(First published in FSM Magazine – February 2012)
Just as I finish this article, Standard and Poor’s have downgraded the credit rating for France from the much prized, triple A, rating. Not something we would usually worry about, but in our connected “Euro zone” world that we now live in, it means yet more uncertainty for our UK economy. Most of the business community are now getting used to things not being “normal”. We haven’t actually had anything close to normal for 3 years now. In fact many businesses have failed in that time, have “gone to the wall” or have been cleverly “packaged” and taken into, and out of Administration, faster than you can say “debt write-off”. But many more have survived, and some have even thrived, and it is those that are catching my interest at the moment.
Those of you that know me, understand that we are not sector specific in our consulting advice. I am a great believer in taking great ideas and successes from the business and industry world and trying them in commercial operations, and vice versa. So. if you read the newspapers and magazines at the moment, you will see that many foodservice operators are doing ok. There are some exceptions, but that is more down to the recession exposing the existing weaknesses of businesses, rather than creating new problems. If you were always bad at credit control and cash flow, this recession is going to kill you off.
So for most businesses that are still trading, they have managed this by adapting what they do and therefore surviving. It might have been as simple as tighter credit controls, stricter Terms and Conditions, or moving into new business areas because existing ones have dried up or no longer create solid enough revenue streams. It could be that you have “got closer to your customer” and you have shaped and varied your service accordingly.
Sadly, I am not excited by the innovation and the approach to “adapting” what is going on in the Contract market at the moment. I have gone on record before and said this, but Contract Catering Partners are not the most “go- getting” when it comes to change. What I have found amazing is that if they are not doing it now, when are they going to? I am constantly being told how challenging the economic conditions are, how difficult it is to make the turnover from site populations and how costs have escalated. Often I step out of these meetings and into another one with a High Street operator, on a commercial project or shopping centre. The differences are quite often stark and very revealing. Yes, they are finding it hard, but they are innovating, marketing and engaging with their consumers and they seem to be winning.
So is there anything at all that can be learnt from the High Street, right now, to allow Contract Catering Partners to adapt their offer, to survive and even thrive? Yes, yes and yes.
When was the last time you saw, in a business and industry site, a caterer offer their guests a special offer on a particular day when trade is traditionally very poor. “Orange Wednesday”, the promotion of free cinema tickets and the subsequent growth in turnover for many high street operators is just that. Pick your worst day, accept a lower margin and go hell for leather to grow your top line cash sales. Your worst day will suddenly be busier, with more cash coming in, and your consumers will be talking about it.
I cant remember seeing any form of “bounce back” being used in Business or Industry accounts. Let’s face it, you’ve all done the hard work and got the customer into your Cafe, Restaurant or Coffee Bar. If you were on the high street, in current times, those same guests would be given a reason to come back, at a quieter time. An incentive, a reason to return, but no, sadly, most Contract Partners sit and expect the customer to just keep returning.
There is little or no evidence of “premium trading” either. All the talk is about less cash, less spend and cheaper food items. This is only part of the story and I can absolutely prove that a limited, “gone when it’s gone” premium offer does work. Putting 20 portions of lamb gigot on the specials board at a premium price, or a market fish offer at 30% more than the usual spend is not madness – completely the opposite. Don’t forget that some people are now taking their main meal at work, as it is cheaper and easier for them in the current economy. This means they might, jut might want something a bit better than the norm.
As “connected” consumers, we are also used to Groupon and Voucher Cloud offers, from the High Street operators. These time sensitive offers give great value for money and give certainty on the numbers and bookings. However I haven’t seen anything like this ever being used in a Contract environment. I have seen many half empty Restaurants, Cafes and Dining facilities that would benefit hugely from this sort of promotion. The operators would not need to use anything technical, just a simple bit of promotional material on site.
All of these examples work for high street operators, but why? Simple really, they bring more consumers to either quiet times of the day or week, or they promote greater value or lower price. Whatever the mechanism, more customers are brought into the facilities, more cash is handed over and more of the costs of running the operation are covered. Come on, face it, you can’t keep cutting labour and other costs, because you finally get to the bone. That leaves you one option only – grow your cash sales. Cash is what pays the wages, not margin and I am increasingly looking at Cash as the measure of success. If you want to know how its done, take a stroll down any high street – there are plenty of restaurant managers who will tell you exactly how they have adapted and survived. Some of then are even thriving – so can you.