By Sam Martin, COO & Co-founder of Peckwater Brands (www.peckwaterbrands.com)
The new financial year begins in the midst of some very challenging circumstances for the hospitality sector.
Almost 10,000 licensed premises – cafés, bars and restaurants – closed their doors permanently in the first year of the pandemic alone. And while lockdowns and social distancing rules might be behind us, there are plenty of new obstacles standing in the way of hospitality businesses as they prepare for the future.
A cost-of-living crisis, staff shortages and supply chain issues will affect hospitality businesses in many ways, not least by damaging consumers’ finances and eating into the disposable income – income that would be spent in restaurants, bars and takeaways. To many, it might seem like hospitality owners are back to square one, facing the same threat of closure they experienced at the height of the Covid-19 pandemic, having to dig deep and claw their way to survival.
This, however, does not have to be the case. During the darkest days of the pandemic, we witnessed the incredible resilience of the industry, with businesses adapting and pivoting to make the most of a bad situation. Peckwater’s own research revealed that a startling proportion of hospitality owners made the vital decision to alter their business model to increase revenues: 75% of the hospitality business leaders surveyed said that they relied on takeaway services to survive, while 69% trimmed their overheads by sourcing new, cheaper suppliers.
We saw during the pandemic that hospitality owners did not take hardship lying down. But in the coming financial year, hospitality should be allowed to move past the struggle and begin thriving in the post-pandemic market. Here are some ideas of what businesses can do.
Anticipate customers’ needs and desires
Companies in all sectors accept that we are living in a “new normal”; a clumsy term, but one that recognises that things are not how they were before Covid emerge. Indeed, food trends and customer preferences have always moved quickly, and hospitality owners need to be flexible and open-minded when they reconsider their offering in the present day.
Our research showed that 64% of hospitality businesses felt they needed to diversify their menu, while 68% felt they needed to find new ways of accessing a wider pool of customers. Whatever area a hospitality business operates in, it will not do to simply guess at what local consumers are hungry for. The popularity of home delivery and takeaway, particularly on amalgamating third-party platforms, has created a wealth of data on consumer preferences and purchasing habits in different areas.
This data must be placed at the heart of businesses’ operations and strategies, and their offerings should reflect this.
Seasonal items, healthy and inclusive menu options, rotating ‘limited time only’ offers and loyalty benefits are ways in which restaurants, cafes and bars can avoid statis and target their local consumers, ensuring they maximise engagement where possible.
Beating a new path
Unfortunately, not all prevalent trends can be captured by altering a business’ offering. Capitalising on certain food trends would require a ground-up rebuild of many hospitality enterprises – or at least a change of approach.
The majority (56%) of the hospitality business leaders we surveyed said that they had begun running a virtual brand or dark kitchen out of their premises during the pandemic, thereby allowing them to take advantage of the prevailing wind of consumer interest as it changes. Changing a restaurant’s overt theme from Italian to Mexican would be a huge endeavour, but through a virtual brand, it could begin producing and profiting from the local demand for a secondary cuisine without changing its business entirely.
Running a delivery franchise for a secondary brand does not only allow businesses to better follow consumer preferences and gain more insight into their clientele – it also is a reliable source of income, with Peckwater’s partners reporting increased revenues of between £12,103 and £45,823 by running a virtual brand out of their existing premises.
While running one or more virtual brands in parallel with their existing operations might seem drastic, this is indicative of the kind of creativity and resilience that the hospitality sector has shown in recent years. Further, it is one way hospitality businesses that are willing to make a change can fulfil their goal of returning to their pre-pandemic success.