Subjects: Hospitality groups must innovate or die, bagels leading the charge of baked goods, what are you looking to deliver
Authors: Everett Fieldgate, Glynn Davis, Jasper Reid
Hospitality groups must innovate or die by Everett Fieldgate
It was 16 years ago Creams Café was founded with two very simple goals in mind: create a concept that delivers moments of joy to people through sweet treats; and give young people a safe space to hang out with their friends. Today, we have close to 100 stores nationwide, collectively serving seven million scoops of gelato, 1.4 million waffles and two million milkshakes every year. Not an easy feat, especially in today’s climate.
But what has been our secret to not only surviving, but continuing to grow as a hospitality business during such turbulent times? Three words: sweet, joy and abundance. Within that, of course, innovation. For a few years, we stood still. We’ll put our hands up to that, and we felt it as a business. However, we have re-prioritised it as something crucial to the success of Creams, allowing us to bring new people into the brand, continue to bring joy to our existing customers and, crucially, stand out from our competition. But why is innovation so key?
The consumer landscape has changed significantly, and the way people interact with hospitality brands – from the rise of social media and “viral” food trends to the pandemic, which required an immediate shift to a delivery model (a challenge in itself when your core product is gelato!). Today, there is also more choice than ever for consumers. As a result, they want the world of hospitality to deliver experiences that are new and will delight, which will give them a reason to leave home and spend their hard-earned money. Arguably, putting more pressure on already stretched front-of-house teams.
People might hear “innovation” and think of the high costs and intensive man-hours needed to drive this. We are fortunate to have an incredibly talented and creative innovation team that is driving forward innovation not just at Creams, but for the entire dessert category, ensuring we continue to be industry leaders, bringing new experiences to dessert lovers and those with a sweet tooth. That is what Creams is all about – affordable moments of happiness and unforgettable experiences. For those who don’t have a crack-team behind them, innovation doesn’t have to break the bank to be successful, it simply needs to create new moments of discovery and joy. And the benefits can be incredible.
For those who want to minimise waste, use ingredients you already have. For example, for us, gelato is our core product – it’s what the business was built on – and so gelato will always remain at the heart of our new products. Last Christmas, we created The Adorable Snowman – a cute dessert to help drive sales during a period that is typically quieter for us. It used ingredients we already have in-store – white chocolate gelato, fresh fruit, coulis and sauces, to name a few – presented in a festive format to bring a smile to our customers’ faces. Thanks to seasonal innovation, our Christmas trading increased by 4% year-on-year.
At Creams, we are also inspired by influences from other cultures. In the UK especially, we live in a diverse and exciting society where people bring something new to the table every day. With social media, we are no longer limited by what’s in front of us either. Inspiration can come from anywhere. It’s important as operators to be on the lookout for ideas at every occasion, and use this to bring new flavour combinations, textures or products to your customers.
The final piece of the puzzle is: observation, insight and action. In the world of hospitality, you need to spend time with your customers in store. Take your ego off the table, speak to people, understand your customers – how they interact and utilise the brand, and what they want from it. The people you are serving day in, day out, should be the fuel to drive brand development.
For example, Creams has always experienced a drop in sales during the winter months. We understand – few people want to dive into gelato when it’s minus two outside. However, we wanted to give people a reason to visit us during the winter months. So, with innovation at the core of our approach, we launched our first non-gelato based/hot pudding products – the Winter Warmers range. It was our biggest and most successful launch last year, giving customers warming and comforting treats. For us, the introduction of the Winter Warmers reduced the winter sales drop significantly – truly showing the power of bringing insight-based innovation into the business.
Looking at innovation for your brand can be intimidating if you think you’re faced with a blank sheet in front of you. In reality, the clues and pieces are all there – they just need to be put together.
Everett Fieldgate is chief executive of Creams Café, the UK’s fastest-growing dessert parlour operator. This article first appeared in Propel Premium, which is sent to Premium subscribers every Friday. Companies can now have an unlimited number of people receive access to Propel Premium for a year for £995 plus VAT – whether they are an operator or a supplier. The single subscription rate is £495 plus VAT for operators and £595 plus VAT for suppliers. Email kai.kirkman@propelinfo.com to upgrade your subscription.
Bagels leading the charge of baked goods by Glynn Davis
Before setting off, I had thought that mid-afternoon on a Sunday might be a bit of a risky time to visit It’s Bagels in Primrose Hill, north London. My fears were well founded because we were met with a locked door and hand-written wording on the glasswork stating: “sold out!!”
I’m sure buying a bagel shouldn’t be quite like this. What has happened to the world of buying baked goods that it often requires something bordering on a military campaign to get your hands on the goods? It’s fair to say that since its opening in September 2023, It’s Bagels has been a runaway success.
During peak weekend trading, the tiny little unit can sell around 2,500 New York-style bagels. Even on a Monday, it can push out 1,000 of the round chewy delights. Needless to say, owner Dan Martensen is on the lookout for a second site. Such has been his success that he has been joined on the same road by established north London bagel purveyor Roni’s Bagels. “We’ve started something cool. There are bigger things to worry about,” suggests the laid-back Martensen.
He’s absolutely right, of course, and the bagel is on something of a roll right now. Bagel Factory is set to open eight sites this year as it moves towards its target of operating an estate of 38 outlets by the end of 2025, which includes a number of travel sites. Also in the capital, B Bagel recently opened a fourth unit and has expansion plans on the agenda. Meanwhile, in Nottingham, The Bagel Project has secured a second site.
Each of these follows in the footsteps of the famous pair of Brick Lane stalwarts, Beigel Bake and Beigel Shop, with the latter having been trading since 1855 but recently, sadly, forced to close in a legal/money dispute. Such is its standing that it was reported that a pop-up would be opening in the smart Mondrian hotel in nearby Shoreditch High Street, with a concise menu including some new Andalusian-inspired specials (makes a change from the timeless salt beef and smoked salmon and cream cheese options).
This exultation of a baked product is not confined to bagels. Many small hospitality businesses are finding their produce is perfect for the visual dynamics of Instagram. It’s clearly happening across the whole of the food industry, but bakery is a particularly accessible category and the latest Insta-driven hype can make a business.
Prior to my lock-out at It’s Bagels, I’d earlier in the day dragged my family to Fortitude Bakery near Russell Square tube station. Even before we got close to the extremely compact outlet down a cobbled side street, it was obvious it had a particularly apt name. The queue, which I calculated would have stolen over an hour of my time, and the requisite fortitude was beyond my staying power, and so the famed beignets – “out at 11am until sold out”, the website states – had to be left to Instagram.
Thankfully, this being London, there were other renowned bakeries to visit that had also been given the rocket fuel boost of Instagram. Arôme has its honey butter toast, Chestnut Bakery has its croissant that recently won an award for UK’s best croissant, and the fast-growing Buns at Home has its cinnamon buns.
Slightly further north, in Angel, is Pophams, which has its bacon and maple syrup Danish pastry. Again, a very small unit that is invariably too packed for me to occasionally pop into for a coffee, and so I have to cycle on past. Even further north in Edinburgh, Lannan Bakery has been anointed by Instagram and its croissants are regularly sold out by 9am.
But it’s not only Instagram that has given the egg wash shininess to the bakery category, because even Lidl is enjoying a boost from its in-store bakery. The overall growth of the discount supermarket has been fuelled by demand for goods in its in-store bakery, where its market share has exploded from 10.2% in January 2023 to 18.2% in March 2024. Introducing bakeries into stores has boosted the frequency of customer visits, and offering occasional free baked goods to its Lidl Plus loyalty app has also worked a treat on driving footfall.
Whatever part of the market hospitality companies operate within, there is surely an opportunity to leverage in some baked goods of some description or other, even if they are peripheral to the core offering. And if it is picked up on Instagram, then it will be more about dealing with the length of the queues than the bake.
Glynn Davis is a leading commentator on retail trends
What are you looking to deliver by Jasper Reid
This week, the spiciest restaurant topic of the age: meal delivery. Good for restaurants or the greatest destruction of hospitality value since Prohibition? First up, who wins in this global $390bn, 10% compound annual growth rate game? Easy, the customer wins (for now). The others – restaurants, drivers, app guys – mostly lose. Indeed, the customer is being subsidised by all the other players. It can’t last, and it used to be so easy. Remember those raggedy local take-out menus stuck to your fridge – browse, phone, restaurant guy delivers. Simple; everyone wins. Now? Countless menus crammed on a phone-screen; rampant discounts; no access to restaurants; opaque charges. And, admit it, the food is seldom as good as a restaurant.
And all this controlled by some cheerless algorithm. Thanks a lot, tech-bros, and your cheap-money private equity masters. This said, my restaurant friends, we did let these cashed-up skinny minnies into our marital bed. But let’s do the math. Good restaurants make circa 15% profit. On a delivery order, fees to the apps are 20%-30%, and with add-ons, might rise to 50%. This, with no access to customer data. My dog could tell you this doesn't work. Raise your prices? Woof twice if you think that'll fly. Silent dog, delivery drivers have it just as tough – hard and dicey work; slaves to the algo; low pay.
Pay fair and the business model is obliterated. Cash paid by US aggregators to lobby down labour-friendly Proposition 22? $148m!
How about the aggregators? Massive overheads (P Diddy, Katie Perry ads); most lose money and only make a profit by getting into other games. Consolidation abounds and monopolies beckon, Chairman Mao style. You think regulators and customers are going to accept this and pay even more? Please send me some of that stuff you’re smoking. And don’t get me started on the environmental impact. What’s burning on that trash mountain? Last night’s delivery packaging. Rant over, I lied.
Final rant – look at what delivery is doing to increase obesity and poor health. More than 50% of all food consumed in the UK is ultra-processed food (UPF) and this rises to 66% with adolescents. Delivered food plays a major role in this grim fiasco.
Where do we go from here? Here's my take:
– Restaurateurs. Look in the mirror and remind yourself we're in hospitality. Yes, we cook, but delivery is a totally different occasion.
– This said, are we really offering a customer a good enough reason to come to us? You can’t deny the convenience of delivery and it has exposed many just blah restaurants.
– If delivery is under 25% of sales, you may be a costly cloud kitchen. You say you can’t do without the sales, but does that really make sense? How will these orders ever become profitable?
– And cloud kitchens are no panacea. It’s incredibly hard to get noticed online, however hip your branding. Anyone for Uncle ShuckleBuckle’s New Orleans Fried Chicken? Sure, so long as you discount by 35%, chuck in an extra bucket, oh, and a bounce back voucher.
– Brothers and sisters of hospitality, be brave. Delivery and discounting is crack cocaine. Wean now or you’ll end up looking like the Iggy Pop of restaurants.
– Delivery is specialist. Learn from the best pure-play delivery guys but only those who play smart and invest in quality (many don't). Short cut: only deliver food that delivers well.
– At Jamie’s India (for example), delivery is just 12%, and I’m tempted to not deliver at all. We offer experience, service, piping hot food, cocktails and love. You don't deliver love.
– Customers: if you care about restaurants, go direct, and if you must use an aggregator, give the delivery guy a decent tip. It’s karma (you’ll be reincarnated as a Deliveroo driver).
– Aggregators, you are doomed if restaurants keep losing money. Get restaurant guys involved from board down, commit to win-win, share the customer data.
– And aggregators, stop with creating dark kitchens that compete with your so-called restaurant partners.
– Investors: do stop prioritising so-called food tech. Get back to the guys that know food and quality and think about the thousands of extraordinary restaurants out there. I mean, read Jonathan Nunn on Vittles and you’ll see what I mean. In some ways, a golden age for cuisine in Greater London (and indeed many cities – come to Delhi and see).
– Entrepreneurs: put your minds to working on a new solution. Delivery is not going away, and indeed, the current state of play creates opportunity. Start with talking to customers. What do they really want? Do they appreciate the inequities in the system today?
– Regulators: stay out of this. You’ve already messed this up in my book (unless you want to cut taxes, in which case, we love you).
Let me end on a social and cultural point. No revolution ever started with food delivery. Alexander the Great did not conquer the known world by staying at home. You won’t meet the love of your life through a delivery app. My point? The most wonderful things in life happen when you go out. We’re waiting for you. PS I had that Alexander the Great in my restaurant the other day...
Jasper Reid is the founder of IMM, which advises brands on international expansion and owns the Jamie Oliver restaurant chains in India. This article first appeared in Propel Premium.
