The casual dining market
Casual dining brands could not escape the acronym CVA in 2019. If 2018 felt like a bad year for the sector, then this one resembled an onslaught.
More than 1,400 UK restaurants closed between 2018 and 2019, up 25% from the year before. Both small independents and big chains have been affected, with rising rents, increasing competition and tighter consumer spending taking a toll.
There have been bankruptcies (Patisserie Valerie), redundancies (Pizza Express) and full closures resulting in thousands of job losses (Jamie’s Italian), with the casual-dining sector’s woes showing no end in sight.
There have been success stories such as Fulham Shore, the operator behind Franco Manca and The Real Greek, which reported a pre-tax profit of £1.4m in March.
The key seems to be holding off on over-eager expansion and innovation. Casual dining brands need to take a cautious approach when trying to appeal to an ever-expanding range of tastes. Instead, do what you do well and at a reasonable price.
The future, however, seems to be takeaway and street food. The latter will help to solve lower rents and appeal to consumers who increasingly favour experience over everything else. Meanwhile, takeaways are on the rise with Just Eat, UberEats and Deliveroo all enjoying collaborations with fast-food giants such as McDonald’s and KFC.
Ultimately, 2020 is not set to be much better for casual dining. Brexit coupled, with a cloudy economic outlook, means consumers will be keeping their spending low for the foreseeable future. MF
According to the IPA’s Bellwether report, spend on market research experienced its most dramatic drop in seven years in the third quarter of 2019.
The net balance of spending on qualitative and quantitative research was -16.9%, down from -2.9% in the second quarter. A fifth reported a drop in spend, while just 2.9% said they had increased spending.
Budgets for all marcomm levers are under pressure as Brexit uncertainty continues to curtail spending, but nowhere – bar direct marketing – has seen as many cuts. This was the 17th consecutive quarter a greater percentage of those polled by the IPA cut spend on market research than increased it.
Brands have become dizzy with the possibility of data. They seek feedback at every touchpoint for an indication of performance. Easy-to-measure methods, such as feedback surveys, are being readily employed, often as direct replacement to methods such as behavioural science, experiments and focus groups.
Meanwhile, the volume of diagnostic tools available to marketers is growing every year. The alternatives to traditional research might be cheaper, simpler, and easier to track, but are arguably more limited in understanding and predicting behaviour.
Customer centricity is the number one attribute ambitious marketers lay claim to, customer experience often said to be the end game for brands. However, investing what is required to understand the real factors underpinning human emotion, motivation and desire seems less enticing. RP
“We’ll stop advertising if you keep buying. Nope that’s not a typo. If you help us reach our sales target. We’ll stop interrupting your day.”
This is a section of a long copy outdoor ad from Coca-Cola-owned soft drink brand Oasis. Part of its long-running ‘Refreshing Stuff’ campaign, it was a nudge and a wink to its target demographic – Generation Z and younger millennials – to reassure them they understood.
Understood their scepticism, understood advertising was an unnecessary and unwanted interruption to their day. Better, therefore, to be honest. Arguably it was anything but. Would they really stop doing something that had helped them hit their target?
Critics of the campaign worried it was self-defeating. In incentivising customers to put a stop to its campaign, Oasis was said to be perpetuating disquiet about advertising.
It wasn’t alone in 2019. In an attempt to remain true to its outsider status, despite enjoying similar depth and breadth of distribution to some everyday beer brands, BrewDog launched a campaign it spun as “the most honest ever”.
Pitched as an antidote to the “growing cynicism” towards advertising, resulting from the “outrageous promises” being made by brands, BrewDog ran a series of ads with no product features, point of difference, evocation or emotion.
Elsewhere, Swedish oat milk brand Oatly ran street art style campaigns that played to the inherent disquiet it believes customers have about advertising. One read: “We made this ad look like street art so you would like it better than if it was just an ad”.
It might be the tactic is perfectly suited to the target market and the messaging, or lack of it, will propel all to sales success. Much of the criticism about the Oasis ad, in particular, came from within the industry.
In claiming honesty as best policy those behind the campaign are being as dishonest as those claiming a greater good is attached to their brand. They are also indicative of a general self-loathing in the industry. RP
Amidst the backdrop of the looming 2020 US election, ‘Big Tech’ and social media came under tighter scrutiny this year, not just for anti-competitive strategies and data harvesting, but for issues around freedom of expression and political advertising.
Facebook’s stance on free speech came under the spotlight in September when it announced the platform would carry political ads without any moderating or fact-checking. The social media giant argued that even if someone is deliberately spreading disinformation, it is in the public interest to scrutinise their comments.
CEO Mark Zuckerberg came under more pressure when his counterpart at Twitter, Jack Dorsey, said political advertising would now be banned on the social network.
Campaigners, academics and non-profit organisations called on Facebook to ban political ads until after the UK general election in order to allow time for reform of online advertising rules. Facebook refused, despite political ads accounting for just 0.5% of its revenue.
The company instead talked up the features it had introduced to protect elections. These include a “verification process” for political ads, which are now kept in Facebook’s ad library for seven years, and a tool designed to warn users when they come across content deemed to be “illegal, false, or partly false” by its independent fact-checkers.
Elsewhere, the UK Government spent a reported £100m on a campaign urging us to ‘Get Ready’ for the 31 October Brexit deadline, only for MPs to vote for another delay and spark a December general election.
The campaign was officially “paused” three days before the deadline and shortly after the National Audit Office declared its effectiveness would be limited due to “ongoing uncertainty”. MB
WeWork, Uber and the Unicorns
WeWork had a disastrous 2019. It came into the year riding high and with plans for an IPO that valued it at $47bn (£36.6bn). Within two months, those plans were in tatters, its valuation had plummeted and co-founder and CEO, Adam Neumann, had agreed to step down.
Many of WeWork’s problems were of its own making. It expanded into new areas – including yacht charter business WeSail, boutique hotel company WeSleep and elementary school system WeGrow – but had no clear route to profitability and huge debts.
Its downfall could well be contagious. Investors are starting to ask tough questions of WeWork and the other ‘Unicorns’ – startups valued at more than $1bn – that have gone public. Taxi-hailing apps Uber and Lyft, messenger app Slack and home exercise business Peloton, have all gone public and are trading well below their office prices.
These businesses have traded on their tech credentials. WeWork’s touted $47bn valuation looks astronomical compared to rival office workspace company IWG, which trades at just 1.25x revenues.
It’s becoming increasingly clear that non-tech companies are trying to trade on the cachet, and associated inflated valuation, that comes from being tech-based. They are also aiming for lofty brand positions that barely reflect the realities of their business. WeWork’s, for example, is to “elevate the world’s consciousness” according to its IPO.
This wave of startups might have disrupted markets, but they now need to prove they have a business and marketing strategy that works. And by works we mean leads to long-term profitable growth.