The eating and drinking out market continues to be a difficult place to thrive. Consumers seem to have become more discerning, independents are disrupting and growing to steal market share, cost pressures remain as a headwind, and large value-players set a tough benchmark on price. However, we believe that there are a number of steps that a business can take to re-focus and find growth again.
One: Agree on the big “why” - why do you exist as a business?
Understanding the need that you fulfil, the niche you sit in, or the gap in the market that you satisfy is the most important step towards refocusing a business. Imagining that the business is being pitched for the first time, with that big “why?” in mind, and you must convince people of the reason that your business needs to exist.
By answering that question, a whole host of other questions are likely to come up – particularly if your business has lost its focus through growth or changes in the market. Each of those questions should be worked through to then build a new business case and business model. Evolution of a proposition is natural, but it can be difficult to keep up with that change, so keeping that “why?” in mind throughout the lifecycle of a business can help to keep a focus on the true raison d’etre.
If there’s no clear purpose, then the customer can sense it, and will (consciously or subconsciously) stop going as there is no reason to.
Two: Understand the customer - who is your customer, and who isn’t?
Understanding who your customer is sounds like a given. However, so many businesses don’t actually know who their core consumer is, they just think that they do. Knowing who isn’t your customer is also one of the best things you can understand. You can understand your core consumer down to their price elasticity, but if that core consumer group is tiny, that information isn’t much use.
Then comes the “why” again. Why does your customer come to you? Within this, there are smaller questions… why do they come to you over other competitors? Is there a specific product or mission that they come to you for? Is there a differentiating factor that makes you more desirable? Customers should be constantly engaged to give feedback, to help design new products, and to make suggestions, as their guidance is so valuable. Understanding the reason for sales is essential to keep generating them, especially as consumers’ demands and expectations change.
Utilising customer data, doing surveys of representative samples of the population to find out why people don’t visit you, engaging with the consumer through as many channels as possible to engage them and improve the perception of relevance, as well as looking at any form of online information from review sites and social media are all ways to gather a better sense of all consumers, not just active or recently lapsed customers.
The customer knows and appreciates when they’re being listened to, and in a world where the concept of loyalty is being transformed, a sense of emotional engagement is a powerful tool.
Three: Find your “alternative purpose” – what do you do aside from make money?
Every business exists to make money, but if a business exists just to make money, then it has no soul. Consumers and employees care much more than just price (or pay) and convenience (or location) and having an alternative purpose can help a business to differentiate from competition. This purpose could be anything from “we provide the most fun night out for customers” through to “we provide excellent customer service every time”.
This can lead on from the big “why?” and shape the business’ aims and the teams employed. It is essential to include KPIs which are not purely financial to understand the health of a business through measuring people metrics from the customer and the employee, such as customer feedback and staff NPS scores.
In addition, focusing on the softer metrics can lead to a better company culture with strong values and contribute to making a business a desirable place to work.
Four: Make your staff happy – are you giving staff what they want?
Happy staff make happy customers. We have seen it time and time again where happiness in staff and customers are near-perfectly correlated.
We think that one of the best ways to begin to improve staff morale is to understand the reason that people leave. Exit interviews are awkward things to do, but they can give rich and crucial information to the business for the future, so finding a way to successfully conduct these is a must. If staff turnover isn’t understood, then how can it be reduced and how can happiness be improved?
On top of this understanding, emotional engagement is essential to staff happiness, and it can be exceptionally difficult to generate. Having a clear and authentic purpose for the business (both in the “why” and the “alternative purpose”) is the first step; and trust and empowerment throughout the business, from the shop floor to the boardroom, are the second.
People are unlikely to leave if they’re happy. High turnover is one of the biggest costs to the business, both as a direct cost, but also indirectly as it starts to impact customer experience and company culture and subsequently sales.
Don’t stand still
All of these steps might sound like a big investment, and they are, but we have seen in our research with CGA that those brands that aren’t being invested in are the ones that are struggling to gain momentum with the customer. The brands that are outperforming are those who aren’t standing still.
The customer wants, and can get, high quality environments, good quality, innovative products, and excellent service from many of the independents and top-performing large brands; so not offering the best in class for your niche means that the customer will go elsewhere. Even when LFLs are positive and everything seems good on the surface, it’s very possible that a lack of focus on the core purpose of the business, the customer, and employees could be creating an undercurrent that will take time to impact the top line.
As we have seen from Jamie’s Italian, a brand can start its life thriving, with expectations of excellent quality and an exclusive experience. However, rapid expansion damages that perception of exclusivity and quality and as footfall dwindled, costs were cut, creating a negative spiral of rapidly declining standards. By ensuring that underperforming locations are either invested in to create positive new customer perceptions or they are closed, that negative feedback loop can be broken.
It’s an uncomfortable time to be investing in refocusing a business, but it’s a crucial and potentially transformational time.
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