Trend demands operational changes
Casual dining in the UK is drawing an extra 47m visits each year compared to five years ago. During the same five-year period, the eating out of home market as a whole lost 4.8% of its traffic. The writing is on the wall and it is imperative that operators pay heed to this fact and adjust their offerings accordingly, says Philip Montgomery, Senior Account Manager, CGA Strategy
Evolution is a word that characterises the GB on trade at present. Driven by a need to draw an increasingly value-conscious consumer into their outlet as well as generating extra revenue streams in tough trading conditions, licensees are adapting their approach to attain competitive advantage. Engagement with a food provision, premium brands, cocktails and a strong daytime offering (through coffee, WiFi et al.) are macro trends that are changing the very structure of the trade and meaning that the traditional perception of the trade is evolving.
From the Tiki Bar to the Cantina Bar, from the Premium Cocktail experience to the Craft Beer provider, experience and the provision of a unique occasion has now become industry capital. Utilising devices such as a heightened theatre of serve (through glass ware and bartender performance) and innovative offerings has become commonplace in the battle for the frugal consumer’s spend.
Increasingly, drinks offers are being aligned to outlet style, for example the extensive provision of rum in Latin-themed outlets or the offering of American Craft beer in the Gourmet Junk Food area of the market. The implication of this is that wine and spirits are becoming ever more influential in the sales mix in a typical outlet at the expense of traditional beer and cider categories. This is a key consideration for licensees as they approach stocking policies in their outlet.
Food no longer optional
In a changing trade, the proliferation of food as a key pillar of licensees’ attempts to drive footfall into their outlet has been pronounced. In fact, CGA Strategy Future Forecasting predicts that by 2018 there will be 7% more restaurants and 5% more food pubs in the GB on trade.No longer just an additional revenue stream to supplement the alcohol provision in tough economic times, engagement with food is often front of mind for many licensees.
Sophistication, innovation and uniqueness are now common considerations to set food provision out from the crowd. One of the strongest trends that have emerged as a consequence of this has been the increasing influence of casual dining operators in the GB on trade. This area of the out of home market is flourishing and it is, therefore, important that licensees understand the strategies that are providing casual dining with its current competitive advantage in the GB on trade.
There are several elements included in casual dining’s recipe for success. First, sophistication and innovation in the various repertoires offered to the consumer are key. From a dining perspective, this means operations are flexible and novel in their approach to ensure that they appear fresh and on trend. New waves of dining experiences from Gourmet Junk Food to Street Food have become stalwarts for casual dining and the innovation in this space continues.
The challenge for alcohol in this market is making it acceptable in a more retail-orientated environment. Currently, this is being achieved through the adoption of sophisticated stockings policies that are engaging with the various innovations across different categories. From a focus on craft and provenance in the Beer range to a recognition of a family/food occasion in Soft Drinks (through refills and ‘mocktails’) to an engagement with cocktails and flavour in spirits, alcohol offerings are being positioned to complement food. For licensees, moving forward, it appears that balancing a food and drink offering to get the most out of both is a key priority. The development of a strong daytime operation and capitalising on the opportunities here is also a key element in the casual dining approach. The multi-purpose venue has been one of the growing areas of the on trade in recent years, with the Café Wine bar one of the main benefactors. Typically, this is an outlet that has a lower tempo offering in the day, based around food, coffee and WiFi, but also has scope for a strong night-time provision in a higher tempo occasion facilitated by alcohol and in-outlet activity (e.g. live music).
Licensees are engaging as the associated revenue streams of an all-day operation are attractive in tough trading conditions. Yet even further opportunity exists here as there is evidence that licensees are increasingly looking to capitalise on key parts of the day and ensure their outlet is equipped to satisfy these multiple needs. At breakfast, a coffee and food provision satisfies consumer demand. Similar offerings, as well as more premium drinks products, aid the lunchtime provision as outlets compete with other operators outside of the on trade for this midday consumer spend. Drinks promotions and food then facilitate the higher tempo night-time occasion. For licensees across the trade, adapting their operating strategy to capitalise on some of these key areas of the day may be beneficial.
Tapping in to technology
As the on-trade consumer continues to seek a unique occasion and experience in their visits, technology has been a useful attribute to help engagement with the consumer. The use of social media such as Facebook and Twitter, while still effective, is only the beginning. Mobile apps are now commonplace, either to facilitate the order of drinks or boosting brand engagement with the consumer at the point of purchase. Technology is also becoming engrained with the provision of promotions, with ‘touch points’ in outlets connected to smart phones offering prizes for participating. The role of technology in an outlet’s operation is becoming important, not just in casual dining but across the trade, and licensees must define its role. Ultimately, the on trade is evolving, and defining an outlet’s position in this space is key. Food appears to be the most influential macro trend at present and, for licensees, it is fundamental to position this provision effectively in their operations to attain the most competitive advantage. Casual dining’s popularity offers a recipe for success, but, as ever, individual licensees must decide which ingredients will most suit their outlets.
CGA Strategy are specialist on-trade consultants focused on interpreting their Brand Index, Outlet Index and Trading Index tools to provide a clear understanding of current and future market dynamics. CGA’s team of industry experts and data analysts are committed to building on-trade businesses: identifying product and market trends, quantifying opportunities and facilitating growth.
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