By Sam Martin, COO and Co-Founder of Peckwater Brands (www.peckwaterbrands.com)
Hospitality businesses of all types and sizes have had to face their fair share of adversity – even before the pandemic, the conventional industry wisdom was that 90% of businesses would fail in their first year. Misjudging demand, issues with staffing and supply lines, and shifting food trends make this sector one of the hardest to survive in.
It is understandable, then, that this sector was one of the hardest hit by the pandemic. Hospitality owners were faced with one of the slowest holiday periods in recent memory, with sales in bars, hotels, restaurants and cafes falling by 60% on Christmas Day, 31% on Boxing Day and 27% on New Year’s Eve in 2021, as compared to 2019. Overall sales in the last week of the year dropped by 40% in the last week of the year, a £3bn reduction from 2019.
Hospitality owners who have experienced major disruptions in the past have often survived due to their willingness to change and adapt, pivoting their offering to increase demand and maximise revenues. No one knows what challenges 2022 will present, but savvy owners should already be looking for the next innovative solution to safeguard their own future.
FINDING THE SILVER LINING
In the past, the solutions that owners have turned to included increasing marketing and promotions to encourage engagement and improving their customer experience and data collection to increase repeat custom.While these methods are effective, they are limited by the amount of demand for the business’ style of food or drink in their area.With home delivery increasing exponentially in food and drink service over the pandemic, and third-party delivery platforms like Uber Eats and Deliveroo becoming consumers’ first choice for hospitality, takeaway has become a pivotal part of the modern hospitality business.
Peckwater’s recent survey amongst 250 decision makers within UK hospitality businesses showed that 75% of UK hospitality businesses relied on takeaway orders to survive during the pandemic, and even as lockdown restrictions are lifted demand for these services remains higher than ever. Struggling hospitality businesses need to do more than just improving their delivery offering to survive – and virtual brands could hold the key.
RESTAURANTS WITHIN RESTAURANTS
Put simply, a virtual brand is a delivery business that exists solely on third party delivery platforms without a physical location of its own. It offers full branding and menus online, but the orders it receives are prepared in a shared kitchen.The benefit for existing hospitality businesses is that they can fold a virtual brand into their operations, using more of their kitchen’s capacity, increasing order volume and revenues, and potentially keeping the wolf from the door.
Embracing a virtual brand requires planning, preparation, and some forward-thinking; awareness of local demand and food trends is essential and aligning with a brand that specialises in a cuisine that requires similar equipment and core ingredients will reduce waste and increase efficiency – while decreasing the likelihood of supply chain disruption.
Take, for example, a modern British gastropub that is using 60% of its kitchen capacity.They likely have the necessary base materials to prepare Korean, or Mexican, or American food (such as chicken, fish, or the main vegetables of a dish as well as most necessary spices or condiments).Whilst they may require some additional training to understand a new recipe, it is unlikely that the kitchen will be overwhelmed by a surge in consumer demand for the new menu.
Owners of cafes, restaurants and hotels are already beginning to embrace virtual brands, with Peckwater’s research showing that more than half (56%) of businesses surveyed having already begun running a virtual brand from their premises – and with some restaurants reporting an increase in delivery orders by an average of +823% after adopting a virtual brand, this is hardly surprising.
THE FUTURE IS VIRTUAL
Good news has been hard to come by in the hospitality industry in the last 24 months. Running a second brand from their kitchen may not be the direction many hospitality owners saw themselves going with their business, but the results are too strong to ignore.
Virtual brands are sure to become a larger part of the industry in the coming years, as food trends and demand become more and more varied. Hospitality owners who want to see their businesses survive and prosper well into the decade would be wise to take full advantage.
Sam Martin is the co-founder and COO of Peckwater Brands (PWB), the delivery franchising experts. PWB helps restaurants and kitchens of all sizes benefit from the fullest demands of the market by streamlining the process of embracing virtual brands and multiple-franchise solutions.Working with partners across the hospitality spectrum, they can transform any kitchen into a multi-franchise operation, integrating with their existing operations and opening them up to vastly increased demand across different brands and cuisines. Sam worked in executive positions at Uber and Amazon before co-founding PWB in 2019.