The volatility in today’s F&B sector shows no signs of abating. For F&B operators, this means finding innovative ways to adapt to new rules of engagement. Helene Mills, director of Pragma, the consumer strategy consultancy, offers some pointers on how restaurant operators can drive performance in 2018.
Restaurateurs and outlet operators are constantly looking to re-invent how they keep their propositions relevant and fresh. We’re seeing add-ons like click and collect, table-top tech and Instagram-able makeovers, but we believe that a future-focused, confident stance is what will ultimately drive performance. These are the fundamentals high-performing operators need to get right.
• Be clear on brand identity
Market volatility means ensuring that your brand and proposition are clearly understood – internally and externally. F&B brands need to effectively communicate their brand by getting to the core of what you stand for, and understanding customer behaviours. This will allow you to remain clear on storytelling and enable the brand personality to shine through.
Understand who your customers are and why they like you. Be clear on how you articulate your proposition through the guest experience too. You can then adjust the various brand components as necessary, to reflect exactly what your audience is looking for. It is through this understanding that you can create an evolving offer, one that delivers a truly reliable and trusted brand promise.
• Build a top-notch team
The F&B sector is characterised by a transient workforce, low wages and a temporary work ethic. It’s notoriously difficult to find and hold onto decent staff – a challenge that’s set to become harder with Brexit. High performing operators will identify team players who are passionate about hospitality, those in it for the longer-term rather than a stop-gap between studies or another job is a key first step. This requires significant investment in the recruitment process.
Your team also needs the right processes in place; induction, training and ongoing development to perform optimally. It’s about keeping employees engaged and delivering their best, through great management and incentivisation. Your team needs to see that there is opportunity to progress and develop, as well as be involved and excited by the evolving proposition, for example, through menu tastings and launches. Make sure that you set the bar on expectations too. Senior level brand guardianship and regular training is paramount here.
This costs both time and money. But great service enhances customer engagement and advocacy and it’s no co-incidence that there’s a direct correlation between staff retention and customer experience. From our perspective, creating a culture that rewards and incentivises on-brand behaviour could be your biggest win. But it needs to be understood and planned for. Modelling the cost of churn against the benefits of stable personnel show that it’s the operators who prioritise and invest in their teams that maintain the edge.
• Get smarter on pricing
With increasing pressure on overheads and other costs, operators need to pull on every lever possible to drive sales to keep their heads above water. A strategic focus on pricing strategy and menu management should be deployed to drive ATV and profitability, ideally with no impact on traffic. This can be achieved through quantitative analysis and statistical modelling of sales data to understand customer spending behaviour.
Taking this approach means operators can be more effective about how they adapt pricing and menus. It means you can react to demand, flex to locality and to find the optimum price elasticity so that your business is equipped to implement demand-based pricing, drive sales and squeeze out any hidden margin opportunity.
• De-commissioned delivery
The delivery channel presents a significant opportunity for the supply side. But, many are grappling with how to execute and make this a profitable line on the P&L. Increasingly, we’re talking to clients about the development of their channel strategy, which is a relatively new conversation for F&B businesses.
In reality, the optimum solution or ‘channel mix’ varies. To develop the most profitable long-term approach requires a clear understanding of the restaurant operations and cost structure, the estate footprint, the target audience and the competitive landscape. Expert advisory supports established restaurant businesses in working out the best means to effectively access the value growth potential in the sector, be that through click & collect, third party delivery partners or a separate ‘dark kitchen’ operation.
• Streamline your operations
Finally, now more than ever, operators need streamline and improve every element of back-of-house operations and concept execution to drive efficiency and performance. This means reviewing team structure, sense checking opening hours against demand, cutting out the fat in rotas and shift patterns together with revisiting standard operating procedures.
The tricky part is striking a balance that achieves this without negatively impacting the customer experience. While it many not be the most glamourous of functions, regular and constant focus on the power of marginal gains can make the difference between sinking and swimming in troubled waters.