that people can engage with,” said one marketing director.
With dozens of competing issues, pick the aspects of sustainability that matter most. As one leader said: “We’ve done lots of little bits and pieces, but it can feel fragmented. [We ask ourselves] what really matters? What’s going to make a meaningful, tangible difference?”
4. Work from the top down…
Roundtable guests agreed that change has to come from director level. To get boards’ attention, it can help to demonstrate the commercial as well as environmental benefits of becoming more sustainable in areas like energy use and food waste. “Being able to quantify sustainability is the way forward… that helps to get over the board challenge,” said one leader.
5. … And the bottom up
Change also needs to come from the restaurant floor, another chief executive pointed out. “If it’s just coming from our executive team down then it won’t land. Getting a push and pull going is always the best way to do it.”
6. Be honest with consumers
Guests are entitled to ask brands tough questions about sustainability. But they also need to be part of the solutions. “We need to tell consumers that we can make dishes with lower carbon impacts, but also that you need to buy them. There’s more to do, but with customer support we can accelerate the changes,” said Mark Chapman, chief executive of Zero Carbon Forum.
7. Stay authentic
Consumers want brands to show genuine commitment to their values. “It’s about having a purpose – and not just on sustainability,” said Vikki O’Neill, global chief marketing officer of Vapiano. “Show willing… people appreciate that more than a bundle of information they don’t understand.”
8. Think social as well as environmental
Thinking laterally on communications can make messaging easier, one sustainability expert said. Try tweaking the language so you demonstrate all the wider benefits. “We’re communicating it as a social solution rather than just a food waste solution.”
9. Motivate staff
Look for elements of carbon footprints that teams can latch on to, like recycling and cutting food waste. “We aim for the low-hanging fruit – the improvements that staff can make, feel proud of and talk about,” one operations director said. Creating league tables of the sites that are making the biggest cuts in emissions can help, he added. “You start to get that competitive element going.”
10. Act together
Round tables and open discussions are vital if hospitality is to make proper progress on sustainability. “We’ve got to be careful about rushing ahead with communications before we’ve spent the time collectively understanding the problem…and then doing something about it,” said one managing director. By looking around for inspiration and sharing best practice, brands can help hospitality as a whole position itself as a leader on this vital issue.
Stephen Nolan is the chief executive of Nutritics. Sustainability Matters: What hospitality leaders want and how their brands can win, can be download here