The last twenty years have seen the world change more than ever before, literally, and the hospitality industry in the UK has changed similarly. The biggest change has been in consumer behaviour as consumers do more online and are more selective about what they do offline.
Set the clock back a few years and the places to get essential things done were located on The Great British High Street. Banking for example, if you wanted to pay money in or take money out, as well as a host of other financial matters you went to the bank, which in most instances was located on your local high street.
Most banking is now done online and there is very little need for most people to physically visit a bank. Hence the proliferation of bank closures on the high street. The consumer group Which reported that in the last three years almost 2,900 bank branches closed. As these ‘need to’ reasons to visit the high street recede so does high street footfall.
Facing reduced footfall on the high street the ‘nice to’ reasons to visit have to work harder for customer loyalty. The customer experience needs to justify the customers time and earn their money. Many retailers have struggled with this and the casualties have been many, household names have disappeared, Woolworths, BHS and many more as the competition for footfall gets ever tougher.
Pubs that relied on high street footfall have also suffered with more than 600 high street closures in 2018 alone.
Restaurant groups that bloomed on the high street including Byron, Gourmet Burger Kitchen, Jamie’s Italian, Carluccio’s and the Prezzo Group have all been forced to close in large numbers. Too many similar customer propositions, in too close proximity for too little footfall.
How people choose to socialise around food and drink has also seen a big move to online food delivery services. People invite friends over and have food delivered from as wide a choice of restaurants as on any high street thanks to service providers like Just Eat, who currently deliver from a menu of over 30,000 restaurants in the UK.
The alcoholic drinks industry is seeing the effect of premiumisation as consumers choose to drink less, but at the same time being prepared to pay more for quality products. Spending £20 on a bottle of wine with an online retailer rather than your local restaurant will deliver far more in quality terms.
IWSR Drinks Market Analysis shows that online wine sales in the UK have reached 6.5% of total sales value. This has prompted leading wine retailer, Majestic, to announce that they are to sell off much of their retail estate to concentrate on their online business, Naked Wines.
The dramatic expansion of online wine marketplaces like Vivino, which after just nine years of trading now claims to have 10 million different wines and as many as 35 million users, has illustrated just how effective selling wine online has become.
Costs for all businesses on a high street location have in recent years increased significantly.
Local authorities look to squeeze those remaining on the high street through higher rates, and landlords do similarly with rents. The high street rates pool is getting smaller and increasing rent and rates is just not sustainable, it is compounding the problem for those who remain.
The solution here is not to lobby for the clocks to go back but to adapt to change. Many do not like change of course and yearn for a status quo, but the reality is change is accelerating and as UK consumers embrace it, hospitality businesses need to do likewise.
So, are any high street hospitality businesses bucking the trend?
McDonald’s is an icon of the high street that has continued to increase turnover and profits throughout recent years and has to put things simply, thrived.
McDonald’s serves 3.5 million people a day every day in the UK, 5% of the population.
McDonald’s has embraced change, it has in many ways reinvented itself, sure you can still buy a Big Mac and fries, but the menu has developed with a very keen eye on consumer trends, vegetarian being just one example.
Possibly the biggest change in recent years is self-service terminals, we all now use them, and they are far more reliable than their counterparts in supermarkets, they work and don’t need human supervision to manage.
The key point here is that McDonald’s in the past twenty years or so, like others has seen technology impact its business and dealt with it differently to most, by utilising it to its advantage.
Another key point is that as a hospitality business it has changed, it stays true to its core brand and delivers its mission statement: ‘McDonald’s brand mission is to be our customers’ favourite place and way to eat and drink. Our worldwide operations are aligned around a global strategy called the Plan to Win, which centre on an exceptional customer experience – People, Products, Place, Price and Promotion.’ How that is delivered is what has changed, and technology is at the forefront of that delivery.
If we go back to finish off where we started and consider again that the past twenty years has seen the world change more than ever before, nowhere is this more evident than in communications.
Social Media twenty years ago was almost unheard of and mobile phones were simply phones. Today for most people, the people hospitality businesses want to do business with, their mobile phone is how they keep in touch with friends, work and the world in general.
What people use to keep in touch with friends, work and the world in general, through their mobile phones, is social media.
And here’s where we ‘spookily’ come back to McDonald’s. McDonald’s communicates very effectively with consumers through social media. If you take a look at their Facebook page, they have 79 million followers, yes that number is seventy nine million. If you look at their posts, they are engaging with their 79 million followers, and doing so very effectively. McDonald’s also communicates with consumers and customers through twitter, Instagram, You Tube and many other social media channels. Consider for a moment what one media placement to reach 79,000,000 people would cost, McDonald’s have it at their fingertips.
If while reading this article you are in any doubt whatsoever about the facts used, please search Google using any or all of the terms above, the results are enlightening.
In conclusion: The world is changing, the world is changing faster than ever before, technology and social media is at the forefront of change and will continue to accelerate change. Businesses like McDonald’s are live case studies in how to meet change.
If you don’t like McDonald’s that’s fine. If you don’t like or don’t use social media that is your choice. If you don’t like how everyone on the train, in restaurants and almost everywhere you go are constantly looking into their mobile phone that’s fine too.
If you are in any doubt whatsoever that your customers and your potential customers are now using their mobile phones as the information gathering tool to make most of their decisions in life, please again refer to searching Google.
The world in general and the world of hospitality is changing, and one thing is for sure, Status Quo in hospitality is a thing of the past.