There is a particular segment of the foodservice market which is growing in importance and stature, especially in these challenging economic times. “Day Visitor” catering has always been around, but the recent growth in activity, and quality, has seen some major changes taking place.
Cast your mind back to the old days when museums, galleries and gardens had “rather quaint” little foodservice offers, tea rooms, cafeterias and snack bars that offered the on site consumers a cup of tea, a slice of cake and, if you were lucky, a sandwich or jacket potato. Roll forward to today, and day visitor catering is big business for the Contract Catering and day visitor catering market.
The importance of this sector was formally recognised by a number of players early on – the purchase of Benugo by BaxterStorey was, in many ways, the pre-cursor to the rest of the industry getting to grips with the opportunity. The market had, up to that point, been dominated by companies like Sodexo, who held long contracts at locations such as Kew Gardens and Blenheim Palace, and Compass who had the same long tenures at The Royal Albert Hall and the British Library. Elior had there fair share of contracts at the Historic Royal Palaces and the museums along Exhibition Road. I wouldn’t be talking out of turn, if I said that these giants were a little sleepy in not realising what was happening around them. A whole set of “new kids on the block” were eying up the opportunities and slowly, but surely, getting into the day visitor catering market.
At the same time changes in the admission costs, with entrance free to most public locations, meant that the funding models for many of these sites needed to radically change to balance the books. “Commercial Activities” became a very common topic of discussion and the plans that were drawn laid bare the inadequacies of anybody that couldn’t properly service the daytime visitor with foodservice on a site. The Client teams became very interested in the quality of the operation, the price of the food and drink, and more importantly, the commercial return that was coming out of the activities. Most realised very quickly that they had a strong footfall, a willing consumer and just needed to match the requirements from this customer with a provider who could deliver on all levels. Contracts changed and Searcys, Company of Cooks, Rhubarb, Peyton and Byrne, to name a few, got a strong foothold in the day visitor market.
I often argue that the Clients needs and wants, and those of the consumer on these sites, are more closely aligned than it would first appear. Yes the Client wants income from foodservice and yes they want minimum hassle, but this can only be delivered through the proper execution of the day visitor catering. Poor quality, slow service, lack of choice and other problems don’t deliver for the guest, reducing their spend and their perception of value.
Nobody likes loosing a Contract. The established players, and certainly the “big boys” have, between them, lost most of the larger Contracts in the day visitor market in the last 2 years. It’s not that they are very poor, so why is it that they have been replaced at a time when income certainty is so important to the Client?
Well, to answer that properly, you have to go back to the consumer again. The money they spend on site in the book shops, retail stores, restaurants and cafes is significantly enhanced if the stay is extended. One of the major reasons for not staying on a site is the lack of foodservice provision of an appropriate standard. Most people function to meal times, so every 2-3 hours food will be on their agenda. Whether it is coffee and cake in the morning, a light lunch, or afternoon tea, the opportunities to be parted with your money are huge.
I firmly beleive the reasons that Contracting Partners have been changed is because the more commercial, and customer focused operators, are thinking “broader and deeper” about their consumer. Many are not thinking about the basic provision, but are looking at ways of “adding value” to the experience. After all, who would not want a grand afternoon tea at Blenheim Palace with a glass of Pol Roger Cuvee Winston Churchill champagne, to top off an amazing day. Sometimes we focus too much on the basics and don’t provide the treats and higher end that our consumers tell us they want.
To reinforce my point, look at the number of “proper” restaurants that have appeared at Hever Castle, The Royal Academy, The Saatchi Gallery, The Barbican, with a whole lot more on the blocks or in planning. One person coming to a site has the propensity to spend a huge range of money on food. Give them no choice and they can but enjoy a coffee and sandwich. Extend the offer and they can have lunch, enjoy coffee and spend, per head, three times more than they were.
I am not saying that every site should have a restaurant, coffee shop and cafe. Each site must be carefully appraised and the consumer understood. But if there is strong evidence from watching consumer behaviour, that more spend could be captured on site, then this is what needs to happen. Simple and quick research exercises have shown that consumers are willing to tell you what they want. De-tune it a bit, be cautious of the complete “wish list” but listen to them nonetheless, they will tell you an awful lot about your opportunity.
So to the future. We have seen some pretty big contracts change in the last 6 months, many of which have been handled by my business, Coverpoint. I suppose that makes me reasonably well placed to say why the Contractor has changed and what excited our Clients. Innovation is a much over-used word and most who talk about it wouldn’t actually recognise it if it slapped them in the face!. What really excites me about some of the new offers and operators who are winning contracts, is the confidence they have. The confidence to deliver great food, great service and to stay up to date and current with their consumers. You cannot make promises without a solid foundation for the business as well, but the exciting ones are those that understand the financials, “get” the opportunity and want to make a good return along with the Client. There are some that think that “good” comes at a discount, when discussing Minimum Guarantees and Commission levels. There are others that promise the world and neither Consultant or Client can see how they could ever get to the projected sales levels.
There is no doubt that this is a serious game. Failure to win a bid in this sector means writing off significant costs. We estimate at least £50,000 per bid for some of the larger contracts, but we are not putting peoples arms up their backs. They want to bid and genuinely beleive they have the capability and cash to win. And that brings me to my final point. There is no doubt that Clients are looking for significantly more investment in their sites than they used to. Many of the buildings and infrastructures that foodservice units are located in are tired at best and some should simply be condemned. Clients don’t have the resources to spend on these, so it is only natural that operators are asked to invest. The really important point for me is that the operators are also projecting sales growth, are proposing changes to units and menus and suggesting enhancements to the foodservice experience. Why would they not invest if they genuinely beleive in the business model they are proposing?. If it makes them look longer and harder at the business case, the viability and proposed offering, then all well and good.
Investment is going to remain a challenge for the next few years. Many operators will find it hard to secure the cash flow they need to invest in sites. Many will want to restrict their investments where possible, and that’s fine. As a cynical foodservice consultant, I have always said it is not about the amount of money you throw at something, it’s what you do with it. Big cheques, big commission levels and big Minimum Guarantees are all fine, but show me how you can actually deliver the guest experience and sales that will deliver it too.
Go on, make my day.