It doesn’t take the sharpest observer to note there are some dark storm clouds hanging over the UK’s eating and drinking out sector, with many pubs, bars and restaurants finding trading particularly tough, writes Mike Berry.
‘Headwinds’ seems to be the word of the moment, and they are becoming increasingly blustery. Cost pressures have been steadily increasing through a painful combination of government regulation on wages and employment measures, alongside food price inflation and inaction on spiralling business rates.
A new study by Deloitte this week found that consumer spend on leisure activities, including eating and drinking out, has fallen to its lowest level in a year. Spending intentions for the coming three months are also blunted, indicating a degree of “self-imposed austerity” will likely have a direct impact on sales at pubs, bars and restaurants.
Add to the mix the fog of uncertainty that Brexit brings and its implications for businesses so heavily reliant on overseas labour and currently there doesn’t seem many reasons to be cheerful for operators in the market.
All about experience
What previous tough times have shown us is that, in a challenging environment, the cream will always rise to the top, with customers seeking out the venues that can provide a fantastic experience alongside meeting the hygiene factors of premium food, drink and entertainment.
Our client Be At One, the specialist cocktail bar chain with 33 bars nationwide, recently featured on Channel 4 News to discuss the current operating environment, emphasising that it continues to trade strongly as people are still spending on going out and enjoying themselves. It just happens that they are becoming more selective about where they go and how often. Be At One is not alone in seeing visiting habits change as consumers focus more on “the big night out” rather than visiting two or three times per week.
So, the challenge for operators is to build a loyal customer base that has enough reasons to keep returning – and spending – with you.
Experience is the watchword here, intrinsically linked with service and how your customers ‘feel’ when in your venue. Be At One understands that their bartenders are absolutely key to delivering their brand promise (as well as the customers’ cocktails) and – to put it bluntly – are the differentiator between someone having an average night or a great night out.
The company invests heavily in its staff in terms of training and development. They hire people based on personality and then give them the technical skills to deliver great cocktails alongside fantastic service in a fun, lovely environment.
It’s a winning combination: the business is absolutely flying – delivering industry-leading like for like sales and now gearing up for the next stage of growth following a refinancing deal, with the ambition to reach 70 bars nationwide over the next five years. They have just revamped their cocktail menu, refreshed the brand and added some fun new functionality to their award-wining app. All in all, this is a business very much on the front foot.
When the headwinds get stronger, that suits some businesses with the ‘tougher’ conditions actually providing a competitive advantage. Think Lewis Hamilton and his record for winning F1 races in the rain.
Tackling the challenges
Of course, others in the market aren’t in such a favourable position. Many will be struggling to absorb those cost pressures and be faced with some difficult decisions in the coming months around investment, staffing and pricing.
How the sector can best tackle the current challenges will be high on the agenda at the Pub18 show, taking place at London’s Olympia on 6-7 Feb 2018.
FSC is again curating the seminar programme across the two days and we’ll be showcasing some of the leading entrepreneurial operators in the industry as well as hearing from some of the trade’s big hitters on the issues that matter.
As the saying goes, we live in interesting times and the aim of the seminar content will be to provide visitors those nuggets of insight that can help them run more profitable businesses.
And yes, we will find those reasons to be cheerful!
Follow me on Twitter @mrmikeberry