As Bob D. once sang, the times they are a changin! And quickly. One minute it’s all diamond bling, 10 grand bar tabs at Mahiki and eight course tasting menus for 200 quid a pop. The next it’s queues out the door at Pizza Express with everyone clutching their 50% vouchers downloaded from moneysavingexpert.com. As Anthony Worrall Thompson goes bust, Alan Yau plans to roll-out Cha Cha Moon.
No longer is it shameful to negotiate the cheapest price, to shop around, to cut a deal. In fact now it’s clever, wise and astute to know where the best discounts are. “You don’t have to pay full price for food any more!” people gleefully exclaim over tap water and house wine. Great for consumers, not so great for hospitality businesses.
Strategically, this is a tricky one. Some commentators have rebuffed the cut-price strategy, stating that this will lead only to price wars and carnage in the industry. Others have embraced it, especially the large chains who can utilise their economies of scale, brand power and marketing muscle to pack ’em in and turn tables all night on micro-margins.
Clearly, only the most efficient hospitality businesses can compete on price, and those that can maximise margins will be the last standing. This means smaller operators must use every ounce of ingenuity to compete effectively with the Big Boys. Clever localised, multi-channel marketing campaigns, targeting core customers, will pay dividends. It costs 10 times more to attract a new customer than in does to encourage an old customer to return. Great value set menus using seasonal ingredients (things are cheaper if they are in season and haven’t had to fly across the planet) will lead to less wastage and higher margins. Streamlined operational processes so that minimum staff can serve maximum customers. All of these will give a business the edge it needs to achieve a competitive advantage.
Seek out the holy grail of high margins, good quality and great service whilst keeping your prices low. This is the true definition of value, and value propositions will rule in the Age Of Thrift.