Goods & Services Don’t Matter Anymore

This blog isn’t about economical shifts (something best left to people with a far better grasp of the landscape than I) but one great big point that has been playing in my mind for quite some time is Covid. Not necessarily the damage it has done to our industry (enough people have already spoken about that) but more around how it has changed the economics of hospitality.

Prior to Covid the biggest drivers for where you’d go on a Friday or Saturday night were typically “where’s cheapest?” and “where’s loudest / quietest”. Your night was built around what you want to do and where you want to go.

Then the world stopped. The net number of closures between March 2020 to September 2024 was 27,951. Net closures refers to the total number of closures minus new openings, so a few of these may well have been restructures, or new operators taking over closed venues but still… It’s a lot.

Basically, everything was just a bit crap. As lockdown measures were lifted, we saw a huge spike in what I’d like to call “Experience Spending”. If someone wanted to go out, they had to plan it in advance, speak with their friends and family, decide on a venue, and make a booking. Time at most venues was also limited - tables were spread out which meant less covers in the restaurant.

Less covers and less time then led to two things:

Firstly, consumers had to put a lot more thought into where they wanted to go based on the experience that they believed they would have. It kind of stopped being about how much it costs and started to be more about how things would feel- Will the staff be nice? Will we have a good time? Will the menu have changed? Will the venue be able to accommodate us or any requests? I’m not saying that cost was a non-issue, I’m merely saying that the cost of a night out became less of a priority than how they would have been made to feel in a particular venue.

Secondly, less covers and shorter opening times meant less money. Operators had to think on their feet and pivot quickly. If they were to remain in business, then the logical step is to earn as much money per customer as possible. Some chose to raise prices whilst others chose to jump on a delivery platform. But the venues that survived, and I mean truly came out of Covid largely unscathed, were the venues that either didn’t have the option of making drastic changes and therefore had to focus on something else or purposefully chose to focus on the guest experience.

Now, I’m not saying that there aren’t some outstanding traditional pub owners out there, but the fact of the matter is that traditional pubs typically focus on what products they can offer at a reasonable price point. Trad pubs did very little in the way of pivoting and thus weren’t able to survive far beyond Covid.

I am well aware that we’ve had countless “crises” post covid; the Omnicron variant, several mini lockdowns, a cost-of-living crisis, the war in Ukraine, never ending inflation, along with what has been dubbed a “mini recession”. I’ve no doubt that these events have sped up the decline of the traditional pub as well as nightclubs, but I don’t believe that they’re entirely to blame.

Traditional pubs have been in decline for years, as have nightclubs. But these types of venue predominantly focus on drinks and pricing, with few placing much emphasis on the experience of their guests (again, I don’t doubt that there are traditional pubs that were able to pivot and had to close anyway, but I believe that this percentage of closures will have been relatively small by comparison).

Maya Angelou once said, “People will forget what you said, people will forget what you did, but people will never forget how you made them feel.” The difficulty will experiences is that they rely on feelings and emotions, which are typically difficult to put into words - they’re dealt with by a part of the brain that does not deal with language. We’re often dismissive of statements such as “I had a great time at Queens Wine Bar last night” as it isn’t quantifiable. What was great? Was it the food? The drinks? The service? The lighting? Even magnitudes of service are hard to quantify as they don’t have a monetary value attached to them.

“Experience” doesn’t necessarily have a monetary or quantitative value so we tend to put little effort into and instead focus on how we can make our products better- new dishes, a different colour menu, new pricing, new drinks, another picture of a cocktail on Instagram- and we wonder why sales don’t bust through the ceiling.

Sure, there are some venues that are busy because they have a Rosette or Michelin Star and they’re busy simply because they have these accolades. There is a specific market for consumers that actively search out “the best” restaurants whereas I doubt that there any many people in the UK that are screaming out to visit every standard pub or café in the country. The reason for this is that we expect to have a good time (a.k.a experience) at a place with a Rosette or Michelin Star and we know that we’re going to spend a lot of money for the privilege.

Creating an experience (or at the very least the illusion of an experience) is possible for just about every venue. If you run a takeaway you could also sell bottles of beer and a bottle opener and frame it via advertisements as a “lads night in” package. If you own a bar you could display images of the glasses that you’re serving fancy cocktails in so that when John goes out with his wife and she buys a Gin with a big umbrella in it, he’s able to choose a cocktail without the fear of “one of the lads” spotting him with something that looks like it could only possibly be served a Hawaiian beachfront hotel. Own a restaurant? If you’ve got the space, then have a coat check and have the coats ready at the end of the guest’s meal so that they’re not fumbling round for tickets. If you’ve got a kitchen you could have a chef’s table in there (provided that there’s enough space), or if you’re very brave (ad your insurance allows), you could select a guest to come and cook their own meal (or at least plate it up)- you don’t even have to be running a bougie restaurant for this. Imagine walking into your local burger takeaway and the guy behind the counter asks you if you want to come and put all the toppings on yourself? I’m not going to lie, if this happened to me I’d be elated - like a kid at Christmas as the saying goes.

Hospitality lives and dies by the experiences that we create for others. Your guests won’t always remember what the bill came to, or what they ate and drank. But they will always remember how they felt that night, and more importantly, how you made them feel. And if we’re prepared to design experiences so carefully for our customers, we should ask ourselves an equally important question: what kind of experiences are we creating for our teams? Because in the long run, the way your staff feel will determine the way your customers feel - and that’s the real foundation of a sustainable hospitality business.