As the out-of-home sector works towards a potential reopening from early July, this week’s CGA webinar focused on the key factors that will influence how plans for rebooting hospitality will evolve and adapt to a changing trading landscape.
The ‘Resetting the Course to Recovery’ session, run with insight partner Wireless Social, set out the on-trade, consumer and economic dynamics that all operators and suppliers will need to react to and track—and explored what the ‘new normal’ might look like. Here are ten of the key messages.
- Reopenings will be phased and flexible
Pictured: Peter Martin (L) and Simon Potts (R)
“The pub, bar and restaurant sector is really deep in planning mode now… activity has really gone up a notch this week,” said CGA vice president and webinar host Peter Martin. CGA’s research suggests that the majority of operators will take a phased approach to unlocking venues, with some testing the waters, and others indicating that certain sites won’t reopen at all.
Webinar guest Simon Potts, managing director of The Alchemist, said he was targeting 4 July for beginning the journey back—starting with four sites in Manchester and Leeds, with pre-booking, distancing and tight restrictions in place, and following with an unwind of the whole 20-strong estate.
The business, Potts said, wants to stay nimble enough to pivot plans and respond to consumers’ needs, while staying true to the core offer. It’s also going to be important to sweat assets and generate sales around the dayparts. “The key to all this from day one has been an emphasis on flexibility… whatever you think you know one day is going to be very different the next.”
- Lockdown footfall has varied
Wireless Social’s footfall data has revealed the precipitous drop in consumers’ footfall out-of-home since the start of lockdown, with levels hovering around 80% lower than normal. But compliance with restrictions has varied significantly. Footfall in Scotland and Wales has plummeted further than in England, where restrictions have eased slightly quicker. And there have been important shifts within London, with a dramatic drop in footfall in office and leisure hotspots like the City and West End but a much lower fall in the capital’s villages, thanks to people working from home and staying local when they shop and exercise. “What the office areas are losing, London villages are gaining,” said Emma Causer, chief customer officer at Wireless Social. “The key to success in the future is understanding those new behaviours.”
- Consumers are anxious on spending
Although British consumers are eager for a return to normality, it’s clear that many will not be spending heavily when they return to restaurants, pubs and bars. CGA’s latest BrandTrack survey shows that 85% of consumers are worried about the long-term financial implications of COVID-19, and a third (33%) of consumers still expect to be spending less on eating and drinking out in six months time. Even regular on-trade users will be exercising extreme care. Among those who ate out at least monthly pre-lockdown, nearly half (45%) say they will only continue to do so with caution, and a fifth (21%) will return far less frequently.
As financial impacts land in the coming months, it will be vital to understand consumers’ sensitivity to price and take a sophisticated approach to menu reviews. The latest BrandTrack survey points to a reluctance among consumers to trade down in their food and drink choices—so it is frequency rather than average spend that could be hit hardest.
“Even though it’s very exciting that we have an opening date to work towards, we’re likely to see a very cautious return to the sector,” said Karl Chessell, CGA’s business unit director for food and retail.
- Eating and drinking out is likely to stay local
With Wireless Social’s data confirming that people are still staying close to where they live, most trips to eat and drink out are likely to remain very local for some time. That is also one of the many lessons from CGA’s exclusive research in China, where consumer behaviour is further along the recovery curve than here. In China, a quarter (25%) of people say they have used local bars and restaurants more often since the start of the pandemic, while nearly half (45%) have reduced their visits to city-centre venues, or stopped them altogether.
- Health issues have been magnified
CGA’s BrandTrack data shows that concern about COVID-19 is leading many people to seek healthier lifestyles. A quarter (24%) are buying healthier food, two in five (39%) are exercising more, and a similar number (26%) say they have stopped buying unhealthy takeaways. All this might have long-term implications for all restaurants, pubs and bars when they reopen. “Health obviously isn’t a new trend, but it’s been amplified during lockdown,” said Karl Chessell. Some long-term drinking trends may be accelerating during the crisis too—like the switch to drinking fewer, but more premium, alcoholic drinks.
6 Some behavioural changes will stick
Are the changing habits of consumers temporary or permanent? CGA’s research suggests that some of them will endure beyond lockdown. Sizeable numbers intend to continue with their virtual social gatherings, for instance, and nearly one in three (31%) plan to carry on their efforts to make restaurant-quality food at home. That will bring challenges for restaurants aiming to tempt people out again—but there’s also a chance to capitalise by helping them socialise and cook at home. “There’s an opportunity for operators to create more omnichannel experiences for their brands,” said Karl Chessell.
7 People will need reassurance
If operators are going to persuade cautious customers to return, big operational changes will be needed to prove they can do so safely. Two thirds (64%) of consumers say they would feel more comfortable if they saw tables and seats set apart, and offering free hand sanitiser (60%), enhanced cleaning protocols (56%) and social distancing measures (55%) will help too. But it will be vital to make safety measures clear and obvious. “It’s not just a case of putting these checks in place—it’s giving the reassurance that venues are safe environments to come to,” said Karl Chessell.
It’ll be important to reassure staff too, he added—so businesses will need to focus on enhancing their culture, communications and career development.
- Suppliers can help
As CGA’s director of client services Jonny Jones pointed out in the webinar, drinks suppliers have been hit by the pandemic too. But they’ve been busy finding ways to support operators, through initiatives like pre-paid voucher schemes for pubs, developing apps and providing training. Mutual support will be crucial as the industry moves deeper into reopening planning, he said. “There needs to be a partnership approach between suppliers and operators to make sure we can reach solutions that work for everybody.”
- ‘People will come back in time’
Despite the financial pressures and the likelihood of a long recovery, consumers will still value the pleasures of going out to eat and drink, said Simon Potts. After so much caution, sentiment about leaving the home will eventually change—and the recent long queues to enter reopened retail stores like Ikea should give encouragement to everyone. “So much of this is tied to how people feel… there’s obviously going to be fear around going out. But if that message continues to unwind and that fear lessens over the next four or five weeks… then people will come back in time.”
Operators with good outdoor spaces are likely to be the first to benefit, and those that can generate other sources of cash are also well placed, he added. “Alongside our main brand [The Alchemist] we want to make sure we have something that can augment the usual revenue channels—like a good click and collect offer and taking advantage of people wanting to do home entertainment.”
- Data will be crucial
As the sector seeks to return to something like normal, it will be crucial to track data around consumer behaviour, footfall and reopenings. “The market will come back—as consumers we want those social experiences,” said Karl Chessell. “But it won’t be the same, and it’s going to be more important than ever to understand what that market looks like and track the recovery using reliable and timely data.”
You can watch a replay of CGA’s ‘Resetting the Course to Recovery’ webinar here or by clicking link below. Contact us to learn more about our exclusive consumer and trade insights that can support operators and suppliers’ decision making as the sector works towards recovery.