I am constantly asked, “What next for hospitality and the pub & bar business?”
Honestly? It is going to tough for a long while.
It has always been clear that hospitality would be the last out of lockdown and there are likely to be many casualties along the way.
It is too early to tell what the industry will look like for as much as anything else the whole of society is changing, and our fundamental behaviours will be destined to change.
There are too many unknowns but there are several observations worth making:
1. Some of our favourite bars and restaurants will never reopen.
This industry has always been hard and many of these businesses will have already been struggling. I know that in the past there have been times with my venues that if we had needed to close for only a couple of weeks we’d have struggled to reopen with not enough cash reserves during the precarious period of growth, for example, when the customer base is not established.
Even with the Government support put in place there will be some businesses for which the timing of this forced lockdown closures will have been catastrophic.
2. When businesses do reopen, customer habits will have changed.
With one of my venues after just a year of opening an area of the venue needed to be closed for 3 weeks due to flooding. The insurance did eventually pay out the interruption of business but inevitably this was for less than we anticipated and did not take any account for the fact that customers in this industry move on quickly. It took us a further year to rebuild the customer that we had lost just over that 3-week period!
Obviously Covid is not the same, as customers will not have ‘switched’ to other venues whilst we were closed but none-the-less the day to day habits of customers will have changed and as people were in lockdown there has been a period of reflection and therefore reassessment about needs and priorities.
Whilst some customers will want to bound right back into their pre-Covid lives, a significant number will use this as an opportunity to make changes.
Humans love routine and habit and this trait is a massive bonus for owners of hospitality businesses - customers like the familiar and they hate change - so once you have them as your regular customer (and so long as you don’t mess that up) it takes a lot to get them to change habits and try somewhere new. Unfortunately for us, the interruption to habits that Covid has produced is exactly the excuse that our customers need to try something or somewhere new in the post-Covid world.
3. Going virtual or ‘pivoting’ your business.
In the past few weeks and months I’ve heard loads of advisers talk about making businesses virtual or pivoting your offer. For some in hospitality they have found ways of doing this with home deliveries, food packages, online virtual advice and even virtual award ceremonies, but for most of us in hospitality this just cannot work and in any case the market for this is tiny and niche. The appetite from our customers to log on to find us is just not there - that is not the reason they were ever our customers. Which leads me to the next point…
4. We were never selling food and drink.
Our businesses have never really been about the need to quench a thirst or satisfy a hunger. Pubs, bars and the rest of hospitality are about satisfying the need of people to be with people, to share experiences and be part of communities. Whether it is a party with family and friends, a quiet drink with a confidant, a business meeting or a clandestine rendezvous…there is a good reason why, that despite the technology being around for decades virtual meetings and conference calls were not the normal. So much is lost in the virtual world.
80% of our communication with each other is through our bodies, the slight movements, the gestures even where we look as we speak - all of this is lost in the virtual world and whilst it is lovely to be able to ‘mute’ others, both family and colleagues, during a catch-up or meeting, people are missing people. No matter how long the Covid crisis and lockdown go on for people will always want to be in proximity of others and our businesses and venues will always be needed.
5. It is going to take time for things to settle to a new ‘normal’ but they will.
I was struck by a comment made recently that even after the London terrorist attacks on the Tube, whilst many people did fear going back on public transport, after a few weeks things did return to ‘normal’. Once we come out of lockdown fully (I don’t pretend this is anytime soon) people will settle and whilst things will be different, hospitality businesses will still be essential.
The hospitality industry will continue to be needed to make sure that being part of something, having contact with family and friends, meeting new people, going out for a treat, celebrating a rite of passage or just celebrating the weekend remain special.
6. Things will change.
But for those of us who have been in the industry for a long time will know, they were anyway!
The industry changes and adapts to a changing society continually. The smoking ban in 2007 changed how customers behaved. Previously, certainly in my businesses, there were a significant number of customers who came to be able to smoke as they couldn’t or didn’t want to at home. When this was no longer an option and when it meant leaving a conversation for a 5 minute smoking break outside, it obviously influenced decisions on smoking, but it also changed how people interacted in pubs, bars and restaurants and how often they visited.
Over the past 20 years supermarkets have changed their offer, alcohol is now sold cheaply and you can even buy speciality products from a vast range of wines, gins and craft beers in the supermarkets - the edge saved for pubs and bars has been lost but the pub was never only about buying alcohol it was always more about being part of a community (even for those sitting alone).
Over time those businesses that have survived the changing society have understood how to create spaces that are welcoming, and understood their customers wants and needs and how they can provide for them.
In the past few years it has been very apparent just watching the high street and operating businesses, that a change was afoot. Maybe this was a result of austerity, Brexit, or just the changing lifestyles of society (it is estimated that a third of under 25s don’t drink alcohol) but coupled with increasing costs it was becoming a harder and harder environment for bars, pubs and restaurants.
7. So change was happening anyway - what will the future look like?
People will always love an event, they will still want to go out and celebrate birthdays, weddings and anniversaries. Being part of something that is happening, sharing an experience and not missing out ‘being there’ will still be important to people and businesses will continue to prosper (once we get through this).
Venues that understand what their customers really want from them, who get that it is more than just serving food and drink; operators who know their customers and can tailor an offer to suit them perfectly are going to still have an opportunity to thrive.
It is likely there will be less venues but there will still be customers and those customers will want to be cared for.
8. What should operators do now?
The environment within which we are operating was changing anyway. Covid had just accelerated things. There is going to be a sudden and potentially dramatic change with the loss of several venues over a short period. But customers will still exist and the advice to the surviving operators and venues has not changed: you are not just selling food and drink, you are providing a meaningful experience for your customers.
Businesses that are going to do well in the future are going to be those who really understand their customers and work on how they incorporate all that understanding into their business.
The clients that I work with spend 8 weeks working on this and the effects are dramatic, we see operators that just ticked along or even struggled suddenly able to lift their gaze upwards and breeze on to grow their businesses.
The industry will survive and even thrive it will just look different.
