I have been planning and hosting research trips (sometimes covertly and sometimes not) across the globe for 25 years now. The process is a reference point for development investment, market mapping and competitor analysis, which as a result, can highlight your operational advantages or competitive weaknesses.

 

They can be both a sobering and an enlightening journey of discovery, but they are always an invaluable sense-check on just how relevant you really are to your target consumer – and how close, or not, you are to delivering an elevated guest experience. More often than not, they continue to provide a stimulus for continual brand iteration, or the quest for the “holy grail” of optimised operational delivery and service standards. 

 

They are always a cocktail of inspiring operations and key insight from influential operators, suppliers and industry disruptors, coupled with an innate knowledge of the chosen destination – which is always an international location with an incredible hospitality provision at the centre of the city’s heartbeat.

 

I returned this week from hosting such a tour in Chicago in partnership with Propel, where over the course of three days and nights, our group of attendees (which was a superb blend of both operators and suppliers) gained access to more than 25 different operations across every sub-sector of the hospitality landscape. In Time Out Market alone we were presented to 21 different vendors, all with a compelling back story.

The expansive, curated experience featured the highest-rated local restaurants and Chicago’s most revered chefs. Together, they make up 18 unique food concepts. The market comprises 50,000 square feet of hand-picked dining, so every amazing dish has been personally taste-tested and approved by local experts whose job is to find Chicago’s yummiest bites.

 

We also visited bars, restaurants and nightclubs to review product, production and content; to experience high-volume, high-energy atmosphere and optimised guest spend per head through elevated delivery styles. The group were delivered a pizza-making masterclass at the restaurant where the original Chicago deep dish pizza was created in 1943 by the chef who has worked there for 18 years and is the third generation of her family to do so.

 

There were also a good number of speakeasies – some with superb entertainment behind improbable exteriors such as a refrigerator door, a vending machine door, a barber shop, a fast-food joint and so much more. We also enjoyed the awe-inspiring rooftop bars, dive bars, a brew pub and household names such as Soho House and the Hoxton, to name but two of the premium hoteliers we visited.

 

Not only was the itinerary ambitious, but it was also inspiring, no matter which corner of the hospitality sector you operate within. The insight shared was invaluable. It is well documented that the hospitality sector is a strong community that comes together on a global scale on a study tour, and our colleagues in Chicago welcomed us with open arms. 

 

Then, of course, there was the little matter of the National Restaurant Show, which is quite the event. Four days, 50,000-plus attendees, three different spaces and the size of ten football fields. This is the largest and best show I have attended, with so many incredible exhibitors in attendance. My take-outs from this year’s National Restaurant Show include avocado bread, pecan oil, gene-edited salad greens, stir-frying robots and underground tunnels with railways that deliver your order across town. From weird ingredients to far-out hospitality schemes, restaurants in the US are looking at all kinds of ways to lure back inflation-weary consumers.

 

· An “underground logistics” company called Pipedream Labs is building subterranean tunnels to deliver groceries and meals, starting in Austin.

· PopMenu helps restaurants craft personalised offers to diners based on their past orders.

· Tastry is building technology that uses artificial intelligence (AI) to predict which wines you’ll enjoy.

· A company called Pairwise is using CRISPR to create gene-edited salad, starting with better-tasting mustard greens.

· Aerobanquets RMX is building what it calls “an immersive, multisensorial, multicourse meal in mixed reality”.

· Project Nourished is a virtual reality gastronomy start-up aiming to elicit the “therapeutic and utilitarian qualities of food, beverage and medicine”.

· An app called Foodini started by a mother in Australia could help people with allergies flag potentially problematic menu items.

 

· The Avocado Bread Company is riffing on avocado toast by baking guacamole spices into many types of bread.

· Alternatives to seed oils, which have gotten a bad name for their inflammatory qualities, include pecan oil, which tastes pleasantly like the nut it features.

· Are vegan, plant-based drumsticks more appealing if they come with sugar cane bones for crunch?

 

· Established by Robert Earl, the Planet Hollywood founder, the company is “scraping menu trends that are developed on TikTok”, said Marcus Viscidi, of Informa Connect, which puts on the National Restaurant Association show.

· “So, if a cool new pasta is launched by an influencer, you’ll be able to taste that in 30-90 days,” Viscidi added.

· The company’s brands include the MrBeast Burger (after YouTuber extraordinaire MrBeast), Pardon My Cheesecake (after the eponymous podcast) and Buddy V’s Cake Slice (from the “Cake Boss” reality star).

 

· Wendy’s FreshAI uses generative AI to take orders at the drive-thru.

· Full-service chains like PF Chang’s and Buffalo Wild Wings have set up stand-alone to-go stores.

· Drones and sidewalk robots haven’t quite proved ready for ubiquitous meal delivery (yet).

 

Dining out used to be all about food and ambience – now it’s also about marketing, IT, logistics and immersive entertainment. International travel can be inspiring. Add into the recipe the most desirable operations with incredible insight from industry titans, and you have the incredible alchemy of a study tour.

 

I have been delivering international incentive programmes and study tours for more than decades, and I always return to the UK inspired by the experience and ready to implement the fruits of my labour. Email me at myles@hospitality-inc.co.uk to reserve a place for next year’s trip.

 

When Geoff Hurst was clean through on goal at the end of extra time in the 1966 World Cup final, the BBC’s commentator, the late Kenneth Wolstenholme, exclaimed: “There are people running on the pitch…they think it’s all over.” And as Hurst slammed the ball into the German net, he joyfully added: “It is now!” 

 

And, of course, it was. The final whistle blew within seconds and England paraded the trophy around Wembley to a jubilant nation. So, here we are, 58 years on and still no repeat World Cup win, and with the planet convulsing out of a global pandemic and an extended period of unprecedented levels of inflation – with our sector suffering most acutely. Like the Wembley crowd, we have been anxiously awaiting the final whistle – signalling that at last, the pressure on our margins will cease. 

 

There is an understandable tendency among some operators to assume that because the consumer price index (currently at around a half of food price inflation) is approaching historically stable levels, the inflation game in hospitality is almost over. But to continue the football analogy, we are actually only about halfway through the second half, and there is still much to play for. Let me explain. 

 

In late 2021, food and drink inflation in hospitality (measured by the CGA Prestige Foodservice Price Index – FPI) was running at around 1% to 2%. Inflation, of course, measures the percentage change year-on-year of a basket of goods. By December 2022, FPI inflation had peaked at 22.9%, almost 15 times the average level in 2021. In one year, food and drink prices had rocketed to unimaginable levels.

Understandably, buyers found this period very challenging – with suppliers repeatedly beating a path to their door, regularly requesting price increases to protect their falling margins as their own input costs rose. At this peak, level prices were rising at close to 2% each month. Mercifully, for the ensuing nine months, inflation stopped climbing, instead hovering between 18% and 22% – maintaining but not accelerating the rate of price increases. Inflation had rocketed up but was now falling like a feather in the breeze. 

 

September 2023 brought a welcome period of decelerating inflation – a time when prices were still going up but not as fast as before. With the headline rate of FPI falling last month to 6.9% (and likely to fall further), it’s easy to see why I have heard some hospitality leaders say that the fight with inflation is all but over. But right now, we are on the cusp of the last phase of this journey – the one where many market prices actually fall month-on-month. This is the final quarter of this particular match and is, of course, the period in which the game will be either won or lost.

The reason for this is simple – the incentives for change have suddenly disappeared. When a supplier’s input prices fall, the immediate impact on them is rising margins. Given the choice of advising their customers of a price decrease or simply keeping quiet while they make more money, it’s easy to see why suddenly there are far fewer conversations about price. When a supplier says, “yes of course I can hold the price on that line”, it probably means that the price could actually be going down. 

 

This is why I refer to the match only now entering the final quarter. Instead of fending off price increase requests, the game has substantively changed – as the operators must often be the ones who instigates a request for a price change, only this time downwards. To do this successfully, the buyer must be armed with good quality data on both what is happening in the market, and to suppliers’ input costs of raw materials, labour, energy and distribution. Critically, it requires the analytical and negotiation skills needed to reach a fair and equitable conclusion. 

 

And before my inbox fills with messages from indignant suppliers, I am not suggesting that this is anything other than the normal ebb and flow between buyer and supplier. By the end of this year, we expect to see the level of FPI inflation levelling out at around the 3%-4% level.

 

But within this number, we predict a high level of variance in the rate at which the heat comes out of individual supply markets. Effectively managing this last quarter of the match could easily be worth 1% point of margin, so even if you think it’s all over….it isn’t, even now.

 

It’s nice to see old friends again, especially when they’ve been away for a while. And so it is with the societal cost of alcohol figures, which have suddenly popped into the headlines again. And my, how they’ve grown! Last time we met they were £21bn going on £22bn, and now they’re a strapping £27.4bn – according to new calculations by the Institute of Alcohol Studies (IAS).

 

For latecomers, the IAS is financially backed by the Alliance House Foundation, the descendant of the United Kingdom Alliance, formed in 1853 to fight for prohibition of the drink trade. Its new website says it continues to promote “total abstinence” and an “alcohol free society”, but through agreement rather than legislation – the debacle of US Prohibition a century ago having rather put the kibosh on that.

 

By itself, this doesn’t mean the IAS is wrong but, well, it has an agenda – an important point missed by The Guardian, which published the £27bn revelation as an “exclusive”. Also by the BBC in a follow-up interview on Radio 4, in which the institute’s spokeswomen was invited to compare the state’s approach to alcohol to that of tobacco, now subject to a gradual prohibition. She wasn’t going to be drawn on that one, and while public health often makes parallels between alcohol and tobacco, and there are those in the drinks industry who worry about that, the focus remains on extending minimum unit pricing.

 

But what about that £27bn? It appears on a rather insubstantial IAS factsheet supported by a more detailed methodology document with links to sources. I have neither the time nor the brain to dive into this maze, but the way it breaks down is interesting.

 

Most of the cost, 53%, comes from crime. The cost to the NHS and healthcare is much lower, 18% of the total, matched by the impact on the “wider economy” of things like absenteeism, hangovers and premature death. The latter doesn’t really make sense since workers who die are generally replaced. 

 

We might also coldly add that dead people are less of a burden on the health service, but this is where you start to see the weakness in these sorts of calculations. Society is a place of complex interactions.

 

If you consider the spike in alcohol-related deaths since covid – largely caused, I’d argue, by a breakdown in services to those with drink problems who might have turned to the bottle in that stressful time – you might want to argue that the NHS and healthcare spend is far lower than it ought to be.

 

And what about the benefits to mental health of social drinking? Why aren’t we calculating that? But perhaps we shouldn’t be taking these attempts to stick a society price-tag on drinking seriously at all. 

 

The IAS calculations are based on Cabinet Office research that dates all the way back to 2003, a study that was later dismissed as unreliable by independent fact-checking organisation, Full Fact, and, perhaps more significantly, by professor Klaus Makela, a much-respected heavyweight alcohol academic. The conclusion to his 2012 paper, published two years before his death, is worth quoting.

 

“Even the most sophisticated cost-of-alcohol calculations include entries based on misleading assumptions or logical mistakes,” he writes. “Calculating the costs to ‘society’ is not a promising research programme. It is good to measure the joys and sorrows of heavy drinkers and their nearest, but the use of a monetary metric conceals important issues and value judgments.”

 

As you can imagine, when Makela broke ranks, it caused much consternation among his public health peers. The ensuing debate seems, unfortunately, to have disappeared from the internet, but I noted some of it at the time, and in 2014 included it in an article for Off Licence News (now Drinks Retailing News).

 

Those weighing in included professor Thomas Babor, lead author of the bible of medical temperance Alcohol: No Ordinary Commodity. The flawed science behind societal cost of alcohol figures, he candidly stated, is irrelevant.

 

“In a democracy, politicians and policymakers often need to be shamed into doing the right thing and costs to society have the ability to shame, blame and even defame … it is the simple, single monetary figure that captures public attention more than anything else,” he said.

 

So, coincidentally appearing in the same week that a general election was announced, it’s political expediency, rather than scientific truth, that’s behind the £27bn.

 

In the first quarter of 2024, the UK foodservice market witnessed a decline in customer traffic of 3%, with like-for-likes down by 5%. Price increases continue their month-on-month trend, although the rate of price increases continued to slow down in the quarter, reaching 7% in restaurants and 9% in delivery versus the first quarter in 2023. There are positive signs of a recovery, with a slowdown in both inflation and the rate of traffic decline, but market conditions remain challenging.

 

In the face of the cost-of-living crisis, promotions play a pivotal role in attracting and retaining customers who are increasingly budget-conscious. With household expenses rising inexorably, compelling promotions such as discounts, combo deals or limited-time offers can effectively meet consumer demand for better value. Promotions also hold the potential to generate additional traffic and sales, assisting restaurants to maintain revenues where budgets may be coming under pressure.

 

Meaningful Vision’s analysis reveals that the number of promotional offers in 2023 increased by 15% over the previous year. Price promotions dominated the sector, accounting for 84% in restaurants and 67% in delivery. Special price offers emerged as the favoured tactic among price promotions, growing in importance in both restaurants and delivery. Campaigns offering a percentage discount remain the top choice for delivery, with their share also having risen last year.

 

As competition in the foodservice market grows ever more intense, with new entrants looking to seize a share of the business, a number of companies are focused on promotions linked to particular dayparts. Breakfast emerges as a key battlefield, where Greggs and McDonalds are the key players, vying to attract customers with affordable prices and meal deals. Lunchtime, too, features many new price-focused initiatives, with KFC’s £5.49 and Dominos’ £4 lunch deals being recent examples.

 

Meal deals are highly effective in addressing both the economic concerns of consumers and the strategic goals of operators, promising value for money to customers while boosting footfall and revenue for restaurants. Meaningful Vision’s reporting reveals a rapid growth in the popularity meal deals and a proliferation of new offers becoming available. Reigning supreme as the primary focus of promotions, meal deals represent 40% of all product-related promotions and 48% of all special price offers.

The share of meal deals in promotional offerings rose by 15% versus the previous year. Deals allow customers to enjoy a full meal without overspending, making them an attractive option for individuals and families alike. By comparison, with purchasing items individually, offering a combination of products at a discounted price imparts a greater sense of value and increases customer satisfaction. Satisfied customers are more likely to return and are better inclined to recommend a restaurant to friends, family and colleagues.

 

Limited time offers (LTOs) are promotional deals or special products available for a short, predetermined period. These offers create a sense of urgency, encouraging customers to take advantage of the deal before it expires. LTOs have increased in prominence over the last year, with their share of the menu growing by 12%. LTOs are most frequently employed by bakeries and coffee shops, and the burger and sandwich segments. Despite inflation pushing new products to higher price brackets, the average price of LTOs has decreased by 15% as operators seek methods to provide and maintain value for money to customers.

 

A careful and strategic implementation of promotional activities can enhance customer loyalty, differentiate brands from competitors and help sustain a thriving business, despite the turbulent economy which shows little sign of abatement in the short term. Understanding who your competition is, where they are and what they have to offer is crucially important for effective decision making in support of your own profitability and growth.