How the industry will change and become an elevated industry of service, value and leadership
There is no doubt that the hospitality industry has changed forever. For someone like myself who has worked in it for over two decades the last two months has been soul destroying. Listening to friends tell me their stories of losing work, staff crying as I unfortunately let them know that we would have to stand them down, veterans of the industry sound scared as we talked about their possible future. And honestly I began to struggle myself as I was shouldering everyone’s burden, but then I turned a corner, a positive corner. Sure I still have days or moments where I feel sorry for myself, scared and even alone, but that is always followed up by emotions of hope, gratefulness and even excitement for what is next.
I believe the industry will move and shake in many different ways over the next 2-3 years. Ways in which we have never seen and we’re likely never to see again. In this article I wanted to outline my thoughts on what I believe needs to change over the course of the next 5 years in order for the hospitality industry to survive, stabilize and flourish.
Greed will stop. This is from all areas. There are a lot of middle men in our industry. This causes prices to go up for suppliers and consumers. Landlords will also become more responsive and rental costs will go down.
Ego’s will stop. For a long time people in our industry have made ego-driven decisions. I have produced content before in which I talk about how I get concerned when 4-5 men come from outside the industry and attempt to open a venue, mainly because they want to look good. I call it the ‘nightclub effect’. You purchase something bright and shiny that you would like to show off and don’t plan the real needs of the business. Because of this reason you will also see less private equity
More groups handled by women worldwide. In my career I have often wondered why more women aren’t running hospitality businesses. I think given the current leadership that we are seeing from female politicians worldwide with the COVID-19 crisis, that you will see boards of major hospitality companies focus on recruitment of women, especially in CEO roles. Women in leadership positions of note are Kate Reid, Director of Lune Croissanterie, Kim Teo, CEO of Mr Yum and Denyelle Bruno, CEO of TenderGreens in the US.
The franchise model has been a great accelerator for success for over 30 years, especially in smaller markets like Australia, but I believe there will be less franchise networks, and less units of the ones that are existing. The franchise model has been a challenge to make more profitable over the last 10 years as IR laws became tougher and more leaning towards the employee. In this wages were increased and saw some models become unprofitable when franchise & marketing fees were extracted out as well. Those franchise models that are loyal, honest and innovate will survive, many will not. Groups like Retail Zoo, Grill’d and Guzman Y Gomez have always been built on the right principles and will excel during these times.
New shopping centres will be built with smaller footprints as food and retail tenancies become unviable. In existing shopping centres the days of 40-50% food tenancy mix will stop. The SC will become more like ‘town centres’ with more services going into them. I also believe that housing might be added to some wings of shopping centres instead of retail tenancies. Food tenancies will come back to a mix of 25-30% to ensure that tenants can survive. Lease costs will drop by at least 30% in the short term with more flexible arrangements for lease terms.
Pop-up venues will continue to grow on short 3-6 leases to prove a food concept in a centre before being offered a full lease. Customers will push shopping centre owners for more experiential venues and tenants will have to deliver on a new level of expectation of their customer. Sitting down and having a coffee or buying a loaf of bread will not be enough.
Staff will be paid more as teams gets smaller, but they will be required to deliver more output to achieve financial targets. This does not necessarily mean more hours spent on the job, but it does mean that managers and supervisors will need to think outside the box, and become more flexible with productivity. Automation will become common place in most venues in small ways. This will lead to less people being employed in our industry as management labour becomes more expensive, but there will be more flexibility focused into hospitality awards to ensure productivity has the ability to be achieved.
There will be less venues because funding banks will hold funding without even more solid business planning. The floor size will be smaller, some venues that are now sitting with big footprints now will be split up. There will be more unique spots, more local produce as we care even more about where our food is from. This industry has focused on this the last 10-15 years, but to get a point of difference amongst competitors, it will become part of the storytelling of the brand.
In that we are going to get back to hospitality, real service and real conversation. There will be better quality training with the smaller amount of staff that we have in venues. Online training that is tailored to a venue will pop-up and become part of an employee’s training path. Brands like Typsy and Ananas will become stronger online platforms in our industry. Managers will be quality driven and have to have different facets of skill set. For the industry to thrive post this era brands will need inspirational trainers, productivity experts, customer service leaders and financial guns. To develop this talent from within, brands will care even more about the life cycle of an employee, and focus on their staff journey offering high level training by quality providers, plus courses on personal financial management, mental health training and wellness coaching. We will care even more about our employees and they will enjoy their job more.
For this reason the hospitality industry will again be seen as a career path. Staff will be better cared for by way of remuneration and hours worked, mental health provisions and quality training. We will again be the industry to be a part of, and one that is highly respected for adding to a community’s environment.
With smaller venues and concepts we will have smaller producers with higher welfare standards. This includes the way that they treat all parts of their supply chain. Sustainability will become a key focus. Especially with packaging, local producers, logistics and animal welfare. We will just care a whole lot more.
Because we are caring more about the supply chain, we will execute better quality produce to our guests. Our staff will be happier and content in that they feel they are contributing more because they understand more about the process of food and it’s production. Our team culture’s will continue to get better.
Marketing businesses will have to storytell more to get their clients’ message across. We will talk more to the community about our producers and supply chain, our staff and how they deliver great customer service, personal stories of leadership, how the architecture of venues was delivered, and how we have improved our offer for our guests.