AlwAysOn-TrAdeRepoRt

in partnership with the association of Licensed MuLtipLe retaiLers

Twenty five years ago this week, I went to the cinema to see Back to the Future II. Set in the futuristic sounding 2015, it promised a world of flying cars, hoverboards and, most worryingly, home nuclear fusion reactors. The closest the plot writers got to predicting our future was the watch that forecast the weather, and that Nike are set to finally sell self-tying laces.

Clearly the idea of a pocket computer which would allow you not only to speak to but also see and write to anyone in the world – whilst at the same time choosing where to eat based on an online review, getting there using real-time navigation and ordering your drink in advance – was unimaginable at the time. But it is the biggest single technological change affecting not just our sector but our lives as a whole.

So this report from Orderella, with research findings from ALMR members on the increased prevalence of technology in hospitality, offers some very timely insights. While it appears to highlight the different priorities guests and operators have, what it actually does is highlight the different means they use to achieve the same end – a great overall experience. All are agreed that speed of service can enhance an offer but it can also detract from an otherwise good experience. As the restaurant guru Jim Sullivan says – great service can make up for a mediocre offer, but even great food can’t compensate for poor service.

And technology undoubtedly has an increasingly important role to play. The best operators use the newest technology to enhance the overall customer experience without getting in the way of it. Moreover, the truly tech-savvy use the savings it offers to invest back into the theatre and experience customers crave.

The benefits for those operators who get it right are clear from this report – and it also provides a route map to unlock them. We urge operators to explore what technology can do for them – but perhaps best to leave the home nuclear fusion reactors to the Back to the Future fantasies!

Kate NichollsCEO of the Association of Licensed Multiple Retailers

how the data was collectedThis report is based on the findings of two pieces of research. The first is a OnePoll survey on behalf of Orderella of 2,000 UK adults who go to pubs, bars, restaurants or nightclubs regularly. Conducted in May 2015, the survey asked a near equal number of males and females proportioned by age and UK-wide geographical location. The business survey was of 17 Association of Licensed Multiple Retailers (ALMR) members, which together, represent a total of 348 venues throughout the country.

the best operators use the newest technology to enhance the overall customer experience without getting in the way of it

““

FOREWORD

always oN-trade report | 2

01 how techNology shapes the oN-trade today 3

02 the ever-evolviNg social media laNdscape 4

03 techNology’s role iN raisiNg service staNdards 5

04 the cashless paymeNt revolutioN 7

05 the future: a poteNtial that caN’t be igNored 8

06 coNclusioN from deNNis collet 10

COnTenTs

3 | always oN-trade report

01 how techNology shapes the oN-trade today

3 | always oN trade report

the perceived beNefits of techNology

According to the Orderella consumer survey, it is clear that technology is valued in hospitality venues. Of those polled, more than half (52%) believed technology improved their experience in a bar, pub, nightclub or restaurant. This figure rises to 64% for 18-24 year olds, but peaks at 67% for the 25-34 age group.

what coNsumers Now expect A number of technologies that not so long ago were considered novel in hospitality venues are now reasonably common. The Orderella consumer survey found that 61% of people have used a chip and pin device to make a payment in a bar, pub, nightclub or restaurant. This increases to 74% among 18-24 year olds. Meanwhile, 58% of people have embraced free Wi-Fi. These figure also grows among 18-24 year olds to 65%.

Less established technologies also appear to be gaining a considerable foothold in the on-trade, and younger generations are leading the way. Overall, 19% of consumers have made contactless payments – a figure that rises to 31% in the 18-24 age group, but falls to just 14% for those aged 45 or older.

Similarly, 7% of consumers have now used a tablet or electronic device to order food and drinks. This rises to 11% for 18-24 year olds, but falls to just 4% for those aged 55 and over. It is likely that this number will rise rapidly in line with The Payments Council predictions that the majority of transactions will be cashless in 2016, particularly among younger consumers that are already less reliant on cash.2

how veNues meet this demaNd

On the whole, hospitality providers appear to be meeting the common usage needs of their customers. Of ALMR members surveyed, all claimed to provide a chip and PIN card machine, while 94% offered free Wi-Fi.

However, just 24% were able to take orders via an electronic device, and only 59% could offer cashless payments. This means that four in 10 operators are currently unable to service nearly one in five (19%) customers who make cashless payments, while three-quarters of operators are missing out on the 7% of customers who find it convenient to order food and drinks via a tablet or electronic device.

While 7% may not appear significant at the moment, the rapid advances in convenient, handheld technology means this proportion is likely to grow significantly in the near future.

New technologies often have a way of becoming universal so quickly that it’s easy to forget how our lives were before they came into existence. take the mobile phone, for instance. At the turn of the century, just 36% of the UK population owned one – but today, there are more connected mobile handsets in the country than there are people.1

Change is the only constant, as the saying goes. So when it comes to new technology, the on-trade faces a constant challenge to meet ever-changing consumer expectations.

52%believed techNology improved their experieNce

always oN-trade report | 4

02 the ever-evolviNg social media laNdscape

The on-trade appears to have had little trouble embracing the more familiar aspects of social media.

All of the ALMR operators surveyed said they have a website, and Facebook and Twitter pages. Additionally, a significant number of operators are active on:

The level of social media usage among operators, however, varied greatly. While 12% said their business was active on social media more than 10 times a day, 6% said they were active only once or twice a month.

coNsumer eNgagemeNt While only 28% of consumers polled claimed to have engaged with the social media channels of hospitality venues – as might be expected – the proportion varied greatly among the different age groups.

According to the Oderella survey, as many as 46% of 18-24 year olds have engaged with on-trade social media channels, falling to just 17% in the 55+ age group. There was also a noticeable gender difference, with fewer men (24%) engaging with social media channels than women (32%).

shariNg the experieNce Some operators may remain sceptical of customer review sites, but it’s clear that many customers now regard them as an important part of the on-trade experience.

When a customer takes the time to write about their experience at a hospitality venue, it demonstrates that they have an interest in that business and want others to benefit from that experience, whether good or bad. Typically, they are social media savvy and will not hesitate sharing information via platforms such as Facebook and Twitter. This presents a real opportunity to use social media and online review sites to directly engage with their customers to create meaningful relationships and foster loyalty through offers and promotions.

Significantly, half of all the consumers polled said they had completed an online review after visiting a venue, the majority of which were restaurants (39%), followed by pubs (17%), and then bars (10%). While these proportions fall away in pubs and bars among the older age groups, they actually increase slightly in restaurants, peaking at 42% for those aged 55+.

Importantly for operators, more consumers said they were increasingly likely to leave a review if they had a positive experience (33%) than those who had a negative one (20%) – the remaining respondents said they would leave a review regardless of the experience.

The younger the age group, the more polarising this becomes, with 47% of 18-24 year olds more likely to leave a review based on a positive experience, and 26% more likely to leave a review after a negative one. There is also a noticeable gender disparity, with 60% of males more likely to leave feedback based on a negative or positive experience, compared to just 48% of women.

41% 35%

100% of veNues polled have a website, twitter aNd facebooK accouNt

18%

WWW

5 | always oN-trade report

03 techNology’s role iN raisiNg service staNdards

Operators shouldn’t really need to be told of the importance of good service. In the current on-trade environment, much of that still relies on staff interaction with customers. What is becoming more apparent is the role that technology can play in helping to transform the way that interaction is focused. It allows venues to focus more on the positive and valuable elements of service like staff knowledge and attentiveness, rather than the ‘technicalities’ of the job like taking orders or payments.

For example, mobile ordering apps like Orderella free staff up from these elements so they can be dedicated to making the customer experience more personable and friendly; and providing customers with the best ‘product’ possible.

prioritisiNg service Needs

In the Orderella survey, half of consumers described staff interaction with customers as ‘very’ important, while a further 24% said it was ‘somewhat’ important. Meanwhile, just 2% believed it wasn’t important at all. The ALMR members’ poll is even more resounding, with 76% having claimed it to be ‘very’ important, while the remaining 24% described it as ‘somewhat’ important.

While these figures indicate considerable awareness of the benefits of staff engagement, operators shouldn’t be under any illusions that if the product offer isn’t up to scratch, or if customers are left waiting to be served, a friendly smile from a table waiter will quickly become less important.

The Orderella survey asked consumers to prioritise what they thought was most important from a list of 10 choices. Quality of food on offer topped the ranking, with 39% of people scoring it a ‘one’ (i.e. most important) on a one-to-10 scale. A clean bar and/or tables came second, with 27% of people scoring it the highest possible mark, and not far behind in third was quality of service (23%).

In a similar question to the ALMR members, which asked what they thought mattered most to customers, knowledgeable and friendly staff came out top. Quality of both food and drinks ranked equal second, while speed of service came in joint fifth, along with location.

the beNefits of a speedy service

While it’s understandable that operators regard the wait for service as less important than the quality of their food and drinks offer, they should be in no doubt that it is a concerning issue for customers.

According to the Orderella survey, 77% of consumers claimed long queues or waiting for service has had a negative impact on their experience at a venue.

Operators certainly appreciate the need for a speedy service, given that 100% of the ALMR members surveyed said they lose up to 10% of customers because of long queues.

Similarly, almost half (47%) of the operators surveyed believed customers would be more likely to spend more or leave a tip if they were guaranteed a quicker service, with just 29% claiming they wouldn’t, and the remaining 24% unsure.

veNues lose

because of loNg queues10% of customers

76%of almr members say staff iNteractioN with customers is very importaNt

Just 2%of coNsumers believe staff iNteractioN is Not importaNt at all

always oN-trade report | 6

what customers value most vs

what else maKes a great experieNce?

of coNsumers claimed loNg queues or waitiNg for service has a Negative impact oN their experieNce at a veNue.

what veNues thiNK customers value most

price

iNformative meNus

quality of service

KNowledgeable & frieNdly staff

cleaN bar/tables

quality food39%

77%

63%27% 38%

15% 75%

23% 31%

15% 6%

21% 56%19% 63%

14% 50%locatioN

variety of driNKs

7 | always oN-trade report

04 the cashless paymeNt revolutioN

The news that cash transactions were overtaken in value by other payment methods for the first time in 20143 will not surprise too many on-trade operators.

And it seems that most are keeping up with trends, with 59% of ALMR members surveyed claiming to offer cashless payments. Payments made by neither cash or card are also starting to emerge – 12% of operators said they are able to accept payment through Orderella, 6% through other in-app payments, and a further 6% through mobile payments such as PayPal.

preferred methods of paymeNt

As to whether operators believed they are losing out on custom by not offering customers their preferred payment option, the situation is less clear.

Almost a quarter of ALMR operators surveyed (23%) either ‘definitely’ or ‘suspect’ they have lost custom, while 12% said they haven’t. This leaves almost two-thirds (65%) suspecting they haven’t, without being entirely certain.

It appears the good news for operators is that 76% of consumers ‘definitely’ haven’t given up on an order because a venue didn’t have their preferred method of payment.

However, on the flipside, it also means 24% say they have – confirming operators’ fears that almost one in four customers have been denied the chance to make a purchase the way they want.

With UK pub and bar sales alone currently valued at £18 billion4, that 24% represents £4.32 billion in sales that operators are leaving open to jeopardy by not offering customers their preferred payment option.

tippiNg culture

While there has been a culture of tipping in restaurants for a number of years now, it hasn’t yet become an intrinsic part of the pub environment. According to the Orderella consumer survey, just 6% of consumers said they never tip in a restaurant, but that figure rises to 47% across pubs and bars – perhaps surprising given the rise of food-led pubs in recent years.

When consumers are asked whether they are more likely to leave a tip if they were guaranteed a quicker service, an opportunity arises. The consumer survey found that 22% of customers would tip more in pubs and bars, and in restaurants, that rises to 42%.

Drilling down the data by age group also reveals how much more value is placed on speed of service by younger generations. The survey showed that while just 16% of the 45+ age group would tip more in both pubs and bars if they were guaranteed a quicker service, among 18-24 year olds that rises to 38% in pubs and 32% in bars.

Similarly, while only 9% of the 45+ age group would tip more for a guaranteed faster service in a club, 25% of the 18-24 age group would be happy to do the same.

uK pubs aNd bars

because of lacK of paymeNt optioNs

could lose £4.32 billioN £

always oN-trade report | 8

05 the future: a poteNtial that caN’t be igNored

One reliable way of assessing the value of technology is to ask customers how beneficial they feel it will be in the near future.

According to the Orderella survey, half of all consumers (49%) believe technology will either have a ‘very’ or ‘quite’ important role in improving customer service in bars, pubs and clubs in the months and years to come.

This increases to 56% among 18-24 year olds, but also scores well among 25-34 year olds (59%) and 35-44 year olds (56%) – suggesting that those who grew up through

the rise of the digital age and computers are more open to the benefits that technology can bring.

One in five customers (21%) are positive about the potential role of technology in eventually helping to stem pub closures. While perhaps more attuned to the broader challenges faced by the pub sector, 24% of operators still believed technology could stem pub closures.

implemeNtiNg New techNology

Operators also appear to be engaged in embracing new technology. When asked whether they were considering implementing new technology in the near future, 35% of the ALMR members polled said they were actively installing it, 24% said they had identified it and will install it soon, while a further 35% were currently researching the market.

Cost considerations always come into play when any investment is concerned, and 94% of ALMR members said it would be a barrier to implementing new technology. However, much fewer (35%) said customers not wanting it would prevent them from investing – demonstrating that the business case for new technology is usually there, even if the money isn’t.

A mobile app such as Orderella, which can simplify the ordering and payments process, will inevitably score well with customers. Bypassing queuing altogether, customers can quickly order and pay for drinks from their stored debit or credit card, before collecting them from a delivery point or having them served at their table.

Equally, operators benefit because it’s a cloud-based technology which means a low-cost implementation option for venues, so upfront investment is much lower than implementing new hardware. In the long term, they also benefit from eradicating the cost of processing payments which is the only element of a sale that doesn’t offer any value add above and beyond the payment.

Furthermore, the app can increase staff productivity so time is better spent improving the customer experience, while allowing operators to gain valuable insights into their customers’ ordering behaviour – enabling them to send targeted marketing offers in return.

are actively iNstalliNg tech

operators believe pubs will stop taKiNg cash

operators would coNsider alterNatives to cash or card to reduce queues

say cost is the maiN barrier

35% of almr members

3 iN 10

8 iN 10

94% £

£

£

£

9 | always oN-trade report

the alterNative paymeNt poteNtial

According to the ALMR members’ survey, 29% of operators believed pubs will eventually stop accepting cash.

Just as significantly, when it comes to trying out methods of payment other than cash or cards, with the intention of reducing queues or the time it takes to serve each customer, 82% of operators said they would be happy to consider it. Meanwhile, nearly half (45%) of consumers said they would consider other methods of payments.

This positive response only serves to prove that, when shown tangible benefits, both consumers and hospitality venues are keen to move with the times and embrace the latest technology available to them.

why operators must embrace chaNge

The consensus from both operators and their customers is that new technology has a central role in helping to improve the overall on-trade experience. Enabled by the growth of digital devices and mobile apps such as Orderella, the ordering and purchasing of food and drink is set to become faster and simpler.

Already, one in five ALMR members surveyed offer some form of mobile payment. As this proportion increases, customer expectations of good service are likely to increase, making them even less tolerant of long waits at the bar, or food not arriving on time.

In an increasingly competitive retail market where standards will be set ever higher, operators need to be in tune to these changing customer demands. Those that aren’t face being left behind.

what tech will be iN veNues iN 20 years’ time accordiNg to coNsumers

what tech will be iN veNues iN 20 years’ time accordiNg to liceNsees

techNology iN pubs iN 20 years’ time

beer mats that Keep driNKs cold

beer mats that Keep driNKs cold

cashless bars

iNteractive tables

iNteractive tables

auto-refillable glasses

cashless bars

auto-refillable glasses

automatic wiNe dispeNsers

augmeNted reality

robot bar teNders

iNteractive touch screeN tables

51%

54% 29%

35%

62%

24% 19%

23%

13%

23%

11%

15%

ar

always oN-trade report | 10

deNNis colletCEO of Orderella

Like all industries, the hospitality sector has been and still is going through a testing time. What is clear from this report is technology has an important role to play in pushing the industry on, be it improving the service for customers or attracting them to a venue in the first place. Technology is particularly important for the younger generation, the 18-24 year olds, the future of the industry. For them, using technology is second nature, they have become accustomed to using it in every aspect of their lives, and going out to pubs, bars or restaurants is no exception.

Payment options and speed of service must be priorities for venues in the near to long term future. Owners risk alienating three quarters of their customer base if they do not address the issue of long queues – a factor that we found has a big impact on a customer’s experience of a venue. The younger generation have also already shown themselves to be the most vocal about leaving a venue if they can’t pay the way they want and admit they would tip more for a quicker service. Venue owners must get this group on side or risk losing increasing amounts of business to other venues that will.

Venues are beginning to embrace technology but they must go further to meet customer’s expectations and identify the areas they are still falling behind in. Cost is inevitably a factor, but there are options out there where the reward is worth the investment. It’s about owners taking the time to research and identify the best options for that venue and ultimately improving the overall customer experience for the better. If they can do that, then the future of the industry looks healthy and strong.

06 coNclusioN

venues are beginning to embrace technology but they must go further to meet customer’s expectations and identify the areas they are still falling behind in.

““

refreNces1 Ofcom 2/3 The Payments Council 4 IBISWorld Pubs & Bars market research report – March 2015

11 | always oN-trade reportin partnership with the association of Licensed MuLtipLe retaiLers