Creams MD Othman Shoukat: ‘Hospitality must diversify and redefine its business models’

The coronavirus crisis has served to accentuate a level of disruption that the hospitality industry was already facing, and now businesses must redefine themselves accordingly, MCA’s The Conversation has heard.

Speaking as part of this week’s delivery-focused panel, Creams MD Othman Shoukat said that prior to the virus, the sector was already experiencing a shift in consumer behaviour and revenue streams towards delivery and takeaway, “which has been accentuated by the covid situation.”

“When you look at what’s happened over the lockdown period, with a big drive of sales being delivered through delivery and takeaway, I think over the short to medium term that trend will be expedited more,” he said, forcing businesses to introduce some “diversification” in their “sales channel strategy.”

For Creams, which Shoukat revealed is due to open three new sites in the coming months, this has meant a process of “reconfiguring what our business model will look like, and where our revenue streams will be coming from.”

“We know that the number of covers will be reduced, and we anticipate that potentially the average spend per customer may go up,” he said. “And we know that if our covers go down then our labour rates potentially will go down as well.”

“It’s about looking at your site economics and almost redefining how the business will work.”

Shoukat’s position was echoed by co-panellist and Pret CEO Pano Christou, who added that one of the Pret’s biggest challenges going forward would be “to be more of a multi-channel operator.”

Over the weekend, Pret appointed advisors CWM to assist in discussions with landlords, a decision Christou explained was down to the “permanent shift in footfall” the business expects to see across its estate.

“We’ve done a great job over the years developing good relationships with landlords and I’m keen to build on that, but we need to go in and have a proper discussion and negotiation about how things will be in the short, medium and long term,” he said.

“Rent in London is high, and we know footfall will be lower. The challenge for Pret as a brand will be in continuing to build on the delivery piece and how we bring Pret to the people, rather than waiting for people to walk into our shops.”

Beyond the retail environment, another key challenge expected to impact Pret and other brands with high site concentration in city-centre locations will be a shift in the workplace environment, added UK Hospitality CEO Kate Nicholls.

She explained that whilst the coronavirus has acted as a catalyst for the acceleration of retail trends and ways of shopping “that were already well in train,” a more significant shift will be in the sharp decline in office workers.

“When you talk to big companies and firms that have headquarter offices in London, they are only talking about returning at 50%, and not until the end of the year,” she said.

“Companies will be more inclined to grant work from home permissions, there will be a reduction in business meetings and business travel, and office occupancy levels will remain suppressed for quite a bit longer.”

“That will be one of the longer lasting effects that we’ll find from the covid crisis.”