CGA’s Graeme Loudon and Karl Chessell were guest speakers at the prestigious 2022 International Hospitality Investment Forum in Berlin. Here are just ten of the key insights into consumer behaviour and big trends from their ‘Perfect Serve, How to drive hospitality footfall and maximise food and beverage revenue’ session on the global market.
1 Hospitality is bouncing back
There is no escaping COVID’s impact on global hospitality. CGA’s outlet data shows that the US has lost nearly 5% of its On Premise outlets over the last 12 months, while Britain has shed 9% and France nearly 3%. COVID problems have been swiftly followed by cost pressures in energy, food, drink and labour. But with the worst of the pandemic now hopefully behind us, sales are building back well, and CGA’s Business Confidence Survey with Fourth shows rising levels of optimism. Capex and new openings are returning too. “In real terms the sales growth is modest—but there’s definitely cause for optimism,” said Karl Chessell.
2 Consumers’ habits have changed
Optimism is growing among consumers as well as business leaders, and the reopening of venues has shown the pent-up demand for pub, bar and restaurant visits. “People have been prioritising spending on eating and drinking out,” Chessell said. However, pressure on disposable incomes is starting to reduce their frequency of visits, while COVID has changed their behaviour in important ways. For example, CGA’s consumer research shows many people’s switches to working from home will continue longer term, which affects where and when they go out to eat and drink—prompting many operators to leverage other dayparts and push further into residential suburban locations. Understanding exactly how consumers behave in the new normal of hospitality will be crucial to success in 2022 and beyond.
3 At-home sales have soared
Another impact of COVID lockdowns has been the surge in delivery and takeaway sales. CGA’s Hospitality at Home Tracker with Slerp has shown how trading in the UK has been as much as quadruple pre-COVID levels over the last two years, and other innovations like Rockfish’s delivery service and branded grocery products have taken restaurants into some exciting new channels. “COVID was a watershed moment—businesses had to do something to adapt, and many of them are now sticking with these innovative strategies,” Chessell said.
4 The pre-visit stage is crucial
To capitalise on returning footfall, venues and brands need to intervene on consumer paths to purchase—and those paths start well before a visit. Two thirds (66%) of consumers don’t know what drink they’ll choose before getting to a venue, so there’s a great chance to direct them to categories or brands in advance. Platforms like Facebook and Instagram are crucial for this, because one in four British consumers visit a venue’s social media before a visit. “Social media is clearly a footfall driver… people are giving us the platform to interact with them and it’s important we take it,” said Graeme Loudon.
5 Menus drive drinks sales
CGA’s consumer research highlights the huge role of menus in influencing drinks choices, with well over half (56%) of British consumers considering them the biggest factor. COVID-19 has accelerated take-up of digital menus, especially among younger adults—but it’s important to remember that a majority of consumers still prefer physical ones. “Putting thought into menus really pays dividends,” Loudon said.
6 Recommendations and activations matter
Bartenders have a similarly influential role, because 42% of British consumers say they take recommendations from bar staff—rising to 59% of 18 to 34 year-olds. Teams have the power to upsell, but in-depth knowledge and good execution of drinks are key. “Bartenders are seen as experts—they hold that trusted advisor status… but that’s only possible if they’ve got a good knowledge, so training has to be a big part of the front-of-house strategy,” Loudon said. In-outlet visibility and brand activations—like iconic serves, glassware, table talkers and posters—are a third pillar of influence. As Loudon pointed out: “You can’t buy what you can’t see.” Using data to work out which of these tactics work best should be a priority.
7 Experience is king
All operators need to understand what makes a great experience for consumers. Elevating factors like technology, sustainability, range and presentation are all valuable here. Social media and the Instagrammability of venues is another big factor, with good examples including House of Small Wonder in Berlin and La Favela in Indonesia, while competitive and immersive concepts like Flight Club and Rex Baron deliver memorable experiences. “It’s the experience that will drive people into venues,” Loudon said. But no-one should neglect fundamentals like service and quality, Chessell added. “The basic building blocks are people… getting employee engagement and the quality of food and drink right are critical to delivering the consumer experience.”
8 Sustainability matters
Environmental issues in eating and drinking out have moved from a niche concern to the mainstream. CGA’s BrandTrack research shows nearly three quarters (72%) of consumers think they are an important consideration in choosing venues now, and it has created a new wave of venues like Barcelona’s flexitarian restaurant Flex & Kale, Hong Kong’s low-carbon Penicilin and France’s minimal-waste Radisson Blu chain. “Sustainability is a really key driver now,” Chessell said. However, with two in five (42%) consumers thinking venues don’t do enough to inform them about sustainability, there’s a need for better communication on the issue, in venues, menus and websites. “You need to tell people… they want to know the detail.”
9 Health is in focus
A big side-effect of COVID around the world has been to sharpen people’s focus on healthy living, and the food and drinks that support it. This has bolstered the no and low alcohol sector, and CGA data from both the UK and US shows how demand has risen. Half (50%) of British consumers now find these no and low options appealing, and alcohol-free venues like Zeroliq in Berlin, The Virgin Mary in Dublin, 0% in Tokyo and Listen Bar in New York are taking advantage. “It’s a big opportunity, but it’s more about moderation than abstinence… catering for people who don’t want alcoholic option is really important,” Loudon said. Another beneficiary is the hard seltzer segment, which is now worth around $1.2bn a year in the US. UK and European markets are some way behind, but could well follow the same upward trajectory.
10 Cocktails continue to boom
Around the world, CGA’s data has shown how cocktails have led pubs and bars’ post-COVID recovery. Trends to watch here include pre-batched and draught cocktails, which provide advantages for both operators and drinkers. “Consumers want that consistency and speed—that’s where batched cocktails play a crucial role,” Loudon said. Cocktails are also powering tequila, which is also being driven by celebrity and influencer endorsements and eye-catching activations. “It’s bringing new PR and consumers to the category.”
Watch the full presentation from Graeme Loudon and Karl Chessell below
CGA’s suite of research sources and expert analysts can support the strategies of all hospitality businesses as they bounce back from COVID. They provide up-to-the-minute insights into ways to influence consumers, how to position brands, the trends to watch and much more. To learn more about CGA’s capabilities and issues raised in the presentation, email Graeme Loudon at graeme.loudon@cgastrategy.com or Karl Chessell at karl.chessell@cgastrategy.com.
