Event Review

Opportunities, Communities and ‘Year of the Dragon’ Energy

Highlights from the Arena Savoy Lecture April 2024

By Anna Massey, Rebecca Lewis Stanton and Michael Gividen, Omne Agency

Once again, this year’s Arena Savoy Lecture saw nearly 200 guests gather in the iconic Savoy Lancaster Ballroom to be inspired by industry leaders discussing the challenges and opportunities currently being navigated by suppliers, distributors and operators.

The opening keynote was given by Kate Nicholls OBE, UKHospitality’s CEO, who set the evening’s optimistic tone. Despite the current economic landscape presenting a mix of challenges, Kate noted that there is much to be positive about. “We've still got dark clouds from that perfect storm,” she stated, “we still have that intense squeeze with the unprecedented costs and the unpredictable nature of costs that have been going through businesses for the last 18 months, together with the cost of living challenges. But I do feel as though we're coming towards an end and it will become much more predictable.”  She highlighted that footfall remains robust, a clear sign of consumer willingness to eat out, but acknowledged that it has never been harder to turn topline revenue into bottom-line profit. A statement that drew wide agreement in the room.

Moving forward, Kate presented several reasons to be more optimistic, not least that the ‘Year of the Dragon’ brings its own energy and vitality!  This included the continued recovery of the global travel market and the resilience of the UK consumer. The consumer’s love of socialising is significant and certainly highlights pent-up demand. Kate presented that, despite economic challenges, 42% of consumers prioritise eating out when disposable income allows, and 69% claim that ‘eating out’ is the ‘treat they love’. Immensely positive consumer confidence indicators. Overall, frequency is on the rise as the year progresses and reaffirms consumers’ basic human desire to go out and connect. Hospitality is seeing its most loyal visitors coming back and spending with 42% of the population eating and drinking out at least weekly and 92% at least monthly.

Kate also focused on how we may be over some of the worst economic hurdles with key financial indicators improving. Notably, the cut in the National Insurance rate will deliver an additional £900 to the average worker and this, coupled with easing inflation and the potential for interest rate cuts later in the year, will collectively unlock consumer spending power. Kate commented, “We will get back to pre-COVID levels of revenue by the end of this year and volumes by the next year. When we start to see these positive messages and consumers feel that we are over the worst, spending will unlock”

On the flip side, the keynote focused on how the cost of doing business remains a significant challenge, and one that’s exacerbated by £3.5 billion in extra costs from the increase to the National Minimum Wage, which is impacting investment decisions and cash flow. “We need the cost of doing business to become more predictable,” she commented, “until then, maintaining operational efficiency into the next year is a key focus.”

With the general election on the horizon and a likely change in government, Kate reinforced UK Hospitality’s recommendations from a policy perspective including the need to:

Extend business rates support temporarily and commit to a fundamental reform of the tax system.
Implement supply-side reforms, such as apprenticeship levy reform to enhance workforce skills and adaptability.
Re-evaluate VAT and other taxes to stimulate demand further.

She shared that the discussions with the Labour Party to date had been positive with two of three recommendations already likely to be adopted.

The Panel Discussion

Following her keynote, Kate joined the panel discussion hosted by Simon Stenning, founder of Future Foodservice with other guests Pano Christou, CEO of Pret A Manger, Dame Karen Jones DBE, original co-founder of Café Rouge and the Pelican Group who now has a range of non-exec and chair roles across the sector, and James Brown, CEO of BrewDog Bars. Throughout the discussion, Simon drew the panel on a range of important themes.

Clarity and Grip:  Through her non-exec roles in many different types of businesses, Dame Karen explained the importance of positively challenging a hospitality business’s strategy with a forensic eye on execution. The panel then agreed on how vital it is for any operator to be able to “explain their concept in one sentence“ and to have a tight grip and deep understanding of their numbers. With the days of hospitality being full of ‘lifestyle’ businesses now over, the focus has to be solid financial management.

Engagement and Skills:  The panel focused on how the industry requires continuous learning and adaptability in skills. The next-generation workforce needs to be versatile, resilient, and proficient in problem-solving and data analytics as it’s never been harder to manage a restaurant P&L.  James Brown commented on the development of his own growth and problem-solving skills within the industry and highlighted how every sector could benefit from hiring people with a hospitality background. The panel agreed on the need for the whole sector to back initiatives that promote youth recruitment by focusing on opportunity and mobility and the need for the industry to adhere to a clear charter that gives employees clarity on the basics such as schedules, tips, wages and hours.

All agreed the biggest selling point to the next generation of hospitality workers is career growth and opportunity and that it must be promoted through the storytelling of success and unprecedented, accelerated career development.

• Sustainability through Collaboration: Moving towards a sustainable business model involves integrating social impact into financial planning and fostering peer-to-peer and collaborative relationships within the industry. Pano Christou stated that sustainability needs to be embraced by everyone and highlighted Pret’s work with its total supply chain. He noted how hospitality is “the most collaborative sector” and how we all need to come together for the greater good.

• Changing Consumer Preferences:  The panel focused on how operators are adapting to new consumer habits, with competitive socialising and earlier dining times becoming more popular, reflecting broader changes in work and leisure lifestyles. James explained how BrewDog has adapted its offer to accommodate remote workers and the under-25 audience with half-price Sunday promotions. Pano also commented on how Pret has responded to the shift in UK working patterns, with a focus on suburban openings, but that it’s not necessarily the same picture globally. Although US consumers are making a slower return to the office, in APAC hybrid working is not the norm and city centre locations continue to perform well. Overall, the panel agreed on how they were seeing a shift in eating patterns with diverse start times and earlier booking also easing some daypart bottlenecks.

• Moving Forward:  The future for the sector looks promising with strategic flexing and continuous innovation. Businesses need to focus on community building, leveraging digital tools for consumer engagement, and enhancing the overall customer experience. The path forward involves not just surviving the current economic pressures but thriving by anticipating changes and being proactive. Further growth will steal ‘share of stomach’ from retail because eating out is part of our social fabric. Consumers will always have the desire to connect and be together and, in the UK, we are world-class. Hospitality remains the second largest sector in exports (£20 billion in 2022). It’s not good enough to simply be the ‘best-kept secret in the economy’, hospitality is the lynchpin to broader economic growth, a driver of cultural good and a promoter of social mobility.

Following the panel, guests were shown to the River Room to network and continue the lively discussion before returning to the beautiful Lancaster Ballroom to enjoy an amazing three-course dinner. Huge thanks to the event partners and sponsors – Delifrance for providing the focaccia for the canapes and mini-handcrafted rolls to accompany the Starter, Britvic Soft Drinks for their range of mineral water and soft drinks, Unity Wines & Spirits for the Prosecco and wines served, Nestlé Professional for the Refreshers, Coffee and Espresso Martinis, Lakeland Dairies for the butter portions and Nutritics, which identified the carbon footprint of the evening menu served.

A big thank you from Arena to all who contributed to the raffle. Over £900 was raised for Springboard and Hospitality Action.

To find out more about the UK Hospitality Charter visit www.ukhospitality.org.uk

Thank you to Omne for this Savoy Lecture Review.  Omne is the leading food service agency and the strategic and creative partner to the world’s best brands. Visit omne.agency or search Omne Agency on LinkedIn.

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