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Do not be in any doubt, 2018 was a difficult year for the hospitality sector, with around an 18% increase in the number of food and drink companies entering into an insolvency process. The trend does not appear to have gone away just yet, with the major casualty of the year so far being, arguably, Jamie’s Italian, which entered Administration in May, after failing to adhere to the terms of its Company Voluntary Arrangement rescue proposals.
Jamie Oliver has gone on record saying that his original aim for Jamie’s Italian was to transform high street dining, with “the intention of positively disrupting mid-market dining in the UK high street, with great value and much higher quality ingredients, [and] best-in-class animal welfare standards”. (The Guardian, 21 May 2019). There is no doubt that high street dining entered a transformation period, with the rise of many outlets, such as Zizzi’s, Prezzo, Byron Burgers, to name just a few.
The last couple of years however, has shown that the casual dining sector has perhaps lost its way. The concept of great value appears to have been lost, as prices have increased for higher quality ingredients, whilst there may not have been a similar increase in customers’ pay packets. The cost of living has risen, but these mid-market restaurants have perhaps not recognised that the monthly wage has to go further, which has resulted in consumers voting with their feet and going elsewhere (whether that is just staying in, or going somewhere where there is a perceived value for money experience).
What does this tell us?
Businesses within the casual dining sector need to have a strong brand presence which consumers understand – that means that businesses need to be able to explain their vision to their consumers and be able to back it up with their offering. Having a generic mission statement about offering great value for money is not going to cut the mustard – consumers are starting to want to be able to buy into what businesses are selling and having a clear vision that can be understood by the customer-facing staff will help build a strong brand.
Another issue is around the menu choice – many of the recent high profile failures have had some form of “Italian” offering on their menus. Again there is a differentiation issue – if everyone does Spaghetti Bolognese for a similar price point, there has to be another reason why customers are going to dine at your restaurant, and, if they do go, there needs to be a convincing reason for them to return.
What can you do to make sure that you receive repeat business?
Data analytics is a big opportunity for businesses nowadays. By offering customers the incentive to sign up to loyalty cards, discounts and special offers, it becomes an opportunity to create customer loyalty, without necessarily costing a lot. It also provides the mechanism to gather data and you can use data collected to determine what options are popular, which are loss-leaders and adapt your menu to suit. Certain restaurants are asking for real-time feedback on the dishes served so that the business knows exactly what is working and where it might need to make some improvements, allowing restauranteurs to adapt more quickly to changes in consumer preferences.
There should also be a note of caution attached to customer loyalty – it can come at a direct cost to the business. Things to avoid would be “buy one, get one free” options, through online offers with platforms like Groupon or offering a meal that would cost you £60 in supplies for an agreed discounted rate of £50 – you’re going to lose money before the customer is even through the door! As with everything, you need to understand the cost implications of a reduced price and make sure that you have sufficient headroom to meet your minimum costs before offering slashed prices.
Ultimately, people will still want to dine out – the key is to make sure that your offering is one that people wish to experience.
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