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Morning Briefing for pub, restaurant and food wervice operators

Fri 8th Dec 2023 - Friday Opinion
Subjects: Seeking frequency over loyalty, the City is reinventing itself for the better, the no-show must not go on, the power of January
Authors: Ann Elliott, Glynn Davis,  Olivia FitzGerald, Dee Sturgess

Seeking frequency over loyalty by Ann Elliott

This week, I treated myself to a coffee at the Signal Box in Euston, and then, I held two meetings at the Parcel Yard in King’s Cross, both Fuller’s pubs. Then, I had lunch at Caravan in King’s Cross, and am about to have pre-theatre dinner at its Drury Lane restaurant.

A few weeks ago, a few of us had dinner at the Grand Junction in Buckingham, an Oakman pub, and then a few days later, I had breakfast at another of its pubs, the Navigation in Cosgrove. If I have to visit a town I don’t know particularly well, I always look for a JD Wetherspoon pub because I know what to expect – there are no surprises.

For a very special celebration, I would like to revisit The Newt near Bruton. It makes the hairs stand up on the back of my neck just thinking about staying there again some time.

 Does this make me a loyal customer of Fuller’s, Oakman, Wetherspoon, Caravan or The Newt? If loyalty signifies “a person’s devotion to a particular person, group of people, an ideal, a duty or a cause” – one definition I found – then no, I am not a loyal customer.

If loyalty “implies a faithfulness that is steadfast in the face of any temptation to renounce, desert or betray” – another definition – then again, no, I am not a loyal customer.

 I am a fan of these brands but love others as well.

I talk enthusiastically about those that make my heart sing, write about them with enthusiasm and recommend them without hesitation to friends. I am not loyal to any of them though to the exclusion of all others. Part of the joy of eating and drinking out is trying new places, eating different cuisines and drinking all manner of different drinks.
In our sector, we all rely on a constant stream of new customers as well as retaining old ones, to keep our businesses strong and vibrant. If all customers remained loyal to one brand, refusing to try anywhere else, then nothing new would ever succeed.

Like everyone, I suspect I probably have an unconscious, mental list of places I really like and visit pretty regularly, and another list somewhere in my head of those places that I want to try. Current on the latter list are The Devonshire and The Portland in London, The Permit Room in Brighton, The Bull in Charlbury and – I am ashamed to say because it’s been open a few weeks – Loungers in Buckingham.

So, I think the terms “loyalty” and “loyalty scheme” are misleading for our sector. Loyalty, in the true meaning of the word, doesn’t really exist for most businesses. To be fair, I suppose there may be one or two customers in some pub somewhere who never go anywhere else and are never tempted to do so, but that’s not the norm.

Loyalty, it can be argued, cannot really be bought. Pret, having thought about it, seems to be making a pretty good job of buying loyalty with its coffee subscription scheme. Or is it just really incentivising frequency?

Frequency, I think, is the holy grail, and not loyalty.

 First and foremost, of course, frequency is the result of delivering consistency in delivering a brand’s offer promise to its customers in terms of food and drink quality, service excellence, atmosphere and value for money.
In today’s cost-of-living crisis particularly, customers seek the reassurance that their money will not be wasted on a poor experience they will regret. Consistency is just a given in the drive for frequency.

 There is a strong role though for reward, discount, email, subscription and bounce back schemes in encouraging every single customer to visit more often. They can turn one visit at Christmas into many more through the year, or turn one visit a month into two.
They can be invaluable, as Pret has demonstrated. They can be creative, innovative, personalised, engaging and relevant. They serve a real role in generating additional footfall. Just don't call them loyalty schemes!
Ann Elliott (she/her) is a portfolio non-executive director and board advisor

The City is reinventing itself for the better by Glynn Davis

Working from home has been one of the biggest impacts on society and business in the post-pandemic environment, and the front-line of the battle between employers and employees over the number of days that should be spent in the office is arguably the City of London. The ramifications of the erosion of the five-day office week for hospitality businesses in this unique part of the country have been significant.
As the battle has raged, the big financial firms like Goldman Sachs and JP Morgan have demanded many of their people return for the full five days, while Blackstone, Lloyd’s and others try to increase the days from only two per week, in many cases, to more like three or four. While some businesses have tried tempting people in with better facilities and free food, others like Citi have used threats on employees, whereby a failure to turn up for three days per week risks them losing their bonuses.
Meanwhile, between September 2019 and 2023, the City lost a hefty 28% of its restaurants, according to CGA and AlixPartners, above the rate of closures across the whole capital that further highlights how damaging the work-from-home phenomenon has been to restaurants and bars in the Square Mile.
Having spent eight years working in the City of London, of which four were largely spent in the area’s many pubs and bars I recall rather fondly, the demise of a growing number of established hospitality businesses has been personally saddening. Those companies with a large exposure to the City, including Fuller’s, suffered particularly heavily during the immediate post-covid-19 period, while those such as its rival Young’s, which had over the years diluted its exposure to the financial area and London in general, were sitting a tad more comfortably.  
But things have changed dramatically over recent weeks as the City has undergone something of a renaissance. This is reflected in the trading at Fuller’s over the first six months of this year, which showed its City pubs were its strongest performing. It stated that while Fridays remain a weak spot, Tuesday-through-Thursday are the strongest they have ever been, and the real kicker is that Saturdays and Sundays are now contributing on the back of strong footfall in the City.  
Simon Emeny, chief executive of Fuller’s, says: “It’s becoming very much a seven-days-a-week operation. The majority of our sites, not all of them, are open seven days a week in the City. People are back in the offices more, but there is also more domestic and international business in the City at the weekends now. The City is carefully and slowly reinventing itself.”
This reinvention is reflected in the fact that Sunday lunch at the Ned is booked up for a number of weeks in advance and the City branch of Hawksmoor is now a destination on Saturday and Sunday, despite it being tucked away amid the tall office blocks, and the new Wolseley has weekend opening hours, just like its older sibling in the West End. It’s the same at Madison, on the rooftop of the One New Change development, which I gather is the most profitable outlet in the D&D portfolio.
When I was doing the rounds in the City there was an earlier revolution, Big Bang, which revolved around an influx of big US investment banks whose bosses were less enamoured of their charges knocking back the booze at lunchtimes in wine bars in dark basements and instead preferred them to engage in sober breaks involving food and well away from subterranean drinking joints. The likes of Balls Brothers, El Vino, Corney & Barrow and Davy’s had to reinvent themselves or die, and unfortunately, not all of them survived. 
The work-from-home scenario is simply another revolutionary period during which the City has to adapt its model in order to survive, and in tandem with the Square Mile’s hospitality companies, it is successfully undergoing the necessary changes. This represents a further move away from its five-day-a-week male drinking club environment to one that is ever more embracing of a boarder mix of customers, with a wide variety of tastes and desires that can be increasingly consumed throughout the week.
Glynn Davis is a leading commentator on retail trends

The no-show must not go on by Olivia FitzGerald

Customers who book a table and then don’t turn up continue to blight the hospitality industry during a difficult financial time, with Zonal’s latest research in partnership with CGA by NiQ showing that 12.3% of bookings don’t let venues know their plans have changed and are no-shows. This comes at an eye-watering cost – £17.59bn across the entire industry in lost sales. But in reality, the financial impact is much, much higher than that. 
That £17.59bn does not take into account the bill for food waste and over-staffing, for example, and on top of that, the inestimable financial loss of lost business from those customers you’ve turned away to keep tables for those who don’t turn up. And, things are getting worse. 
Our research clearly shows the level of no-shows has doubled in the last year, up from 6% in August 2022. This indicates a worrying trend as we head into what looks like it may be a tough 2024. Diving into the data, we can see that the worst affected sector, unsurprisingly, is restaurants, which account for more than a quarter (27%) of the sites that are impacted, followed by food-led pubs with just under a quarter (24%). 
Who’s not turning up?
Young people continue to be the biggest perpetrators of no-shows, with 40% of those aged between 18 and 34-years-old simply failing to turn up, according to our analysis of the data. This drops significantly as people get older – just 13% of 35 to 44-year-olds are no-shows, and just 6% of 45 to 54 and 55 to 66-year-olds. For the 65-plus, it is a mere 3%.
This is partly because younger adults tend to be more frequent bookers. In previous research we’ve undertaken into booking habits, nearly three quarters (73%) of 18 to 34-year-olds say they had made a reservation in the last month or so – well above the national average of 60% and for those over 65 (52%). It’s also true to say that younger adults are more inclined to stay spontaneous, making them more likely to change plans at the last minute. 
We also know those who more frequently visit restaurants, pubs and bars are more likely to be no-shows, with our most recent data showing 21% of those who go out weekly no-show, dropping to 13% of those who go out less than monthly and 10% of monthly visitors. In the same vein, Londoners are much more likely not to turn up.
Solutions for no-shows
A total of 16% of consumers simply forget about their booking, so sending out reminders appears to be the most obvious solution to tackling no-show rates, with all the evidence suggesting that restaurants that re-confirm their bookings have far lower rates of no-shows than those that do not. 
The timing of reminders appears to be the key to this. According to our consumer research, just over a quarter of people (28%) would like to be reminded on the day of a booking, while 38% prefer a few days in advance or a week ahead (11%). Systems can be set up to do this automatically, easing the pressure on staff and making the process easy on both sides.
Operators also need to ensure there is an obvious and simple way for customers to cancel. More than half (51%) of people prefer to cancel a booking digitally, so signposting on websites and booking confirmations just how to cancel can make a significant difference. This process should be simple, easy to navigate and require just a few clicks to be truly effective.
Deposits are another solution – albeit a more controversial one. When we last garnered public opinion on this, we found that more than half of people (51%) said they would be willing to pay one to secure a booking, but they do remain divisive. In general, customers are more willing to pay them when booking for a large group or for a special occasion, with 65% saying they would do under such circumstances, but only 41% willing to do so for casual occasions. This latter number is still a significant number of customers, however, and so while the general consensus in the industry is that people won’t agree to pay a deposit, we may need to reconsider our squeamishness around this.
Rather than looking at deposits as a blanket approach, operators should think about how and when to use them to make them effective. For example, having deposits for large group bookings and reservations for peak times could help secure a booking, but operators should review their policy for other instances. There’s no point giving people hurdles to jump through on a Monday lunchtime if it’s not necessary.
There are other, less common options worth considering as well – over-booking, for example. Most operators are hesitant about this method, but if you have the data available, you can find out when and by how much you might be able to over-book while maintaining an excellent guest experience. And, if the practice were more widely adopted by the industry, then it is likely consumers would come to accept it, as they have in other sectors.
Show Up for Hospitality
However, as we approach the issue, it is clear we can no longer ignore it, which is why we initially launched our #ShowUpForHospitality campaign in 2021 and continue to champion the issue today. 
We believe educating consumers about the damage not showing up causes to individual businesses is key to making a positive difference and we will continue to drive awareness of this as much as we can.
This will be much more powerful if the sector works together collaboratively, however, and so a concerted effort across the industry will be key to making a significant difference, driving behaviour change on a large scale and clawing back some of that £17.59bn in lost sales.
Olivia Fitzgerald is chief sales and marketing officer at Zonal, the hospitality technology supplier

The power of January by Dee Sturgess

As any seasoned hospitality professional knows, after weeks of Christmas parties and longer-than-hoped-for shifts, the quieter weeks that follow in January and February are often welcomed by operations teams. Although the early part of the year brings its own challenges of lower footfall and revenue, the chance to rest, regroup and reset for the new year is understandably greeted with open arms by most operators and their teams.
I remember my first year as a trainee shift manager and how I loved the atmosphere of Christmas in a busy bar environment. As an enthusiastic 21-year-old, I embraced every minute! From planning events and entertainment for festive parties through to peeling potatoes and working late on Christmas Day after having record breaking covers through the door. However early the mornings and late the nights were, I just loved the infectious buzz from both the customers and the team around me. 
At the end of that Christmas, 2 January felt utterly dismal to me in the bar as I helped take the decorations down. My then mentor must have caught my sulky glaze and said to me: “Don’t underestimate the power of January.”
Her words stayed with me, long after the, ahem, “buzz” of peeling sacks of spuds and washing up on Christmas Day evenings wore off! I realised after that first year in operations that if you get January and February right, it can make a significant positive impact on the business growth for the rest of the year.
The phenomenon of using the 1 January as a marker for positive change is well-known, but I wanted to delve a little deeper into finding out if there really was some science behind “the power of January”.  I want to find out if the start of the new year is truly the most impactful time to learn, or if it was just blooming convenient that our industry is much quieter in the first quarter of the year? As it turns out, there is actually a lot of fact and not just feeling behind the “new start” ethos.
A study by Hengchen Dai et al (2014), aptly named “The Fresh Start Effect”, shows exactly how this works. Their research shows that key landmarks such as a new year can create new “mental accounting periods” which provide psychological distance from a person’s past imperfections, encouraging them to tailor their behaviour to match their new, positive self. This research also shows that these temporal landmarks break up the daily routine, giving people a chance to regard a “big picture view”. That, in turn, can enable them to devote more time and effort into achieving their goals and targets. 
So, the beginning of the year appears to be not just logistically convenient for us to plan training in the first quarter, but also that investment in upskilling teams early in the year will have the best possible return on investment for the business. Great team members can be hard to find and tough to lose. So, why is it that our industry still falls foul of not investing in developing our people before they disappear from our businesses?
We’re all familiar with the long-standing challenges of recruiting and retaining people in the industry, which most of us have always attributed to the cheery list of long unsociable hours, low pay and lack of job security. However, are we wrong to assume that this list is always the root cause of having such terrible team retention numbers? 
I believe, as an industry, we can be better by investing in developing the people that are the heart of our businesses. Ensuring they feel valued, wanted and appreciated. Which, funnily enough, are also three key values I focus on in training that are recognised key elements for driving rapport and loyalty with guests.
If we want our team to make our guests feel valued, wanted and appreciated in our venues, then we’re really missing the irony that we don’t always offer that to our employees. How many of us actually intended to have a career in hospitality as our first job choice? Anyone? Most of us fell into the industry by chance; a part-time job in college or university that stuck, or a backup for another vocation that triggered a change of heart. 
We can’t forget that most of us didn’t originally plan to be right here where we are now! Someone gave us a chance, invested in us, trusted us, inspired us and triggered our “hospo” journey! Still not convinced yet? Here’s some food for thought.
According to LinkedIn’s 2023 Workplace Learning Report, 94% of employees claim they would remain with a company longer if it simply invested in their learning. Meanwhile, 90% of hospitality employees would be more likely to stay in a role longer if their employer invested in training from the outset.
Guests can tell when they are dealing with a well-trained, confident and informed team member. The guest naturally gets a better service and the business builds a stronger reputation, which results in loyalty, driving revenue.
If we are going to move forward and reframe the way a career in hospitality is viewed, then we must stop blaming the negatives in our industry as being the reasoning behind our “people problem”. It’s time to start focusing on building rapport and loyalty with our own team if we want to achieve the same with our guests.
Dee Sturgess is the director of client training at Bums on Seats, the strategic sales and business development expert

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