Dynamic pricing for restaurants?

Paul Winch-Furness / Photographer
Bob Bob Ricard is using dynamic pricing

Some restaurants are starting to follow more closely the revenue management practices used by airlines and hotels. Dora Furman reports

Consumers are most familiar with the use of yield (or revenue) management in the travel industry, as airlines, hotels and car rental companies constantly alter rates based on revenue channel, day of booking and date of future use.

Consumers continue to be extremely savvy shoppers, adapting the way they shop, from changing the time of travel departure (“I can save £200 if I leave at 5am!”) to managing the time and place of booking. Now, they’ve got it down to a fine art.

Businesses such as Uber are leveraging similar yield management tactics, using dynamic pricing to adjust rates by the minute. What sets them apart from the airlines and hotels is the immediate need their services fulfil for customers. Although a customer can book a future journey, the service is most commonly called upon for instant use.

Interestingly, while restaurants have historically utilised yield management through tactics such as printed coupons, app-based offers via the likes of Groupon, day-of-the-week promotions and early-bird menus – the techniques are less advanced compared to what has been happening across the wider hospitality industry, reflecting a more static and less flexible pricing strategy.

The above raises the question, are restaurants leaving money on the table? Should operators be invoking a more flexible pricing structure? Additionally, should they charge a different price for the same product on different days or during different hours of the same day?

Norse restaurant in Harrogate moved to a bigger site thanks to crowdfunding
Norse in Harrogate is experimenting with variable discounts

Already popular in the US, some UK restaurant operators have recently started trialling dynamic pricing. One such example is the high-end London eatery Bob Bob Ricard, which is cutting 25% off its bill for off-peak diners, whilst independent operator, Norse, based in Harrogate, is experimenting with set discounts that vary according to the day of the week. Norse has now moved the trials on to Tock, a booking platform which enables customers to choose from a four or eight-course menu at £40 and £60 respectively – booking via two methods. The first option is to leave a £15 deposit, which is removed from the final bill. The second is a ticket-based system for diners who want to secure additional value by obtaining a table at a reduced rate and then finding a date to use it when slots are released. Advance tickets range from £25-35 for the four courses and £40-55 for the offer to try eight. Prices change based on demand, as well as by day and time.

Dora Furman is Vice President, Revenue Management Solutions
For further information about Revenue Management Solutions (RMS), visit
 www.revenuemanage.com or call 020 3755 0960

Advertisements

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.

Starbucks_Roastery_Shanghai_A web
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.

Shanghai_Roastery_(8)

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.

Starbucks_Roastery_Shanghai_-_Top_10_Things_(20) web
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.

 

 

 

 

 

 

 

Focus groups on female leadership

Are you interested in sharing your thoughts on equality in the workplace? Do you work in tourism, travel, hospitality or events?

The University of Greenwich is carrying out research to understand how women regard opportunities to develop onto executive-level posts in the industry.

It does not matter what type of organisation you work for. The researchers are interested in hearing your thoughts. They also want to hear from men – how men perceive opportunities available to women in the workplace is also relevant.

Your involvement in a focus group would give the research team an opportunity to understand your thoughts on the skills required for leadership roles, and how support could be made available that would be recognised in the industry. The aim of the research is to develop a Female Leadership Developmemnt Programme for the Tourism Industry.

A focus group will be held on the following date at the following locations:

  • Thursday 24th May 12.00 – 2.30 Ulster University
  • Tuesday 29th May  12.00 – 2.30 University of Strathclyde
  • Monday 11th June 12.00 – 2.30 University of Greenwich
  • Wednesday 13th June 12.00 – 2.30 University College Birmingham

Food and drink will be provided and travel will be re-imbursed to the value of £10.00.  If you are interested in participating in the research, please contact Dr Menna Jones by e-mail on: m.t.jones@gre.ac.uk

Picture MTJ(3)Dr Menna Jones
University of Greenwich
Department of Marketing,
Events and Tourism
Business Faculty
Greenwich Campus
Old Royal Naval College
Park Row
London
SE10 9LS
Tel. +44 (0) 20 8331 8311

Greenwich
A focus group takes place at the University of Greenwich on 11 June

 

Emirati and Italian Architects win Second Annual Bespoke Access Award to Champion Accessible Hospitality

Robin Sheppard, Baroness Celia Thomas, Maher Hadid (MnM Studio Architects)web res
Robin Sheppard, Baroness Celia Thomas, Maher Hadid (MnM Studio Architects)

At the second annual special event held at the Palace of Westminster on April 18th, MnM Studio Architects, along with Maria Brighenti and Marcello D’Orsi, were announced the joint winners of the 2017/18 Bespoke Access Awards, a design competition to create accessible solutions, run in association with the Royal Institute of British Architects (RIBA) and featuring a prize fund of £30,000.

MnM Studio devised an innovative accommodation solution based around the four senses of smell, taste, sound and sight, with extensive use of Braille throughout. Termed “empathy through aesthetics”, the system aims to support the emotional state of the guest, while maintaining a distinct visual appeal via a stylish, curved design.

“’Empathy through aesthetics’ perfectly encapsulates what we are aiming to do with the Access initiative”, commented Baroness Celia Thomas, Chair of the Judging Panel and Patron of the Awards. “The emphasis placed on the emotional state of the guest was particularly impressive, given this is an area that is often overlooked.”

Alongside MnM Studio, freelance Italian architects Maria Brightei and Marcello D’Orsi were successful in the Architectural category, as well as being announced joint winners of the overall Celia Thomas Prize, worth a total of £20,000. Their design, which focused on the means through which existing accommodation can be renovated with the disabled traveler in mind, concentrated on the public spaces of hotels, and how subtle enhancements can be made to significantly increase the ease with which they are passed through.

Robin Sheppard, Baroness Celia Thomas, Marcello D'Orsi web res
Robin Sheppard, Baroness Celia Thomas, Marcello D’Orsi

“I was particularly struck by the attention they had paid to the customer journey through reception and the lobby areas”, commented Alan Stanton, Stirling Prize-winning architect and member of the Judging Panel. “These are areas often overlooked by both architects and business owners alike, and it is easy to think of them as merely transient. But they can significantly improve or disrupt a guest’s experience, so it was exciting to see them highlighted and approached with such care.”

“The architectural community across the country has really embraced the Access Awards since their launch in 2016”, added Jane Duncan, RIBA Immediate Past President. “It is tremendously encouraging for the future of accessible tourism to see this year’s awards attracting interest from around the world, as well as ideas shining a light on some of the more often-overlooked aspects of disabled travel.”

The competition attracted submissions spanning the length and breadth of the UK, as well as from across Europe and Asia. Entrants competed across an expanded range of categories, including Product Design, Architecture, Service Applications (Digital) and Service Applications (Training). Alongside the overall Celia Thomas Prize, worth £20,000 and believed to be the largest cash prize in the UK for a design concept.

“We were extremely pleased to see the competition attracting a truly global roster of entrants this year”, said Robin Sheppard FIH, Chairman of Bespoke Hotels and recently appointed Hotel Sector Champion for Disabled People. “The Access Awards continue to grow and evolve, but the high quality of entries ensures our collective focus remains on improving the experience for all hotel guests, whether disabled or otherwise.”

The entries were judged at the turn of the year by a panel which included Paralympic gold medalist Baroness Tanni Grey-Thompson, Stirling Prize-winning architect Alan Stanton, Baroness Celia Thomas, Tom Perry, Head of the Cities Programme at the Design Council, Graeme Whippy, Disability Specialist for Channel Four, Alastair Hignell CBE, alongside Robin Sheppard.

Full list of winners:
MnM Studio Architects, Dubai
Joint Winners of the Celia Thomas Prize

Maria Brighenti with Marcello D’Orsi, Italy
Joint Winners of the Celia Thomas Prize

MnM Studio Architects, Dubai
Joint Winners of the Architecture Category

Maria Brighenti with Marcello D’Orsi, Italy
Joint Winners of the Architecture Category

Wilson Mason LLP, Lancashire
Winners of the Product Design Category

Purcell, London
Winners of the Service Applications (Training) Category

Neatebox Ltd, London
Winners of Service Applications (Digital) Category

Full list of judges:
Robin Sheppard, Chairman, Bespoke Hotels Group
Celia, Baroness Thomas of Winchester, House of Lords
Alan Stanton OBE, Stanton Williams
Tanni, Baroness Grey-Thompson, Paralympic Gold Medallist, House of Lords
Graeme K Whippy MBE, Disability Specialist for Channel 4
Alastair Hignall CBE, Trustee of the Leonard Cheshire Foundation
Tom Perry, Head of the Cities Programme at the Design Council
Sarah Weir OBE, Chief Executive of Design Council
Paul Gregory, MCIBSE, MSLL, Global Specification Director for Dyson.

www.bespokehotels.com/access
#BespokeAccess

HQ explores the talent pipeline

001_HQ_SPRING_2018_SPINE.pdfYour latest issue of HQ (second quarter 2018 issue 48) is landing on UK doormats this week. It explores the talent pipeline from a number of perspectives.

Where is our next generation of leaders and senior managers coming from? It is a question often asked  in hospitality management and education circles. Your latest issue of HQ Magazine is packed with answers and opinions on the matter.

Our chief executive Peter Ducker FIH is impressed with the talented and enthusiastic young hospitality management students coming out of universities and colleges. It is up to all of us to ensure they find ways to achieve their full potential within our sector and that we do not lose them to other industries, he says.

Still just 32-years-old, Adam Rowledge FIH is a rising leader on the UK hotel management scene and a superb role-model for new entrants. Our in-depth interview showcases the importance of creating the right culture within the workplace that allows talent to grow and shine.

A UK government review into higher education is now underway, concerned about choice and value for money within a system where almost all institutions are charging the same price for courses. The review may mean some tourism and hospitality courses will either need to change their approaches radically or risk becoming obsolete, says John Swarbrooke of Plymouth University

Of course, a university degree is by no means the only route into a successful hospitality management career. Sue Williams FIH MI, current Hotelier of the Year, is just one of hundreds of professionals who started their careers with the Concord hotel management programme.  Celebrating its 50th anniversary, Glen Harrison MIH reveals all about this unique on-the-job training scheme which specifically targets youngsters coming out of FE colleges who do not want to go to university.

Other contents in this HQ Magazine

  • Peter Jones MBE FIH – Why has the government dropped the T level in hospitality?
  • Passion4Hospitality 2018 – re-live the excitement of our largest ever student and industry networking event
  • The end of business as usual – Angela Roper FIH on vertical disintegration in the corporate hotel industry
  • A winning partnership – how Sheffield Hallam University and Hilton are working closely together
  • Cybercrime and GDPR – what businesses need to do to protect themselves
  • Tableware trends – creativity is all the rage but weird, wacky (and unhygienic) are definitely out

 

 

Quotas for female managers?

On International Women’s Day (8 March), Serena von der Heyde FIH MI makes the case for affirmative action to achieve greater diversity in the boardrooms of the hospitality industry19 Serena von der Hyde FIH

Like a lot of people, I don’t like quotas – I don’t think they are fair – but recently I have started to think again. Nearly 60% of the UK workforce in our industry are women yet only just over 20% of our managers are women, and these figures have been almost static for more than 20 years.  We know that businesses with more women leaders are more successful and more profitable, so why aren’t companies rushing to develop and promote them?  The benefits of diversity are proven, but still progress in achieving diversity is glacially slow.

We want a fair workplace for our young women and men, and optimum performance for our businesses, and yet a compelling business case has failed to bring about change; then should we consider quotas?

Quotas have been shown to get results, and fast.  They have been used across Europe to promote women in politics and business since Norway started in 2003.  Many countries including Iceland, France, Spain and now Germany have followed suit, and the numbers of board-level women have risen in those countries. What’s more, there is some evidence that where quotas have been in use for some time, diversity becomes self-fulfilling. The culture and infrastructure has changed to the extent that women and men are coming through to leadership levels in equal numbers. In Belgium, the quota system states that both sexes must be represented for applications for roles in politics, and recently it is male applicants that have been hard to recruit. For quotas to work, they need to come with strict repercussions. In France, businesses were threatened with de-regulation if they failed to meet quotas. In Spain there were no sanctions for not meeting quotas, and as a result Spain has been far less successful. Quotas without teeth are ineffective.

One of the main arguments against quotas is that they prevent promotion on merit. We want the best leaders for our businesses regardless of gender. But I challenge the notion that our meritocracy is working. If it was, wouldn’t we already have more women leaders? The truth is that our societal and cultural background is failing to provide a level playing field for our aspiring women leaders.  More women than men are graduating from our universities, and, on average, women have better grade degrees, but still we overlook their talents.  It is becoming clear that we have to learn diversity – it takes time for a culture to genuinely believe in the value of diversity, and then to implement processes that nurture it.

There is a difference between quotas and targets, in terms of delivering change; quotas enforce where targets incentivise. Personally, I believe that people learn better and change more when they can set their own agenda. Every business will have different issues affecting diversity, and real change is most effective when a strategy is developed specifically by the team for that business.  When regulations are imposed, teams spend half their efforts working on strategies to sidestep the new rules, and quotas can result in alienating the team.

For my own business, where we need to develop male leaders to ensure diversity, I will be:

  • Ensuring full and ongoing commitment to diversity from the leadership
  • Leading the development of our diversity strategy and targets
  • Publishing gender pay differences, and recording gender balance across the team and our leadership team

This type of approach gives businesses time to develop a pipeline of talented women (or in our case men), so that they can make quality appointments and showcase successful women within the business. I believe that hospitality businesses should be recording gender balance, monitoring gender pay gaps and publishing their own targets and strategy for diversity.  However, if these initiatives prove inadequate, then it is time to consider resorting to the faster, but blunter tool of quotas.

Serena von der Heyde FIH MI is the owner of The Georgian House Hotel, London

Sign up to the Diversity in Hospitality, Travel and Leisure Charter here.

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

focus-on-hospital-food-and-on-the-way-forward-by-mike-duckett-mbe-fih-1
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.”