After a year of changes at the top and problems on the bottom line, it is easy to forget that there are operators who continue to fire on all cylinders. James Wallin looks at the companies for whom 2017 wasn’t an anus horribilis and what they are getting right, as well as discussing why we should all make a New Year’s resolution to ban the phrase ‘headwinds’.
I’ve just finished a review of 2017 (you can read that here) and it doesn’t make great reading for restaurant operators. Seen in succession, the rotation of senior departures, profit warnings, site closures and revisions of pipelines, starts to seem pretty endemic.
Pub operators have seen more successes, although this is far from universal, and many food-to-go operators appear not to have got the message that ambitious growth plans are so last year.
But, for the eating out sector generally, it is difficult to put much of a shine on the situation. The latest update from MCA’s Eating Out panel stated bleakly that in the space of a year the sector had “gone from firing on all cylinders to showing signs of breakdown”. In November, frequency fell at every day-part while only breakfast saw a rise in spend-per-head.
And then there’s that word…. the one that seems to creep into every analysis and every interview (don’t blame me, I just type this stuff)… headwinds. From business rates to the apprenticeship levy, costs are rising at every juncture, yet value perception is more important than ever. And don’t mention the b-word….. the price of butter is absolutely ludicrous (no, it really is - a box that cost £26 a year ago is now £65).
So, it’s my New Year’s resolution to ban all use of the word. Anyone who catches me using it can have a free MCA subscription for life (NOTE: Take this bit out, James, we’ll get in trouble).
Ultimately, there are limited ways in which operators can affect any of these h….. challenges ahead. The sector absolutely needs to keep the pressure on the Government to ease the flow of stealth taxes on the industry. To this end, there is one message the Government understands – employment. The sector is a huge creator of jobs and the message that further burdens = less growth = fewer jobs created, is a powerful one that the sector must continue to press. At the risk of sounding like a buffering download (I’m trying to update the broken record cliché for the Spotify generation – what do you think?), we must also continue to speak with one voice and take a simple message to Government. Judging by recent conversations with sector leaders, a business rates system that is simply no longer fit-for-purpose remains the top gripe with authorities.
On consumer confidence, external price pressures and Brexit, however, there is not a thing that operators can do. All they can focus on is their own offer – and to that end, it is important to remember that there are still winners.
To name the first few that come to mind (and apologies to any I’m missing) Wagamama, Nando’s, Be At One, Young’s, Greggs, Pret and McDonald’s (in the UK at least) still continue to display sales growth in line with their performances during the boom times. Even in the better burger market, which has had more than its fair share of negative headlines this year, the likes of Honest Burgers and the seemingly unstoppable Five Guys continue to grab share.
I have picked a deliberately diverse range of operators above and it would be ridiculous to try to pick one over-arching reason why they are outperforming the market, but there are some themes which I believe can be picked out. Apologies in advance, none of these are rocket science, but are worth reiterating.
The first is customer service – the absolute basics of hospitality and the mantra of every CEO, so why is it so often lacking in a fundamental (ie cultural) way at outlets of some of the country’s biggest brands? I have lost count of the times when, despite specifically requesting that my young son is served first, he is left waiting (and glaring) as my wife and I sit in front of our rapidly cooling plates. It’s a little thing but I can still remember every venue this has happened. The sites where staff listen to me, smile, don’t forget anything or spill anything on me, are the ones I return to. All of the brands mentioned above tackle customer service in their own way but do it well. Customer service may not be the first thing you think of when Greggs is mentioned but its staff are experts in crowd control – as anyone who has waited behind a queue of lorry drivers getting their service station butties can attest. Similarly, Be At One’s proposition on service is simple – great cocktails, expertly made, with a smile and on time.
All of the companies above are not afraid to innovate – both in their core offer and in flexing their brand to suit new environments. Young’s runs great old-fashioned boozers, but has capitalised on the opportunities technology provides, has led the way in having a dedicated events manager for each venue and has utilised otherwise dead space with its Burger Shack concept. Pret’s diversification into veggie-only offers was an inspired move, not least on a PR level. Wagamama is utilising real-time customer reaction to new dishes to inform its menu evolution. NWTC’s Tribes app was a game-changer.
I wrote last week about huge potential that exists in partnerships across the sector and here again these leading operators have not held back. Debenhams has been open about the fact that external brands – especially f&b – are a big part of its future strategy, with Nando’s so far proving a great success. I understand that one brand, not actually mentioned above, has managed to increase weekly sales at a former Debenhams own-brand café tenfold within just a few weeks of opening.
There remain great opportunities for operators with a good offer, properly priced, in the right location for their audience. As Welcome Break’s chief executive Rod McKie told MCA last week, consumer appetite for high street brands at service stations has returned and there is plenty of opportunity for operators in a market that is still growing footfall.
Part of Wagamama’s huge success is often put down to its sensible rollout structure and this is an area likely to be at the forefront of operators minds over the next few years. The lessons of Ed’s Easy Diner should not be quickly forgotten.
As usual with these kinds of articles, I’m not telling you anything you don’t know already. I’ve never rolled out a brand, I just pester the people who do so. If there is one message I would like to impart though it is this – it’s still ok to get excited. Whether that’s about new trends, new avenues for growth or just about the fact that no matter what headwinds (NOTE: You see, you didn’t even get to the end of the article) this is an industry with good times at the very heart of its offer.
So, Merry Christmas and a happy new year, let’s hope it’s a good one, without any fear.