Hospitality – what's next?

1 July 2020

There were cries of joy for many across England when people heard they would be allowed back into pubs and bars this weekend. However, the relief felt by much of the hospitality industry is tinged with uncertainty for many operators.

A changed hospitality landscape

The changing of the 2m distancing rule to 1m has had a significant effect on the short-term hospitality landscape. According to a BII members survey in June, 25% of pub operators said they could not re-open if social distancing guidelines stayed at 2m. The reduction to 1m reduces that figure down to 10%. But that is still over 6,000 pubs alone that cannot feasibly open their doors this weekend.

For the majority of those who can open, there are still real concerns about the viability of opening and making a loss. 82% of hospitality operators expect it to take over six months for footfall to get back to pre-lockdown levels, according to KAM Media.

“This is the beginning of a long, hard fight for many in hospitality,” said Katy Moses, MD at KAM. “For the vast majority, the next 1-3 months (at the very least) will be purely about survival. It is likely to be a lot longer before most operators can move from survive to thrive mode. Government support will certainly continue to be needed.”

The fight for survival

We have already seen endless examples of the industry’s innovative and entrepreneurial spirit during lockdown as many pivoted their businesses to serve local communities and keep staff employed.

Within three weeks of lockdown 1-in-4 pubs had set up delivery or takeaway service, with a further 20% planning to do so. 80% of them intend to continue this service even when they have re-opened – this includes off licence sales as well as hot food. The potential growth in home delivery could have huge implications for the whole industry, including suppliers.

Rod Eslamieh; Disaronno Brand Ambassador and owner of Chapter 72, offers some advice to businesses struggling to keep afloat: “Restrict your menu to your best sellers, be active on social media and show you are contributing back to the community i.e. free hot drinks to front line staff. Make sure your team shows consistency in exceptional customer service, because that will help you stand out from your competition.”

There is no denying that the hospitality landscape will have changed. But the industry stands the best chance of survival by remembering what it does best: obsessively focusing on the customer.

A changed hospitality customer

For many, their financial situation has changed or is less secure. According to the Citizens Advice Bureau, the average level of disposable income in the UK has dropped by around 17% due to the Covid-19 crisis. KAM research shows that 44% of people who plan to visit pubs less frequently say the reason is to ‘save money’.

Operators and suppliers to the industry will need to focus on providing fantastic value (not just low prices) to get people coming through the doors again. They will need to focus on re-assurance, building trust and ‘temptation' to get people out of home. And not rely solely on price discounts, it will always be cheaper to drink at home. Offering an outstanding experience, with fantastic food and drink is what hospitality does best.

London Cocktail Week is a brilliant opportunity for brands to help businesses bring experience to life in venues this year. Due to the pandemic The Cocktail Village will not be there in October but instead London Cocktail Week is extending to a month and brands will be encouraged to move all experiential activity to a chosen bar of their choice. No white spaces!

Siobhan Payne, Co-Owner and Organiser of London Cocktail Week said: “Not only is this an opportunity to create something really engaging for audiences, but it will help to keep some bars running which is hugely important right now. We need the support from brands to help re-build our industry and be a part of something truly significant”.

“For the first time, London Cocktail Week’s directors will be personally offering support to all partnering brands to secure on-trade partners, whether this be for the £6 Cocktail Tours, hosting an event, or creating an activation through agency partners like Mercieca. There will also be an ‘at-home’ element to the festival.”

Recent research from KAM Media shows that nearly 2-in-3 customers are expecting a price increase when pubs and bars re-open. Most are aware that times have been tough for hospitality. In fact, perhaps surprisingly, 1-in-2 regular pub-goers said they thought price rises are acceptable for the first month of re-opening. However, this sympathy is relatively short lived; the figure drops to 1-in-4 after six months. Support from brands via promotions, the creation of in-venue experiences and sampling is now more important than ever.

"Not only is this an opportunity to create something really engaging for audiences, but it will help to keep some bars running which is hugely important right now. We need the support from brands to help re-build our industry and be a part of something truly significant"
Siobhan Payne, Co-Owner and Organiser of London Cocktail Week

Safety first

Without a doubt many consumers are nervous about getting back into pubs and bars. The industry will have to work hard to ensure their venues are Covid-secure (look out for a barrage of new apps and technology to reduce human interaction!). Remember also that perception is reality. It will be critical that customers feel completely safe and relaxed in the venues. Staff will play a key role in helping venues breath confidence into the customer and create what historically has always been an escape and enjoyable experience.

Digital and social media is also critical for communicating this message. Research from KAM Medias 'Return of the Pub' report - June 2020, shows us that the top information they now want communicated are safety and social distancing measures, and when to avoid the busiest times.

Flatten the curve (again)

This creates a fantastic opportunity for operators: how do we maximise footfall during off-peak times and flatten the traditional peaks throughout the day to keep a steady and safe stream of customers? Although many are concerned about a drop in professionals visiting for lunch or post work drinks, many are still looking for a change of scenery now that they are working from home. This potentially means opportunities for earlier family dinners; or the need to ‘escape’ for a morning coffee; or brunch/breakfast with friends instead of after work drinks.

There is an opportunity for operators and suppliers to think differently. How does range, offer and comms need to flex to attract different customer occasions?

Don’t forget to surprise and delight

Many will need a lot of convincing that it is worth the risk to return to pubs and bars. and Helping them feel safe will play an important role but that will not be enough. We must remind them what they used to love about the experience; the food, the drinks, the perfect serve, the welcoming atmosphere, the list goes on.

The initial experience back in a pub/bar will be critical. The first to visit will tell their friends. We need to work as an industry to re-assure customers but also to re-sell why they loved eating and drinking out so much in the first place. KAM research shows that many (1-in-3) are worried that pubs and bars will have fundamentally changed, and this is putting them off returning. Show them this isn’t the case!

Young customers will pay a key role

Not all customers will need convincing to return. On average, Generation Z and younger Millennials are less concerned about Covid-19 and are excited to get back to the pub.

1-in-3 18 to 34-year-olds claim they will be visiting pubs more, post lockdown, compared to pre-lockdown. A third of people under 34 years plan to spend more time and more money per visit compared with just 6% of those over 55 years old.

What does this mean for the industry? Dial up comms with these younger customers Creating bespoke content that is fun and engaging, but still highlights key safety messages is crucial to driving footfall for this audience.

3-in-4 customers believe it’s the pub/bars responsibility to ensure they have a memorable experience while they visit. Customers need to trust venues to keep them safe, but they also need to be confident that they will have an outstanding time!

Things WILL be different

Anyone working within the on-trade, in whatever capacity needs to expect things to be different. It will be a long road to recovery.

The reasons people visit bars and pubs may change (less live sports and fewer business meetings.)

The time of day people visit may change (people are less likely to be commuting, kids are still at home in the short-term.)

Spending patterns may be affected (initially there is likely to be some ‘pent up’ spending but then a more cautious consumer. Pub-goers may be forgiving of price increases at first but not long term.)

The most important thing is for the industry to stay obsessively close to their customers and be open and ready for change. Because whatever happens next month, it will probably look very different again in 3-6 months. And different again in 6-12 months. In the medium term at least, we need to be continually prepared for hospitality’s ‘next-normal.’

Ultimately communicating to customers and consumers alike is essential to staying relevant, front of mind and building positive brand perceptions during this uncertain time. Whether that be through experiential, social media, PR or b2b comms, we can offer creative solutions to help you be targeted and effective.

Source: KAM Media

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