Gemma Thompson

26 August 2020
Topics in this article
  • Cost Optimization
  • Risk & Resilience
  • Strategy & Planning

As we approach the end of August 2020, we also approach the end of Britain’s Eat Out to Help Out scheme. The scheme, set up to support and protect jobs in the hospitality industry, has seen over 85,000 restaurants sign up and over 64 million meals claimed (so far). Those participating are offering half-priced meals up to a £10 discount per person, valid Monday to Wednesday, subsidized by the government at a total so far of £180million.

While there isn’t one sector of the economy which has managed to dodge the effects of the pandemic, the hospitality sector has been hit particularly hard. With signs of struggle for the sector even before Coronavirus hit, think the closure of Jamie’s Italian, the pandemic seems to have been the ‘straw that broke the camel’s back’ for many, causing mass closures across Carluccios, Frankie & Benny’s, Las Iguanas, and Pizza Express to name a few.

Designed to address this, the Eat Out to Help Out scheme has reignited demand, enticing consumers out of their lockdown bubbles with half-priced meals, and creating a need for employees to return to work.

Of course, there have been hurdles to overcome. Social distancing requirements have led to an average 25-30% reduction in capacity. Then, there’s the customer’s nervousness of the experience, with many skeptical about how relaxing the atmosphere can be. Combining the two means restaurants face the challenging balance of ensuring sufficient demand before committing resources and costs once more.

However, overcome they have. The scheme has been well received by restaurants, customers, and the government. So, in an exciting month for its’ recovery, thoughts turn to how businesses will hold up once the scheme ends, suggesting that the key to this recovery is two-fold; firstly, by addressing the now, and secondly by adapting for the future.

With just over half of those registered on the scheme having claimed the government pay-out so far, there’s a way to go with the first step, however with it being a simple process to access the money, there shouldn’t be too many blockers to its’ success.

So, where should restaurants focus efforts when adapting to the new normal, and how can they optimize that effort for a speedy recovery? With indirect spend typically representing 15% of the cost base, perhaps the answer sits in this often untouched territory, utilizing hospitality procurement and supplier expertise to better shape the experience on offer…

Rethink your restaurant design and offering

From coffee shops to hotels, Perspex screens and one-way systems have been put in place to protect customers and employees alike. For many, lockdown has provided the time to bring these additions into their brand, re-designing for the new normal, and presenting an opportunity to review their cost base. So, using the correct suppliers at both the right time and the right price, is vital for survival and growth.

With competitors facing the same hospitality procurement challenges, advantage once again falls to the experience you are able to offer customers – or, the experience your suppliers are able to offer your customers. To do so, they must be innovative, open to collaborate, communicate effectively and strive to align with your strategy. If this isn’t the case, think about finding supplier solutions that solve challenges in different ways, or who apply expert insights smarter and faster.  

The same can be said for adapting your offering. While dining in wasn’t an option throughout lockdown, take-away soon was and those restaurants that adapted to such an offering were able to stay in touch with their customer base. A change which requires agility and responsiveness in your supply base, effective supplier relationship management from you as a business and effective hospitality procurement strategies.

Aggregators Just Eat, Deliveroo and UberEats were causing the takeaway market to outpace that of eat-in even before the virus took effect, with projections estimating a worth of £15bn by 2023, a target expedited by the current climate. So being able to access this market is certainly worth thinking about.

Embrace digitalization

City centers continue to lag behind in the route to recovery due to the lack of footfall, where it’s all too commonly seen that those without an online presence lose out to those that do. Although this doesn’t affect the restaurant industry to the same level as retail, the similarities sit-in being able to communicate effectively to your customer base.

So what does your digital supply base look like? Can it keep up with the rapid technology demands of customers? In today’s world of smartphone apps and instant notifications, restaurants that are set up in a tech-savvy way get a head start on communicating the measures they’ve put in place, allowing customers to know they can return to dine in a safe environment, but it doesn’t stop there…

Once they return, there are further steps to consider – opportunities throughout the end to end customer journey that can be streamlined and digitalized, from reviewing the menu, placing an order, or paying. Innovative solutions exist within the digital market, to access which, businesses must adopt robust processes, with a clear vision and quality criteria to ensure the right partner is chosen.

Segment your customers

At the start of the scheme, many were dubious on whether it was shifting the problem rather than solving it by pushing all demand to Monday to Wednesday, leaving weekend bookings sparse. However, as the scheme has progressed many restaurants are reporting maintained trade levels throughout the week.

Undoubtedly though, the weeks’ trade pattern will shift once more as the discounts disappear, so optimize the engagement while you can. Your marketing team has a key role to play here, in both segmenting the customers and targeting them effectively. So, how does your marketing mix fair in the face of such a challenge? Does the in-house team have sufficient capability or is it time to access external expertise to drive the optimum approach?

Whether it’s loyal customers, customers who have used this time to try elsewhere, or new customers that are trying you out for the first time, all require a different angle to gain, grow, and maintain loyalty. Marketing has a huge amount of responsibility for rebuilding consumer confidence in your brand over your competitors in a nervous post-Covid world, so chose carefully.

Surveys indicate consumer habits are returning to the old ways, but what’s not clear is whether that’s in response to the scheme, or here to stay. Some say the government should extend the scheme, which would give the two-fold recovery longer to be established. Some restaurants are extending the scheme voluntarily, perhaps trying to glide customers back to “normal”, rather than face a potential cliff edge.

The issue with the Eat Out to Help Out scheme, is its unsustainability. As well as targeting increasing sales figures through discounting their core offering, businesses should also be optimizing costs through unlocking supplier potential, utilizing expertise to drive initiatives. Put enough work into hospitality procurement, and do it well, customer experience and business growth is sure to follow.  

For more information about how Proxima’s procurement expertise can help businesses in the hospitality sector, visit our sector page.

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