Coutts and ScaleUp week discuss opportunities for hospitality growth
3 min read
As part of ScaleUp Week, Coutts hosted a virtual lunch with hospitality leaders exploring their experiences over the past year, and their predictions for the future. Many businesses have had their best-ever weeks recently. This will power the economy over the next six months. But what happens next? Will this be a champagne moment that quickly turns flat? Or will we see a long-term recovery that allows us to build back better and more inclusively?
Coutts client hospitality spend held up throughout 2020
The discussion was informed by Coutts data showing that client hospitality spending held up relatively well throughout 2020; falling by just 43% vs 2019 for the whole year (£65 million) and just 20% year-on-year across the summer.
This reflected a big increase in delivery spending, which doubled between December 2019 and December 2020. Deliveroo benefitted, with spend up 200%, as well as a 1000% increase on high-end London delivery service Supper – with indications these new delivery habits may be here to stay.
“Coutts client credit card spend on food delivery doubled throughout 2020. Spending with Deliveroo increased 200%, and high-end London delivery service Supper, 1000%.”
Technology could make things better, not worse
“We realised we could stick our head in the sand or look for solutions. And when you do the latter, you see new opportunities that would have seemed impossible two years ago.”
What was an “old fashioned” industry has begun to invest in technology and proactive, data-led marketing. Businesses can find out exactly what people are eating and when they are eating it. This helps them to refine their offering and double-down on their customer base.
While the need for technology has been clear in the pandemic, one guest responded to the idea that trends should reset in the recovery: “The criticism of technology is that it leads to less interaction between staff and customers. But the opposite is true. It is estimated that using a device to order raises the average transaction value by up to 40%. And if you take routine functions away from staff, you can focus on higher-touch conversations with customers.”
Another added: “We could see greater spend and with this, higher margins. There may be less of a need for front-of-house staff and a faster rotation of tables when dining in. These are interesting opportunities that have been considered as the long-term future of the industry but have accelerated because of the pandemic.”
The impact of this technological leap may change the industry forever. This is backed up by Coutts data that shows that far bigger than a decline in hospitality spend was a change in how that money was spent. Even in periods where dining in was allowed, trends towards delivery increased.
We said in one of our discussions – what could do wrong? A pandemic – we all giggled and thought ‘not on our watch’ – so the lesson was ‘expect the unexpected – because it’s always out there!’
Hospitality is how people come back together
“Companies are about social interaction. And so, the question for hospitality is: what can we do to stimulate these moments that contribute to the joy of coming back?”
Leveraging the lessons of lockdown and changing technological trends, the industry can build back inclusively – supporting the recovery across the country.
Pre-pandemic, someone that visited a restaurant as a convenient alternative to cooking, may instead just order delivery. Instead, going out will be more about the experience: “There is no more room for average,” said one guest. “Customers are not so worried about cheap. They want to have premium experiences, as long as they are getting good value for money.”
This also partly results from wider changes to people’s living habits. Flexible working has seen many move out to suburban areas from the cities. This may lead to a wave of hospitality businesses opening away from city centres to where people live, and a big opportunity for those already there.
There is also a reputational question for the industry to address, with one guest citing that 60% of young people believe there is a stigma to working in the industry. Compared to other countries, the UK’s homegrown hospitality talent is lacking. And so, with an increasingly competitive job market, what can hospitality do to attract young people into these roles?
The industry also has an important role in managing mental health. Times are tough for staff: “the combination of people not working for a year, and now the pressures of being back – the busy week, not all the staff there, the pressures of going from nothing to more than 100% in such a short time is causing big issues for people”.
But also important is the industry’s role in helping people come back together. “Food represents joy. And when we have all been focused on surviving rather than thriving for so long, it can help us to get that mojo back.” “We work in fun delivery”.
Times are tough for staff: “the combination of people not working for a year, and now the pressures of being back – the busy week, not all the staff there, the pressures of going from nothing to more than 100% in such a short time is causing big issues for people”.
A flexible, creative future
Concluding the conversation, guests agreed that while not all hospitality businesses will successfully navigate the next 12-18-months after the initial re-opening euphoria subsides, the hospitality industry is recognised for its inventiveness.
“We are going to see so many new brands, styles, ideas, experiences: it is an opportunity to be opportunistic, go with the flow, look at the trends and not just go back to how you used to do things. This is a chance to not only build back better, but build back creatively.”
As the discussion drew to a close, speakers agreed that while the next 12 months will be decisive for many hospitality brands, the future is yet to be determined – and all is still to play for. To keep up to date with the conversation, speak to your private banker, or click here to learn more about our work with entrepreneurs.