Don’t give up! PAPA director, Jim Winship.

Don’t GIVE UP!

It’s been a tough two years for anyone in the hospitality business and, despite the pandemic restrictions starting to ease, there continue to be serious challenges for everyone, not only nancially but also logistically with sta shortages and supply chain problems, writes PAPA director, Jim Winship.

MIXED FORTUNES

While market analyst, Peter Backman, recently told members on a PAPA webinar that he was optimistic about things getting better from around springtime, that assumes no further hiccups and it also very much depends upon where you sit in the market. For many of those in city centre sites, hope is pinned on whether o ce workers return which is, again, not likely to happen much before the spring, and then analysts expect hybrid working to reduce numbers by around 20%.

The good news for restaurants is that, according to Peter Backman, there is a pent-up desire amongst consumers for returning to eat out but this, too, is dependent upon in ation not consuming their nances and consumer con dence about meeting up indoors returning.

For the delivery and takeaway sector, which many see as having weathered the storms of Covid better than most, there are also challenges ahead as they are facing increasing competition with more restaurants o ering delivery and takeaway services. They have also been hit hard by sta shortages without any support from government as takeaways were excluded from the most recent round of grants.

Like the retail sector, hospitality businesses are also faced with increasing government legislation from allergen labelling to curbs on sales of products high in fat, salt and sugar (HFSS) through promotion and display restrictions. For businesses built around delivery, driver shortages are critical.

AGGREGATORS

While independents have escaped the more draconian HFSS regulations for the time being – those with under 250 employees are exempt – they have been as much a ected as everyone in other factors and many feel they are being squeezed out of the market as aggregators and delivery operators focus more on the brands who are now increasingly using them.

Reality is that everyone is facing the same pressures and seeking ways to survive. Many of the major brands have had to cut back on their estates and are naturally seeking to bolster their turnover via aggregators as they have targets to meet if they are to satisfy shareholders and investors. Equally, the aggregators and delivery operators are under more pressure than ever from competitors moving into their space and they too have commercial targets to meet which, realistically, chains can give them through the volumes they drive through their brand recognition and marketing.

From conversations with those involved, the aggregators and delivery operators are not seeking to abandon the independents but are just re ecting the market. Hence, delivery drivers are often focused around the brand sites simply because of the volume of deliveries coming out of those sites giving independents the impression that they are being abandoned.

As Katy Habibian from Village Pizza told the PAPA Management Committee recently, the result of this is that some independents are having to wait for delivery drivers and their customers are su ering as a result. There are also concerns over the way some customer complaints are being handled with operators nding that rebates have been given without their having a chance to deal with them.

Unlike the major brands who continue to maintain their own marketing, there has been a tendency for independents to become increasingly reliant upon the aggregators to drive sales. There is, perhaps, a lesson to be learnt here that while aggregators and delivery operators o er a real bene t in helping to drive business, it is a mistake to become too reliant upon them and rely entirely on their marketing. After all, the value of any business in the long term is in its customer base and sales.

Similarly, it is highly risky to rely entirely on a third party to manage deliveries in an increasingly competitive market where operators are now taking on grocery and other deliveries as well as prepared meals. Like taxis, delivery drivers will always congregate at prime locations where they can be assured of work and brands will generally provide that.

INDEPENDENT ADVANTAGE

While it may at times seem that the brands are dominating everything because of their sheer size, in reality independent businesses have many advantages over them. By their nature, major brands will always be corporate and in exible as the whole point of a brand for consumers is that they can get the same service at any site. Independents, on the other hand, are exible and tend to be much closer to the communities that they serve than their big brothers.

By using those advantages - maintaining their own local band marketing, building customer databases and focusing on building a strong local reputation - independents can do just as well as the major chains. Simple actions like branding pizza delivery boxes with the business’s logo, contact details and a clear message encouraging customers to give you their feedback will both help to build brand awareness but also encourage consumers to come back to you if they have an issue rather than the aggregator they may have bought through.

As the American self-help author Napoleon Hill famously wrote: “You are the master of your destiny.”

As we emerge from the last two years of pandemic it is something we all need to take on board. It is easy to blame Covid or others for our destiny, but reality is that we all have to adapt to a changing world if we want to survive and thrive. Some will do this better than others.

Having watched this market over the years, I am con dent that this industry will come through these times stronger but it will be those that read the signs well and are exible to change that will come out on top.

At PAPA we will do everything we can to help member businesses come through these times. In addition to providing insights into market trends through webinars and guidance, we are committed to supporting the recovery of this market through activities such as National Pizza Week and simply by providing advice and help where we can.