Karen Jones, the Café Rouge founder, ex Spirit Pub Company founder and current chair of Food & Fuel, spoke to the Imbiba Conference this week on the subject of the future of the UK leisure market. She talked about how hospitality is catering to the millennial market, her top tips for fledgling operators and issued a plea to private equity backers of entrepreneurial businesses.
The last ten years has seen the most extraordinary energy in this sector and, for those of you who were around in the 90s, it has echoes of that time. It has been distinguished by growth in all areas, all cuisines and characterised in many cases by extraordinary inventiveness and real skill.
I often think back to a business called Shrimpy’s in Kings Cross a few years back, which for me marked a shift in the market. It showed that you no longer needed temples of marble and rare wood to be successful. It proved that what you really needed was great quality in your offer, delivered with top quality service.
It was a sign of the hospitality industry coming of age, driven by the skills and the interests of the millennial generation – who are entering both our workforce and customer base – fuelled by travel, food literature and programming. Hospitality is now acknowledged as the rightful partner of innovative retail and an integral element of any successful high street, residential neighbourhood or transport hub. These partnerships are key to the future of our industry, as are equitable tenant and landlord relationships.
The headwinds are undeniable – rents, rates, National Living Wage inflation returning to the food chain - but they are countered by skills and enthusiasm, innovation in food trends and increased spend in eating out.
For me the most interesting and significant observations are around the millennial generation. The Office of National Statistics reports that the average weekly spend on alcohol, cigarettes and narcotics has fallen below £12 for the first time. This generation go the gym, spend less on drink and more on coffee. They really care about health and wellness, they’re more individual and less driven by the crowd, they’re more self-aware.
The volume drinking of the 90s was driven by people wanting to keep up with each other and drink in large groups. Today’s consumers often move between groups within the same evening. Millennials also appreciate artisanal values, personalisation, authenticity and transparency and are also extremely knowledgeable about food.
So, how has our industry responded? In terms of drink, quantity has been replaced by quality. This has been seen in gins, vodkas and rums, as well as quality mixers and, of course, craft beer. Pubs in particular are very resilient. I’m always amazed by how they continue to reinvent themselves and that may have been given new life by widespread interest in the explosion of new breweries. Having seen the death of the brewpub in the 90s they are now re-opening and they’re different – younger and a lot cooler. English wine – often the butt of jokes – is now becoming increasingly popular and, crucially, cheaper.
Meanwhile, healthy eating has now established itself in the mainstream while foods as diverse as the kebab, the taco and Lebanese cuisine have all become big business.
More and more people freelancing also means more and more need for out of home spaces, with coffee shops and their free WiFi truly reinventing the 18th century London coffee house.
It seems extraordinary to me that when we first opened Café Rouge in 1989 there was no Starbucks or coffee shop chains as we know them today.
Let’s not forget that this is a hard-pressed generation economically and value for money is more important than ever before.
The hospitality industry has been pretty damn good at innovation and evolution. Things that were done poorly in the past have found their way back in new and exciting ways. However, things aren’t perfect. There are still plenty of things we can do better.
Values are very close to my heart and I believe we all need to think about them. I am a firm believer in the equation of values + excellent execution creates value. Millennials want to work in places that care about them as individuals, that are honest and transparent and that provide training that allows them to flourish and build careers.
Today’s hospitality entrepreneurs are an inspiration. They are more knowledgeable than we were, they foster proper customer care, they are early adopters of technology and participate in a constant conversation that is going on around them in their sites and on social media.
Nevertheless there are things I find myself constantly repeating to the young hospitality entrepreneurs I have supported.
There are five key points:
Clarity of concept – I’ve always maintained that if you can’t sum up your business in a sentence then you’re not clear about what you’re doing. If you’re not clear then there’s no reason why you’re customers should be clear.
The second one is understanding your company values.
The third is absolutely crucial – don’t do it for the money. You will be working such long hours that you better absolutely love it to the core of your being.
Partnership – I’ve generally had very positive experiences of partnerships but I’ve learnt that the best thing of all is a great partnership and the worst thing of all is a bad one.
The final one is to look at the numbers. Have the numbers in the first place and then when you have them, use them.
To anyone who represents any sort of financing and works with the hospitality sector, could I just make one plea – don’t conform to the stereotype. If you invest in or buy an entrepreneurial business please remember that profit is an output of doing things right over a very long period and entrepreneurs, however confident they may appear, need the occasional arm around the shoulder as well as tough love.
If you sit on a board make it your mission to ensure that there aren’t two camps – the money and the management.
We all need to be committed to the vision of a UK hospitality industry in all its myriad forms that cares deeply for its people, deeply for its customers and demonstrates as it can a continued and perceptible excellence and excitement in all it does.
Karen Jones was a co-founder of Café Rouge and then chief executive of Spirit Pub Company. She co-founded and continues to chair the Food & Fuel pub company, which last year launched a joint venture with the Ei Group – Frontier Pubs. She is also chair of Hawksmoor and Corbin & King.
This is an edited version of a speech delivered at the Imbiba Investor Conference at the end of February
