2020 Vision

Power to the people
Staff buy-in has been central to the revitalization of the iconic TGI Friday’s brand, managing director Karen Forrester told Peach 2020.

In an impassioned presentation, Forrester tracked the five-year recovery of Friday’s form a moribund name—“It was seen as tired, dated and maybe on its way out,” she admitted—to a powerful business with quintupled EBITDA and eight more openings planned for 2013. One of the keys had been to give customers a genuine, consistent experience of the brand’s trademark vibrancy, following the mantra ‘If it’s real you’ll feel it’. “That authenticity is what differentiates us.”

But achieving that is impossible without getting staff on board, Forrester added. So the recovery strategy has been firmly people-led, with a host of initiatives aimed at redefining the TGI Friday’s culture. A thorough retraining of staff has spread the new philosophy across the business, while a ‘Team Challenge’ each winter sees bosses reward staff for good performance, increasing motivation for the key Christmas market. ‘Gold mark’ cards provide instant incentives, and a ‘Friday’s legends’ scheme rewards a host of unsung heroes. Celebrations around the company’s 25th anniversary in the UK this year meanwhile saw every member of staff presented with a gift, among them 25 holidays of a lifetime.

Forrester admitted that it all came at a price. “We do invest a heck of a lot of money in our people… but that’s absolutely where we should be spending it, and it pays off.” Team turnover had fallen from 157% to 40% over the last five years—a sure sign of the brand’s recovery, she said. “It feels like Friday’s again now.” 

She also hinted that Friday’s was now ready to leverage its popular name in other formats. “There are some great opportunities to extend the brand into other territories.”

Sector needs to ‘sell the story’
Pub, restaurant and café bosses are upbeat about the future but aware of the work that needs to be done on people, a panel of industry big hitters revealed at Peach 2020.

Optimism may be cautious, but most companies are primed for growth. Patrick Dempsey, managing director of Whitbread’s hotels and restaurants division, said his company would add another 8 million square feet of space over the next five years, while Tragus CEO John Derkach said he was “optimistic” of growth. “Our focus is to make our brands more relevant to customers, and the potential for those brands is enormous.”

Bob Ivell, chairman of Mitchells & Butlers and later in the day named a Peach Icon, was also positive, with brands including Harvester, Miller & Carter and Browns all earmarked for more openings. And Gerry Ford, chairman of Caffe Nero, said the UK was still the most conducive market in Europe to start and grow a business, though competition was tight. “You can still do things here and make it happen.” Caffe Nero wanted to grow around the world but would stay rooted here, he added. “We’re trying to create an international brand… [but] the UK’s still the mother ship.”

All four bosses spotlighted people as crucial to their success, and agreed more must be done to attract talent to the sector. That means selling a job on much more than just pay, said Ivell. “It’s about how you develop and engage people once you’ve got them. [And] It’s about selling the story—can you get from a wash-up to a managing director?”

Dempsey said he was an example of that. “I started out washing dishes in a motorway service station, and I don’t think I’d have come into the industry if I hadn’t done that.” He is behind the new ‘Big Conversation’ initiative to engage young people in apprenticeships, work placements and life skills training, and urged delegates to get involved in its forthcoming regional events.

Derkach said it was vital to show young people how they can climb the ladder quickly. “We’ve created 150,000 jobs in the last few years [across the industry]—but I bet we haven’t created 150,000 careers. We’ve got to do more to provide the structure for people to progress faster.”

Leisure outpacing fragile economy
The economy will continue to bump along in 2013—but restaurants and pubs are better placed than most to ride out the challenges.

That was the message from RBS UK economist Ross Walker in his scene-setting outlook for the conference. He predicted no GDP growth in 2012 and a modest 1.3% rise in 2013, against a long-run average of just over 2%. “We’ve had and are still emerging from a pretty severe recession… this is still a very fragile recovery.”

But the squeeze on household income is showing signs of easing, and consumer spending will nudge up next year. “We’re beginning to see tentative signs of improvement… There is some cash out there to be fought for.”

Walker also pointed out that the private sector was still recruiting—and the food and accommodation sector has led the way with 150,000 extra jobs over the last year. The industry has also outperformed the economy, with sales up and price inflation relatively stable. “You’ve had a pretty good year,” said Walker. “2013 isn’t going to feel radically different—but it certainly shouldn’t be any worse.”

The upbeat tone was echoed by data from the Coffer Peach Business Tracker, which shows sales through leading pub and restaurant groups comfortably in positive territory this year—up by 1.7% on a like for like basis and by 5.8% on a total measure including new openings. “People are still eating and drinking out,” said Peach Factory’s Peter Martin.


The next generation
Start-ups keep the whole sector on its toes and may grow into the new wave of big players, an entrepreneurs panel showed Peach 2020—but only if they overcome some tricky barriers to growth.

Richard Bigg, founder of Camino and a host of other concepts, said passion was crucial in any start-up. “You’ve got to be thoroughly behind what you’re selling—make it the kind of place you’re comfortable in yourself.” Camino has just signed its fourth site with plans to reach ten by the end of 2015, he revealed.

But while an entrepreneurial spirit is crucial, it helps to have support at your elbow. The Draft House is growing in the capital, and backing from Luke Johnson has opened doors, said founder Charlie McVeigh. “Having a large investor has given us a lot of flexibility in getting debt [for expansion].” Backers can be useful sounding boards too, though not even they can solve an increasing problem for all operators in London—getting the right properties. “The biggest barrier for us at the moment is finding sites in London.”

McVeigh said the opening of the third Draft House had been his biggest ever challenge, and Mark Jankel of mobile operator Street Kitchen agreed that early expansion was hard. Street Kitchen will launch a second unit in January; “If we get it wrong it could be the end of the business—but if we get it right it could be the launchpad for growth.”

Jankel said Street Kitchen’s motivation was to celebrate local ingredients and suppliers. “It was born out of a lack of good ingredients in the London food supply chain.” That aim of authenticity is shared by Cass Titcombe, founder of street food concept Roost—one of a host of chicken specialists to have launched in London lately. “We’d noticed at [Titcombe’s previous venture] Canteen that chicken dishes were always our bestsellers. But the quality of the chicken has to stand apart, and the biggest challenge for us is getting enough of it.”


Boarding up
Pub and restaurant groups need active and committed boards to stimulate their thinking, the conference heard.

A ‘Strictly Boardroom’ session heard from Ralph Findlay and Robin Rowland, CEOs of Marston’s and YO! Sushi respectively. They might seem like very different beasts, but each agreed they had learned from the other since Rowland joined the Marston’s board.

“Non-executive directors and what they bring can be huge for a business,” said Findlay, reporting that Marston’s had been influenced by Rowland’s consumer focus in particular. “One of Robin’s enormous strengths is his closeness to customers, and we’ve been getting much better at that.” He has also played a part in Marston’s development of more premium pubs under the Revere Pub Co banner.

Rowland said the benefits were mutual. “I’m a much better chief executive of my own business now, because I can see how a well-run board can add value. It’s been a joy to be welcomed into Marston’s.”

Findlay said board members at the sharp end of business were more valuable than those easing out of their careers, while Rowland advised operators to recruit more women and people with international experience and the ability to think ahead to their boards. Variety is important too. “You need a team of people with different backgrounds and different characteristics,” said Findlay. And businesses ignore the value of their non-execs at their peril, added Rowland. “A poor board is usually a reflection of a poor CEO or chairman.”

Landlords and operators pull together
Landlords are opening up to restaurant concepts like never before, Davis Coffer Lyons director Alice Keown told Peach 2020.

She pointed to examples of shifting approaches in sections of the market like retail developments, where Westfield has illustrated the new openness through its ‘market’ area of artisanal concepts. At other centres like Sheffield’s Meadowhall, Birmingham’s Bullring and Kent’s Bluewater, developers are making restaurants a bigger part of their mix, and are increasingly flexible on sites and concepts. “We’re seeing the importance of a very close relationship between operator and landlord,” said Keown.

The same differentiation is at play in transport hubs, where concepts like Corney & Barrow’s Cabin format at Waterloo and Jamie’s Italian at Gatwick—a Peach Hero Award winner—have shown landlords’ readiness to try new things.

Keown said landlords have also switched on to the value end of the market, and all-you-can-eat concepts like Cosmo and Red Hot World Buffet in particular. And they are being “bombarded” with single-offer concepts like chicken, burger and steak joints—which are proving appealing to diners but which have to be on the money. “There’s nowhere to hide with that model.” It all helps to form what Keown called “a virtuous circle”, with restaurants and landlords working together to make developments like shopping centres and travel hubs more enticing places to visit.


Marketing goes virtual
Coca Cola is using virtual reality technology to get a better understanding of what customers want.

Martin Sampson, associate director of shopping marketing, gave Peach 2020 a tour of its hi-tech package of 20 ‘virtual’ sites like pubs, restaurants and shops. Part of Coca Cola’s Collaborations, Learning and Insights Centre, the system can be adapted to try out different marketing techniques, like the relocation of products and signage. When the new ideas are tried out on sample consumers, eye-tracking technology assesses where they are looking and what catches their attention.

Sampson said virtual reality helped Coca Cola to plan space and layouts and—in conjunction with operators—spot opportunities to increase sales. “If we get it right, we can ultimately use it to change consumer behaviour.”


Trendspotting—Ten things we learned at Peach 2020

1 It’s all about the people
From the restaurant floor to the boardroom, Peach 2020 speakers singled out their people as the most important driver of a business. Keeping them happy and motivated was crucial, said Karen Forrester of TGI Friday’s. “Culture is an incredibly important thing—everything else in a business is replicable with the exception of the culture.” “The critical thing is the people—everything starts from there,” added John Derkach of Tragus.

2 The branded market is a battleground
“It’s the most competitive I’ve ever known it,” said Peach’s Peter Martin of the state of play in eating-out this year. He pointed to Peach BrandTrack research showing that people’s average brand repertoire has doubled from four to eight in just two years. “Customers have been given more choice, and they’re taking it,” Martin reported. “It’s brand to brand combat out there.”

3 Pubs and restaurants are converging
From the value end through the mid-market to the gastro concept, pubs and restaurants are increasingly chasing the same customers. As Marston’s Ralph Findlay put it: “We’re fishing in the same pond.”

4 Street food is looking for a home
Mobile operators have given eating-out one of its biggest recent trends, but more and more of them are using their vans as a way to build a market for a bricks-and-mortar location. Mark Jankel of Street Kitchen said he had an eye on a restaurant project, while Cass Titcombe said his Roost concept would bed down somewhere. “We’re using the truck as a promotional tool and to get our dishes right.”

5 Social media rules
The likes of Facebook and Twitter have brought customers nearer to brands than ever before. Conference co-chair Steve Richards, CEO of Novus Leisure, charted how customer engagement had progressed from letters to emails to social media and review sites. “We have to be obsessed with Google Alerts and TripAdvisor if we want to get closer to our customers.”

6 There is life beyond London
London is often thought of as a county within a country, but it’s not quite the recession-proof cure-all that some operators think. Coffer Peach Business Tracker data shows a 1.7% drop in sales inside the M25 lately, but a 1.7% rise outside it. “London is not a panacea,” said Martin.

7 Shopping centres are where it’s at
With the high street grappling with a much-publicised crisis, shoppers are heading to malls and out-of-town leisure schemes. That opens up more opportunities for restaurants, especially as landlords realise that they can be as much of a draw to customers as shops. “Shopping centres are giving our sector more space, and better space,” said Alice Keown of Davis Coffer Lyons. “Dining is providing the motivation to get people away from their computers and out to shop.”

8 New concepts are clustering
Hotbeds of emerging operators are developing in spots of London like Brixton and Shoreditch, helping to stir up interest among diners and allowing each of them to benefit from the communal buzz. “They can be great breeding grounds,” said Keown.

9 The hybrid bar is here
With customers wanting more flexibility than ever, the attractions of venues offering everything from breakfast and coffee to dinner and craft beer is obvious. Loungers has shown the way with its versatile Lounge formula, and Martin singled out Caravan on Exmouth Market as another example to follow. “It’s got all the elements of the pub, restaurant and café of the future.”

10 Even a downturn has upsides
With such a wealth of diverse concepts launching over the last few years, observers could be forgiven for thinking the economy had never taken a dive. And Bob Ivell of Mitchells & Butlers pointed out that slumps often triggered fresh thinking. “I’ve been through several recessions, and what’s always fascinating is that people get the most creative in them.”

The sell-out conference at the Intercontinental Park Lane Hotel attracted a top level audience from across the eating and drinking-out market. The event was organised by Peach Factory in partnership with RBS, Coca-Cola, Coffer Corporate Leisure, Micros, Ecolab, Fourth and Livebookings