Paul Newman, RSM’s head of leisure and hospitality, looks ahead to what 2018 has in store for the sector.
Meeting demand from Centennials
Move over millennials, Generation Z have reached adulthood. Born between the mid-1990s and mid-2000s, these ‘digital natives’ have never experienced a world where the internet and social media wasn’t ever-present.
We will see innovative operators create more personalised, interactive experiences that constantly reflect the latest digital advances. Those that don’t adapt risk failing to build relationships with a demographic that holds more buying power than the millennials before them and places greater significance on brands which they can interact with and contribute to.
A move away from third-party apps
With mobile ordering and payment now mainstream we predict an increasing number of hospitality brands will seek to develop their own apps.
A recent report from Zonal and GCA indicated that 82 per cent of adults surveyed were more likely to use a restaurant’s own app as opposed to a third-party provider. Trust around personal data is a significant barrier to consumer engagement and operators who have complete control over their apps and customer data will be able to engage consumers through this platform.
We will see the full impact of GDPR (General Data Protection Regulation) in 2018. Significantly smaller mailing lists will make it more difficult to target customers through traditional means, leaving operators to undertake smaller, more frequent, marketing initiatives and make more effective use of social media and influencers.
For those unprepared operators, the required operating system and procedural updates, together with staff training and the associated management time are likely to significantly impact bottom lines.
The tequila takeover
2018 will see a surge of tequila based cocktails and sippers appearing on menus. We expect the tequila renaissance which has slowly gathered pace over the past decade in the US to be adopted at a faster rate by UK operators. The trend has seen a move away from cheap mass-market products towards higher quality products, combination cocktails and sipping tequilas.
The Blue Planet II Effect
David Attenborough’s hit show has passionately highlighted the eight million tonnes of plastic waste that leaks into our oceans each year, killing more than one million seabirds and 100,000 mammals.
Restaurant and pub operators use thousands of straws and plastic stirrers each year, often without customers asking for them. We expect the trickle of operators who have so far announced their removal of plastics to gather pace as consumers young and old become more vocal in their demands for action to be taken to protect our coastlines, marine life and oceans.
More site closures, restructurings and consolidation
We anticipate seeing a larger number of site closures, restructurings and consolidation amongst brands play out in 2018. The combination of dampening consumer confidence and continued cost headwinds will make some sites no longer viable, particularly those where leases were signed up some years earlier. The extent of site closures will depend on the flexibility of landlords and the long-term view of the banks and Private Equity funders. Those operators with deep pockets will look to capitalise.
A focus on staff retention
We see a focus on staff retention being a key theme amongst operators in 2018, particularly through creating career ladders, training programs and education opportunities.
Staff play a vital role in enhancing the customer experience. A notable encounter can lead to loyalty, recommendations and ultimately profit. In an ultra-competitive market and in a time where recruitment is challenging due to uncertainty surrounding EU nationals working in the UK, a valuable part of the sector’s workforce, operators must retain the best people to stand out.