By Jeremy Harvey, Creative Partner at marketing communications agency Clarity (www.clarity.pr)
Life as we know it has drastically changed. The dining sector has felt the impact immediately and deeply, enduring months of real uncertainty, a feeling that won’t be going away any time soon. Experts predicted that in 2019 the industry would suf- fer its fastest year-on-year decline since the beginning of the last decade.Yet prior to the current crisis, the industry was still valued at almost £19bn in the UK alone.
There has been some tentative reopening since the beginning of July to try and mitigate some of the economic damage that has already been
done.The ‘eat out to help out’ scheme is now in full swing, and a great example of an initiative in place to help revive the sector.And whilst even though we are still adapting to a new normal, one thing we know is con- sumer behaviours will have changed forever in a multitude of ways. However, convenience, great service and a unique experience will remain crucial factors to brand success.
Innovation is nothing new in this sector. In fact, we’ve been hurtling towards it becoming a necessity for survival for some time. Certain brands, driven by technology, smart players such as delivery platforms, subscription snacking propositions and nimble restaurant chains were already innovating to keep up with demand.They were simultaneously fuelling changes in customer habits. And some of the trends we saw then, such as D2C in particular, have drastically accelerated over the last few months.
There have been some high-profile brand failures in recent years, Jamie’s Italian is an obvious example. More recently chains such as Chiquito, already weakened by pre-crisis market conditions, have been tipped over the edge. Similarly, as a result of the virus,The Azzuri Group has struggled to keep Zizzi and Ask Italian restaurants afloat. Even with the recent res- cue deal from investment firm TowerBrook Capital Partners, we’re still likely to see approximately 75 sites close. In contrast delivery services such as Just Eat and Deliveroo who were already doing incredibly well, have remained in a strong position during lockdown.
In a world that almost feels unknown now we created The Eating Index in order to uncover the crucial factors behind these failures and successes. It’s a unique methodology that maps brands according to two key measures of performance: customer centricity and disruptability. The crisis has thrown a number of new factors into the mix.And the findings still stand. In fact, given the challenges that dining brands of all types have recently faced and continue to do so, the insights uncovered are perhaps more valuable than ever.
The Eating Index scored attributes for each brand we examined, group- ing them against a range of factors – from financial indicators to brand strength, innovation strategies to internal communications. Each brand was chosen as we believe them to be representative of different categories within dining, allowing us to benchmark disruption, successes, challenges and overall performance in a way that can be applied to similar brands from each category.
HUNGRY FOR SUCCESS OR FEEDING ON SCRAPS?
While plotting individual brands on the index we also grouped them into four segments – ousted brands, the challenged mainstream, front runners and dominators. In the ousted group, Jamie’s Italian acts as an obvious cau- tionary tale.While Jamie’s personal brand and approach to sustainable sourcing ranked well, the business lacked the necessary customer-centrici- ty, agility and innovation to remain relevant.
Brands such as Yo!, and Strada sit in the challenged mainstream grouping. This segment is characterised by financial strife – Strada had already had a bad 2018 when it closed nearly all of its estate blaming “an increasingly competitive market”. Although it has a relatively clear proposition, con- tented employees and offers convenience, it falls down on aspects such as investment, innovation and customer satisfaction. Brands in this segment need to find ways to freshen up.They’re going stale and crisis aside were already drifting towards more financial scares that might eventually leave investors cold.
The likes of Nando’s and Wagamama make up our front runners’ group. These are strong brands, growing and profitable, scalable and digitally savvy, but still disruptable with disloyal customers and indifferent employ- ees.Wagamama’s even teamed up with MasterCard earlier this year, to let customers use a mobile application to pay for meals.A trend in which has been adopted by other restaurant chains, such as Pizza Express, to help with the safety and speediness of ordering paying for food during this time.
Nando’s scores full marks for willingness to act and is bang on the money with the bulk of its customer-centricity elements. It has always been faithful to its clear proposition, just as rivals have stretched too far by feeling the need to diversify in the face of changing customer tastes. This ethos has propelled Nando’s to the front of the casual dining chains striving for Dominator status.
Regardless of their exact spot on the index, the key challenge for brands in this group is to grasp the nettle. In most cases, a greater focus on mar- keting and communications – amplifying why they have done well so far and creating more reasons to believe for diners – will turn the dial up still further. Such moves have paused for now, but should be reactivated like never before if these brands are to regain lost ground in Q4.
Game-changing innovators such as Just Eat and Deliveroo make up our Dominators – although even they’ve had challenges to deal with during the pandemic. Innovators with a clear purpose, proposition and plan with the financial clout to stay ahead, Dominators are the ones to catch, and now they’re bouncing back. More than any other type of business in the index, delivery brands are changing the face of dining. Deloitte recently found that a third of Western consumers use meal deliveries, with 7% doing so at least once a week. It’s not hard to imagine in which direction those figures might go.
This really could be a winner-takes-all segment in years to come, with market consolidation seemingly likely as delivery brands jostle for posi- tion. In the longer term it’s important to not underestimate the impact of reputation and ethical factors; Deliveroo scored poorly for sustainability in comparison to Just Eat, which is proving its green chops by partnering with Eskuta, the e-scooter brand. In that sense it’s one step ahead of its rival.
RECIPE FOR SUCCESS
There are clear learnings we can take from these findings.As the sector is beginning to navigate its way out of lockdown, sector disruption will continue.The brands that emerge from this crisis will need to take proac- tive steps to ensure they’re moving up, not sliding down, the scale.Where should they start? Which specific steps you need to take depend in large part on your stage of organisational maturity.
When it comes to established brands, just because they may enjoy high awareness doesn’t mean that enough volume and profit will follow to sus- tain it.This is the reason chains like Ed’s Diner and Frankie & Benny’s pre- viously had to shut branches.They have a broad proposition and suffered from the effects of trying to appeal to everyone.
This is where a market focus is crucial.The age-old adage “put the customer first” couldn’t be more apt.What do people actually want? Especially in the current environment.Working to an existing – often successful – formula might feel safe but blocks the change necessary to remain relevant and embrace bigger opportunities that emerge from new technology, or a trend propelled by other brands. Or unforeseen circumstances.
It’s crucial to be open-minded to new and better ways of operating.A new ‘normal’, means new rules, new opportunities for driving true change, and innovation that goes beyond a quarterly menu refresh to embrace the whole dining experience.
There is no harm in taking learnings from innovation by the newer breed of digital native scale-ups.These brands bring convenience and personalisation to customers and do well because they know what works. Competitors should use some of those ingredients to grow, too.