On Monday 11 July 2016, Steve Richards gave foodservice and hospitality professionals an insight into the creation of Casual Dining Group, one of the largest mid-market restaurant groups in the UK, and its strategy for growth. International full service market research agency YouGov also presented its latest casual dining data, giving attendees valuable insight into the casual dining market, consumer eating out habits and key growth opportunities.
Take a look at the attendee list for this event.
We may not have been able to guarantee sunshine for the Arena Summer Event this year, but the opportunity to gain valuable industry insight and knowledge, hear inspirational success stories and connect with foodservice and hospitality professionals was a given.
International full service market research agency, YouGov, began the proceedings with an interesting overview: ‘Eating out habits and trending factors of influence’. With the important caveat that information within the presentation was pre-Brexit, YouGov used its consumer data to consider the state of consumer confidence, changing dining behaviours, and influencing trends and their potential opportunity for the foodservice industry.
Pre-Brexit, consumer confidence is positive across the UK, reflected in a growing commitment to eating out spend. Four in ten adults are eating out more, with two thirds eating out more often or the same amount. Coffee shops and cafés are the clear winners of the increase but the data shows a most favourable appetite for casual dining, with two thirds likely to use mid-range restaurants if available in their locality. Immediate post-Brexit data has shown that short-term spending in general has not yet reduced as people try to understand what’s going on.
YouGov focused on three trends offering a huge opportunity for foodservice. Firstly, the increase in consumer spending on food consumed at home and the growth of the high-end takeaway. One in five consumers surveyed have experienced high-end delivered food or are likely to in the next six months, with Deliveroo the market leader with prompted awareness almost doubling in four months.
Secondly, technology has the power to boost brand loyalty, with the majority of adults now owning smartphones and older age groups leading the way in tablet usage. The app bubble has seemingly burst, with four in ten of the smartphone population not using takeaway apps but relying on more sophisticated mobile websites to look at menus, online recommendations and reviews.
And finally, FreeFrom. Consumers are increasingly choosing FreeFrom for health reasons or as a lifestyle choice. One in five of the UK population now has a food intolerance or allergy, either professionally or self-diagnosed, and one in five of the consumers surveyed are looking to cut gluten or dairy from their diets. The general consensus is that FreeFrom requirements are better catered for out of home, but there is still room for improvement, particularly in terms of choice and information. Foodservice is missing out on visits as one quarter frequent the same ‘safe’ restaurants, taking their friends with them, and one in five are eating out less often than desired.
Following a lively drinks reception that saw industry professionals reconnect with colleagues and make new acquaintances, and a superb three-course lunch thanks to the talented brigade at the Mandarin Oriental Hyde Park, Steve Richards, the CEO of Casual Dining Group, took to the stage.
Over the course of approximately 20 minutes, Steve took the audience on the journey that transformed Tragus of 2014 into the successful Casual Dining Group business of today – one of the fastest growing restaurant businesses in the UK that has more than doubled its profit in two years and created over 5,000 new jobs.
In 2014, the decision to take control of Tragus was made. Described as ‘a business well known for going backward’, Steve saw a good business with a poor profit sheet that had real potential. It possessed well-known, good (albeit tired) brands such as Bella Italia and Café Rouge, and 192 cracking sites, and this was to be the basis of Casual Dining Group.
The first year of acquisition was all about creating the Casual Dining Group business. In a nut shell, the business was ‘shrank down, re-focused and re-invested’. This involved selling off the Strada chain, as Steve didn’t want a ‘sub-scale pizza brand’ in the portfolio that only worked in London; putting in place strong teams to embark upon a rejuvenation programme for the tired brands, and devolving the brands to operate autonomously.
At the heart of Casual Dining Group are its brands and the first transformational year saw the revival of Bella Italia and Café Rouge.
Bella Italia was a ‘fairly brown, run-down and forgotten’ brand, but a great estate made up of fantastic locations. The plan was simple, to refresh the whole offer, including refurbishment, staff, training, food and opening out to leisure parks and overseas. The new menu featured stretched pizza and fresh pasta made with authentic Italian ingredients from a new supply chain. Customers reacted well and double digit growth was achieved.
Project DNA researched 284 Bella Italia customers and identified three distinct customer groups: the 16-18-year-olds out for the first time in a ‘safe place’; families; and loyalists. The loyalists, aka Denise and Keith, are an older couple who made up 14% of the customer base but a staggering 50% of sales. Denise is the driver behind visits, bringing her family with her, so it’s very important to give her what she wants.
At Café Rouge, the love for the brand still existed with customers but they just hadn’t been for ages. Again, it was tired and run-down and the food and service was simply not good enough. Café Rouge was also re-energised and refurbished to create the right food and environment and bring it back into fashion. The menu was stripped back to basics to authentic French classics made with the right ingredients.
Extending the Café Rouge brand, a grab-and-go offer has been introduced at Euston, Oriel, Café Rouge’s premium sister, has been launch in towns such as Chislehurst, a site has opened in Dubai and its ‘other sister brand’ Belgo, which has actually been around for 25 years, has also been refreshed with new site openings.
The second year of transformation stepped up the growth of Casual Dining Group with two significant acquisitions: Las Iguanas, the ‘brand deal’, and La Tasca, the ‘property deal’.
Las Iguanas was a proven and very attractive brand of 25 years that boasted like-for-like growth for ten consecutive years. It complemented the original portfolio and appealed to the 25-30 year olds, not the Denises, avoiding any cross-cannibalisation of brands. The lively and fun brand is unique and can go anywhere, successfully taking a massive amount of share wherever it opens and rating an impressive four out of five on Trip Advisor. Steve confirmed that next week, Las Iguanas will enter the leisure park market, in Braintree, Essex, with great expectations.
Casual Dining Group is the fourth largest restaurant business in the UK and there is a clear desire to grow. The vision is to double profit and reach 650 stores in the UK, and Steve believes this is achievable. It has great growth prospects across the globe and operating abroad is a very serious ambition, with Bella Italia already open in Deli and Saudi, and a Café Rouge and an office (be it only four desks at present) open in Dubai.
Looking forward, it’s all about supporting the growth plan of investing in people, brands, guests and property. Casual Dining Group is looking for new brands to acquire and develop alongside continued organic growth. Steve conceded that Brexit has forced the foot to be put on the door for a short time while the dust settles. The property markets are uncertain so it’s all about seeing what happens in six months and taking the opportunities. The trackers have shown a decline in restaurant visitors over the last eight weeks, but no one can be sure why. Steve put to the audience the possibilities of the weather, England’s disastrous performance in the Euros and the fear factor brought on by Brexit. Steve also believes that the impact of the predicted recession will depend on when it happens, how deep it is, and the recovery style. He ended by reminding the audience that the casual dining sector proved itself very resilient in the last recession as people didn’t stop going out to eat, choosing instead to cut back on big ticket expenses.
During the question and answer session, Steve revealed that what Tim Martin has done with Wetherspoon is something to be admired; if a brand is going to have more than 100 stores it has to pass the ‘Wigan test’; Casual Dining Group is keen to stay in the tapas space, but La Tasca will not be called La Tasca going forward; and home delivery is in the early stages with the signs good so far, however, quality of food is paramount and if it will be pulled if he suspects it is damaging a brand.