The remarkable rise of Starbucks in China

56 alan hepburnOur man in Shanghai, Alan Hepburn FIH, provides an analysis of Starbucks’ expansion in China, a country with no tradition of coffee-drinking. What lessons are there for other western businesses looking to break into this vast market?

Last week I was sat in the 30,000 sq ft Starbucks Shanghai Roastery, about five minutes walk from my apartment in Shanghai. I was there for a business meeting, trying to decide between Sumatran, Ethiopian or Nicaraguan, when I realised I was next to a couple of friends. After a quick chat, it occured to me that even in a city of 35 million people with change being constant and exponential, it’s a small world.

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Howard Schultz at the opening of Starbuck’s Shanghai Roastery in December 2017

I arrived here in 2000 as manager of the Portman Ritz Carlton and remember chatting with Howard Schultz when he came to open the first Starbucks in the city (Beijing opened the first one in China in 1999). I somewhat naively asked if he was planning on opening many? He looked somewhat incredulous at my ill-judged question. “We expect 100 in the first year,” he said. They now have 3,000 stores in China and are opening one every 15 hours – projecting 5,000 by 2020.

I was new to China and frankly had not observed much coffee-drinking going on. But what I had missed was … well, pretty much everything.

What Starbucks saw in China was four things: firstly the growth potential in the middle/upper middle class who want to buy an upscale Western experience.

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The floor space of a Starbucks in China is substantially bigger than in the West. People have business meetings, social gatherings, go on dates and get interviewed for jobs in China’s Starbucks. The saying here is: “The first two thirds of your cup is for enjoying, the last third is for staying.” Three quarters of all coffee drunk in China is consumed by 25-35 year olds and 99% of retail coffee sales is instant, but that will change.

Secondly, Starbucks’ growth in China shows the importance of not removing the essence of what makes you successful elsewhere, but shows how this needs to be adapted. As Roy T Bennet once said: “The past is a place of reference, not a place of residence.”

The Macha Frappuccino (220 – 440 calories depending on size) is a huge seller here. Green tea powder, loads of cream, milk and vanilla syrup and not a hint of coffee in sight. I have struggled in the past to get a simple espresso, as very few people are drinking them in China. But that will change.

The Roastery here is a modern-day F&B masterpiece with all the theatre of coffee roasting, artisan bread-making and stunning retail. But take a look at what people are consuming and it’s a lot less coffee than you might expect. But, as I say, that will change.

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The Chinese are not big coffee drinkers, but that has not been a barrier to Starbucks’ success

Thirdly, brands which understand progression from entry-level to premium do very well here. There are famous dumpling shops where you pay four different prices according to where you consume the same dumpling.

The last thing Starbucks understood was marketing. Their social media presence was well-established and generally ahead of most Western brands in China during its first decade here. The rest tried catch-up and some succeeded but most failed. Telling your brand story here needs content and context and it better be entertaining and fun. I spoke with the head of marketing for one of the world’s biggest and coolest sports fashion brands two years ago and he was telling me they had just moved into mobile platform selling. That’s like arriving today in Scotland and telling them you just invented whisky.

Sadly, many Western brands can’t grasp the speed of change and that the Chinese consumer is dynamic, developing and learning quickly. By the time many companies work out their ‘China strategy’ the market may have moved or changed.

I’ve lost count of the number of UK companies (including the famous ones) I speak to and meet with who bring a rigid ‘what made us successful in the past will determine all our action for the future’ attitude and end up closing shop, heading home and blaming China.

Don’t get mad, get prepared. Starbucks’ next Roastery opens in Milan, the home of great coffee and design.  But before we mention coals and Newcastle, I’m betting Starbucks have that well-covered too.

Alan Hepburn FIH has spent more than 30 years in Asia in the hospitality and lifestyle sector. Having run some of the world’s best hotels , he then developed, opened and operated China’s first luxury lifestyle company: the multi-award winning Three On The Bund in Shanghai. The Hepburn Group is a Shanghai/Singapore-based boutique consultancy that works with hospitality and F&B companies from the West, helping them navigate the challenges of market-entry and growth in China and Asia.

 

 

 

 

 

 

 

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The positive impact of the Royal Wedding by Neel Radia FIH, national chair, National Association of Care Catering (NACC)

Neel Radia image“The nation is gripped with Royal Wedding fever, as we prepare to celebrate the marriage of Prince Harry and Meghan Markle. The NACC’s members are certainly no exception. We’ve heard from care caterers and chefs up and down the country who are putting in a tremendous amount of effort to ensure that their residents enjoy a Royal Wedding experience to remember.

As with most celebrations, food is playing a leading role. Our members are using their expertise in creating delicious, nutritious meals, suitable for a care setting, to give the elderly and vulnerable they care for a real treat.

Indoor and outdoor festivities include, for example, coverage of the wedding on televisions and large screens, street parties, wedding buffets, wedding breakfasts, Afternoon Teas and BBQs, all featuring carefully-planned, mouth-watering menus, plus beautiful lemon and elderflower cakes to match the famous couple’s wedding cake of choice.

Residents will be involved in the preparations, helping decorate venues and cupcakes, making their own fascinators and being invited to dress in their finest attire for the big day. They will also enjoy music, entertainment, quizzes, dancing, and one care home has even reported that their wedding breakfast will include life-size cardboard cut-outs of Prince Harry and Meghan Markle themselves!

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As well as enjoying delicious food, residents will benefit emotionally and socially. The Royal Wedding provides a fantastic opportunity for them to socialise with fellow residents, staff and visiting relatives and community members. I’m sure the parties will be an enthusiastic subject of conversation in the build-up to the main event and for some time after. The celebrations could also, importantly, help evoke fond memories of their own weddings and family occasions, as well as Royal Weddings of the past. I’m sure some residents will have seen many a Royal Wedding over their lifetimes, including that of Her Majesty The Queen herself!

The NACC sends the Royal couple many congratulations on their wedding day and we wish our members and their residents a wonderful weekend of festivities.”

How restaurants are reacting to Vegetarian Month

March is vegetarian month. Recent news shows that an estimated 29% of evening meals in the UK are vegetarian or vegan. These numbers only seem to be increasing, but just how is the hospitality industry reacting? Wayne Redge reports

Reports show that sales of meat-free ready meals were up by 15% in January compared to 12 months before. Vegan numbers went up from 150,000 in 2006 to 540,000 just a decade later, with 1.2 million vegetarians in addition to this in the UK. Not only that, but there has been an uprising of ‘flexitarians’, those who reduce their meat consumption by choosing to have meat-free days. As a result, evidence shows that 25% of people in Britain have cut back on how much meat they eat. With all of these figures on the rise, the transitions to a meat-free way of living aren’t just a ‘fad’.

Signs of the hospitality industry acknowledging these statistics has come with many different reactions. Nando’s, the Afro-Portuguese chain restaurant known for its chicken, has been consistently adding to its range of vegetarian and vegan options over the past few years. The spiced chicken giant has now announced that two more vegetarian dishes will be added to its menu: golden brown halloumi sticks served with a pot of sweet chilli jam dip to start, alongside a new main of Veggie Cataplana (a South African inspired stew dish.)

A host of vegetarian restaurants are also popping up, giving people who have adopted this lifestyle a lot more options. Run by former mentee of Gordon Ramsay, Minal Patel, “Prashad” is a 2 rosette and Bib Gourmand standard Indian cuisine restaurant. The personalised and crafted menu boards created by Smart Hospitality encase an all vegetarian menu that has been the talk of popular review site, Trip Advisor, since the restaurant opened its doors. Receiving the “Most Talked About Restaurant On Trip Advisor Award” and a “Certificate of Excellence” on the site, it is proof of the popularity that a vegetarian restaurant can receive by focusing its efforts towards a collective audience.

January of this year saw a mass of high-profile restaurants trying out full vegan menus or dishes for ‘Veganuary’. Harvey Nichols brought a full vegan menu to its OXO Tower restaurant in the shape of a three course vegan meal and vegan wine list. Upon opening their menu cover, guests were welcomed by the sights of Grilled Tofu with Miso and a Poached Pear and Blackberry Dessert.

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Even Michelin Star chef, Tom Aitken took part in his Tom’s Kitchen restaurant . Teaming up with vegetarian burger company, The Vurger Co, he served up a hoisin glazed mushroom patty with pak choi, red cabbage and crunchy spring onions ( pictured above). Due to the success of this vegan burger, he has adopted a vegetarian burger to his main menu since then.

The amount of vegan festivals has seen a massive increase too, with at least 75 festivals lined up for 2018 in the UK alone. The festivals are a celebration of the natural lifestyle whilst also introducing its participants to new vegan restaurants and foods that they may not have tried before. Restaurants are creating pop ups at these events to promote themselves to the vegan following and gain some new supporters.

So, with the popularity of no-meat lifestyles on the rise, it is clear that restaurants have an opportunity to increase their offerings and enable themselves to appeal to a wider clientele. If 25% of evening meals being eaten are meat free, would restaurants do well to make 25% of their offerings meat free? It might even serve as a cost effective alternative whilst not compromising on quality.

Wayne Redge is marketing assistant, Smart Hospitality Supplies

Food additives are a cause of obesity, says Mike Duckett MBE FIH

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Mike Duckett MBE FIH, centre, meets HRH The Prince of Wales

The hospitality industry has a responsibility to promote healthy eating habits, writes Mike Duckett MBE FIH, the ambassador for good hospital food and the former award-winning head of catering at The Royal Brompton Hospital, London.

“I have always worried about the amount of chemical additives added to food during manufacturing and the number of alien ingredients used to extend the colour and the shelf life of food, especially ready frozen meals. I have been very vocal in expressing my concerns which were confirmed recently when I visited the local hospital here in Surrey.

I was disturbed to hear of two eight-year-old boys who were hospitalised with severe pain from type-one diabetes. The senior nurse on duty told me that the main cause was their poor diet and lack of a variety of healthy food.

We therefore as the hospitality fraternity  have a collective responsibility to ensure that the food we serve is healthier.  We should persuade those who manufacture meals to be more aware of the steps needed to reducing high levels of obesity.

Statistics show that we are eating out more regularly and that we tend to eat more in a restaurant than in the home environment. This raises one important question. How safe is it to eat out these days? Recently we have heard that a major meat supplier was told by the FSA to stop supplying, a popular pub chain received a zero rating for hygiene,  and food factories change best before dates on food.  We also hear of customers dying from eating food that cause allergies. It makes you wonder if eating out is taking your life in their hands.

Hospitals, care homes, meals on wheels services and the general public are in the habit of purchasing  ready frozen microwave meals. These meals are high in fat, sugar and salt. Scientists have warned that emulsifiers – the chemicals widely used in processed foods including ice cream, bread and chocolate – may be a key cause of obesity. These emulsifiers are used to make smoother textures in foods such as peanut butter, sausages and mayonnaise. They are understood to be chemically active long after we digest them and they increase hunger and therefore we eat more.

If we are going to take the growing obesity epidemic seriously, we need an urgent look at what is being used in our food manufacturing and in the type of food and ready meals we serve our customers and campaign for the use of fresh local ingredients from as near the point of service as possible.”

The Menu Museum

menu museum logo large(1)A Brighton-based academic is bringing a unique archive of menus to the attention of the wider international hospitality industry and education practitioners with the aim that it will remain free to users and continue to grow.

The Menu Museum is an interactive online menu archive that facilitates research and teaching in menu design, pricing and food and beverage trends. It currently features more than 640 menus and has over 1,500 users.

Ioannis Pantelidis FIH, principal lecturer in hospitality and culinary arts at the University of Brighton, started the website with his colleague Ken Woodward. Pantelidis says: “I had a big collection of restaurant menus that I was using for food and beverage management-related modules, so I had numerous folders that I used to carry to my classes. When I came to Brighton I started teaching a module with Ken. He had his own collection, so when we put the two together we had about 500 menus which we scanned and uploaded onto the website. Since then a further 140 menus have been uploaded by users, which is great.”

The collection includes a menu replica from the Titanic (1912) and a 19th century menu from the Dorchester Hotel, London.  Menus can be searched for by country and year of origin. Once registered, users can upload their own menus or collections of menus.

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Pantelidis adds that the website continues to be a work in progress and wants to bring it to the wider attention of the international hospitality community in order for it to grow.

The website can be an important teaching aid. Pantelidis has used it to compare a 1970s Dorchester menu with its equivalent today. He says: Students are able to explore the differences – how the pricing strategies differ, the design and the types of dishes on the menu. I want to keep the website free and I want the community to use it.”

The Menu Museum won the 2017 Teaching Innovation Award,  presented by
The Council of Hospitality Management Education, in association with the SHARE center.

The Menu Museum received initial funding from the European Union. Subsequently both the Savoy Educational Trust and Trigger Solutions have helped with server hosting and maintenance costs.

BU_23NOV17_AW_050adjustedFor further information about supporting the Menu Museum, please contact:
Dr Ioannis S. Pantelidis FIH – Principal Lecturer
Admissions, recruitment, marketing & WP leader
School of Sport and Service Management
University of Brighton,  Darley Road, Eastbourne, BN20 7UR
Tel:  +44 1273 64 4748   Email: isp12@brighton.ac.uk

 

The Menu Museum

menu museum logo large(1)A Brighton-based academic is bringing a unique archive of menus to the attention of the wider international hospitality industry and education practitioners with the aim that it will remain free to users and continue to grow.

The Menu Museum is an interactive online menu archive that facilitates research and teaching in menu design, pricing and food and beverage trends. It currently features more than 640 menus and has over 1,500 users.

Ioannis Pantelidis FIH, principal lecturer in hospitality and culinary arts at the University of Brighton, started the website with his colleague Ken Woodward. Pantelidis says: “I had a big collection of restaurant menus that I was using for food and beverage management-related modules, so I had numerous folders that I used to carry to my classes. When I came to Brighton I started teaching a module with Ken. He had his own collection, so when we put the two together we had about 500 menus which we scanned and uploaded onto the website. Since then a further 140 menus have been uploaded by users, which is great.”

The collection includes a menu replica from the Titanic (1912) and a 19th century menu from the Dorchester Hotel, London.  Menus can be searched for by country and year of origin. Once registered, users can upload their own menus or collections of menus.

Pantelidis adds that the website continues to be a work in progress and wants to bring it to the wider attention of the international hospitality community in order for it to grow.

The website can be an important teaching aid. Pantelidis has used it to compare a 1970s Dorchester menu with its equivalent today. He says: Students are able to explore the differences – how the pricing strategies differ, the design and the types of dishes on the menu. I want to keep the website free and I want the community to use it.”

The Menu Museum won the 2017 Teaching Innovation Award,  presented by
The Council of Hospitality Management Education, in association with the SHARE center.

The Menu Museum received initial funding from the European Union. Subsequently both the Savoy Educational Trust and Trigger Solutions have helped with server hosting and maintenance costs.

For further information about supporting the Menu Museum, please contact:
Dr Ioannis S. Pantelidis FIH – Principal Lecturer
Admissions, recruitment, marketing & WP leader
School of Sport and Service Management
University of Brighton,  Darley Road, Eastbourne, BN20 7UR
Tel:  +44 1273 64 4748   Email: isp12@brighton.ac.uk

Institute of Hospitality Endorses Training Programmes for the Homeless

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Providence Row bakery trainees celebrate the endorsement of their training programme by the Institute of Hospitality.

The Institute of Hospitality has endorsed training programmes that help people affected by homelessness enter the catering industry and turn their lives around.

The catering and bakery training courses are provided by Providence Row, a charity that works with more than 1,400 homeless and vulnerably housed people a year in East London, offering an integrated service of crisis support, advice, recovery and learning and training.

Peter Ducker FIH, chief executive, Institute of Hospitality, says: “Endorsement by the Institute of Hospitality demonstrates that Providence Row’s training courses meet a wide range of essential criteria and benchmarks relating to quality standards and quality learning outcomes.”

Dominic Gates, Enterprise and Training Manager, Providence Row, says:  “We’re absolutely thrilled to gain this prestigious endorsement as it’s a fantastic acknowledgement of our team’s great work offering catering and baking training to people affected by homelessness, substance misuse and mental health issues. In the last seven years, we’ve developed a traditional ‘soup kitchen’ into a supported training kitchen, offering people quality training to help them move away from homelessness and back into employment.”

Providence Row Charity has been helping vulnerable people for 160 years. It has been running the Catering Trainee Scheme for the last seven years, having worked with over 200 trainees, food designers, and nutritionists and over 20 professional chefs at Andaz Hotel Liverpool Street and other catering establishments. Providence Row has two full-time chefs with catering backgrounds. In addition, Andaz Hotel Liverpool Street provides workshops and work experience placements for trainees.

The Institute of Hospitality offers an endorsement service to training providers for the recognition of quality professional development and training.