Subjects: The chocolate chips are down, in defence of dynamic pricing, seeking the new generation of hospitality hidden gems
Authors: Katherine Doggrell, Glynn Davis, Sandra Kelly
The chocolate chips are down by Katherine Doggrell
It was a sunny old day at the Propel Multi-Club summer conference and party. In fact, if you have a moment, it was the collective sun from the rest of the year in one day, and all the better to sell your ice cream concept for it.
Pistachio and pomegranate aside, the mood looking towards the autumn was buoyant, with a hint of wrap-up-warm, it’s getting chilly out. Research earlier this month suggested that all that fabled pent-up savings was starting to drain away, sucked up by frivolous things like electricity bills and rent. The next few months may not be as filled with good cheer as the season might hope.
As befits one of the cheerier industries, the latest survey from CGA indicated a notable upswing in confidence among smaller businesses. Nearly two in five leaders of independent operators now felt optimistic about prospects for hospitality – up by 15 percentage points from the last survey. However, 25% of independents saying that their business was at risk of failure in the next 12 months was not a wholly happy take. This was 11% for leaders of businesses with five or more sites.
Independents are prized by consumers for their, well, independence, their uniqueness and their not being part of a brand – but how many of them are thinking of phoning their nearest neon sign vendor and embedding themselves in a likeminded family of restaurants or bars and seeking solace in a group?
In the hotel sector, branding is primarily about distribution. You need to be in front of the consumer when they are rummaging through the internet on a Zoom call, looking for the next destination. The event was held in a Doubletree, which is the brand you put on a hotel when you’re not sure what its unique selling point is. The brand differentiator for Doubletree is a chocolate chip cookie warmed in a drawer at reception. If you’re a hotel thinking about taking shelter in a brand, it’s not so much of a challenging standard to meet.
For the big, branded operators – the Marriotts and the Hiltons – offering light-touch brands that puts heads on beds is a significant trend. Soft branding – where everything looks the same but you’re on a website and part of a loyalty programme, maybe even with discounted access to Expedia – has been the hip thing to do and flags have popped up to feed this.
Since the pandemic, hotels hiding out from the storm like penguins in a blizzard have driven growth. To facilitate this, they are launching conversion brands, most-recently IHG, the home of Holiday Inn, which launched its new midscale conversion brand, Garner (to garner new hotels, geddit?) last month.
Elie Maalouf, chief executive IHG Hotels & Resorts, said: “Owners are attracted to the benefits of IHG’s global scale, strong enterprise, technology platforms and leading IHG One Rewards programme, supported by our proven success in developing, launching and growing brands.”
For the “eat and drink out but then go back to your own bed sector”, distribution is a little more old school. Technology is more focused on deliveries. The issues are the same with Deliveroo as with Expedia: am I being massively ripped off, how much of my business is coming from it, is it diluting my brand? But being distributed by Deliveroo is not the shelter from troubling trading that installing a cookie-warming drawer might be.
That’s not to say that these big stables don’t exist. Look at SSP. Tom James, managing director of Bill’s, part of the Ivy Collection, described being part of a wider group as enabling “collaboration on the big topics of the day: technology, sustainability”. But it’s not quite the same as hotels.
One group that was skating closer to hotel land at this year’s event was Sessions, which creates and acquires brands, helping them to grow up into adulthood and then moving them on, or not, depending on everyone’s shared exit aspirations. The group was building a network around food courts and offering such delicious bonuses as buying power, with a possible 45% better pricing from suppliers.
So, getting closer, but not quite. The hotel doesn’t always have a lot to teach the wider hospitality sector, but could the trend towards light-touch conversion brands be a possible wisdom? It’s less simple to change a restaurant than it is to install a cookie drawer, but not impossible.
Delegates heard the casual dining sector was getting back up off its knees. We heard from Mark Selby, co-founder at Wahaca, which was looking at growth after a gruesome 2016 and a compounding covid. We heard from heritage brands such as PizzaExpress. We looked at the UK launch of Popeyes, which has been getting chickens out for 50 years in the US.
Tempting pickings for the ground-down independent. Is there room for a softer version of these brands, something to help them bulk up again? There is much chatter around how a brand is more about the experience than the way the room looks. Is now the time to prove the theory?
Katherine Doggrell is Propel’s editorial advisor and founder of NewDog PR. 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.
In defence of dynamic pricing by Glynn Davis
Despite the extreme unexpected late-summer heat, I cycled across north London to the BrewDog bar in Camden Town and bought a pint of much welcome “Cold Beer” for a highly discounted rate of £3.05 versus the regular £6.55.
There was method in my “mad dogs and Englishmen go out in the midday sun” madness because it meant I could benefit from BrewDog’s Beerometer. For each degree of heat above a base temperature of 20 degrees, the company was knocking 25p off the price. Having hit a peak for the day of 32 degrees when I arrived at the bar, I saved £3.50 on my beer.
This had been the second time the company had run the promotion, and the Camden Town bar had done some good business the first time around, according to the barman. But there was a lack of in-store promotion materials during my visit, even though the till systems were set up for the initiative. My prompt about the Beerometer relaunch had him clambering on to the bar to change the price of the beer list from £6.55, and this immediately attracted further custom.
Despite the operational and communicational hiccup, I very much applaud BrewDog for this playful promotional activity around price. During this cost-of-living crisis, one of the key levers hospitality businesses have is clearly price, but I’m wondering how many organisations are really experimenting with it in unusual and innovative ways – whether that be through price reductions to drive volumes or increases to bump-up margins?
One company that is certainly having a go is Stonegate, which has been hitting the headlines this week for its move to add 20p to a pint during peak times at 800 of its pubs. This follows the increased pricing it introduced for England games during last year’s World Cup.
It’s disappointing to see so much pushback against the company’s actions, but it should have possibly taken greater care with communicating these moves and maybe offset the new increases by knocking 20p off prices during quieter times. Despite the misstep with its approach, it’s great to see Stonegate experimenting with dynamic pricing, and I hope its actions will give other businesses the confidence to follow its lead and combat the vocal naysayers.
The Beerometer is very much a form of dynamic pricing, but it is being done in a very entertaining manner through gamification. Such innovation with pricing undoubtedly overcomes the public’s fear for dynamic pricing, which is invariably linked to prices rising and people getting ripped off. The sensitivity can be seen from activities at visitor attractions and their widespread adoption of high-and-low-season pricing strategies for school holidays and other peak periods.
In a survey by Convious and Baker Richards, only around 20% of people believe it acceptable to increase prices at busier times, whereas a hefty 60% find it acceptable for prices to be lower at less busy times. This would suggest many people quite like the idea of dynamic pricing, but only when it works in their favour and prices fall.
At the moment, there are too few examples in the market of innovative activity around pricing. One is Pesca restaurant in Amsterdam, where the fishmongers continuously decrease the price of the fish to ensure they sell out by the close of business. This way, it avoids unnecessary food waste.
The changing supply on the fish market varies depending on daily delivery, seasonal availability and weather conditions. It was a similar approach taken some years ago at Geales in London’s Notting Hill, where the blackboard listed fish prices at the point of the catch and showed its impact on the price of the dishes based on these raw material movements.
Recently, cinema chain Vue announced it was accelerating the roll-out of flexible pricing across its outlets as it found growing demand from consumers. The company stated: “Price optimisation enables the group to offer agile pricing strategies to customers to optimise admissions and profit.” Sounds good for all parties.
Vue seems to be taking a page out of the playbook of Amazon, which uses various data points across purchase behaviour and market trends to change prices 2.5 million times per day. This has been linked to it increasing its profits by as much as 25%.
Clearly the hospitality industry is a world away from this scenario, but maybe now is the time for some bold thinking and greater thought being put into playing around with price. There are some serious lessons to be learnt from the approaches of both BrewDog and Stonegate, and I’m hoping their actions turn up the heat a degree or two on experimentation with dynamic pricing across the hospitality industry.
Glynn Davis is a leading commentator on retail trends
Seeking the new generation of hospitality hidden gems by Sandra Kelly
The workforce crisis is a worry at the top of every operator’s list. A challenge to be tackled that will remain there if we do not act together to solve it through a strategic, long-term and industry-wide plan.
In the short term, we’ve proven that we can make progress towards lowering sector vacancies. Through the creativity and endeavours of hospitality businesses and industry initiatives, we’ve seen vacancies in the sector fall by 48,000 (29%) over the last year from their peak, post-pandemic.
But there is a lot more to be done if we’re going to fill the 120,000 vacancies currently left in the sector short term and build a viable long-term plan for creating a generation of hospitality talent and future leaders.
That’s why we’re proud to have announced the launch of a new design of the Hospitality Sector-based Work Academy Programme this week, a pilot scheme that sees UKHospitality collaborating with the Department for Work and Pensions for a springboard to provide tailored training for job seekers from industry experts (including Greene King, Marriot Hotels and ACC Liverpool).
It allows candidates to move into a career in hospitality while boosting workforce participation in the sector and helping to grow the economy. Meetings with Guy Opperman MP, the employment minister, in which we discussed the crucial importance of addressing labour shortages, led to the collaborative creation of this newly designed scheme, and we’re excited that the pilot in Liverpool is now live. There are plans in place to also roll it out to other major cities, including London, Birmingham and Manchester, over the coming months.
The idea is to provide a unique programme of learning for benefit claimants in order to get them into stable employment. They will be able to complete qualifications and accredited training in areas such as health and safety, food safety, licensing and conflict resolution to add to their Hospitality Skills Passport – a digital pass that can be added to CVs to show employers that job seekers have the skillset required by the sector.
A huge benefit for those taking the course, and the employers involved, is that the programme will culminate with a guaranteed job interview for all participants, helping job seekers with a valuable progression opportunity to apply their new skills and a pathway to apprenticeships.
It’s not just about recruitment
This new pilot scheme is a key component of UKHospitality’s wider Hospitality Workforce Strategy and sits under the recruitment strand. But it’s bigger than just that – this is about recognising that we have woken up to the fact that we, as a sector, haven’t necessarily been strategic about building our talent pipeline – but that is now the ambition. Through this scheme, we not only want to fill vacancies, but we want to harness and grow talent, give people the tools to access jobs in our industry and enable them to then grow and thrive within it.
Hospitality is a fantastic sector that offers a diverse variety of career opportunities, which is why it’s so well suited to helping people back into work. We are uniquely positioned as a sector in that we can bring people in who haven’t worked before, have no qualifications or have no experience. That’s challenging, but we have a social conscience that is big enough to tackle the challenges. We can grow the emotional strength of our leadership to look after the whole person, regardless of their job history.
Through this four-week programme, not only will candidates learn the everyday basics such as customer excellence and food safety, but they will also focus on the elements of the Level 2 Hospitality Team Member Apprenticeship standard – building personal strength with attention on resilience, agile thinking, personal impact, compassion, teamwork, communication, collaboration and confidence. All skills that are invaluable to building a well-rounded workforce that we hope will go on to lead the sector.
Working as one
Through the creation of a Hospitality Skills Passport, we also hope to deliver a universal entry standard that benefits both the job seeker and the employer. It will give potential candidates a clear path of training to follow in order to secure a job in hospitality and a clear accreditation they can share with a prospective employer. And for the employer, the knowledge that the person they are taking on has the necessary building blocks to succeed in their business.
The launch of this newly designed pre-employment programme is a big step forward and just one part of our wider Hospitality Workforce Strategy. This is just the beginning, as we embark on the pilot. We always welcome feedback and collaboration from businesses and the wider industry as we look to move forward together, united by this pilot of the universal entry standard for hospitality.
It is critical that the industry continues to concentrate on long-term objectives as well as dealing with present-day challenges. We at UKHospitality will be focusing on the launch and successful roll out of these pre-employment programmes over the next year, as part of a much wider programme of work across skills and training, recruitment, infrastructure and building the reputation of hospitality.
We know that there is much more that needs to be done to build a sustainable talent pipeline for our hospitality sector, and we hope that operators agree that the launch of this new pilot scheme is a step in the right direction. One step of many on the journey to making hospitality the employer of choice for a fun, exciting and rewarding job and career.
Sandra Kelly is the skills director at UKHospitality