The concept of value may be different for everyone, but Edmund Weil thinks a great bar experience is a universal win.
I’ve been reflecting recently on value. Value has always been at the very core of what I feel is important in hospitality. The idea that, however much a drink, a meal, a stay or an experience costs, it feels like money well spent. It’s also a very personal concept. I’ll happily drop several hundred pounds on a memorable meal, but even at £1.49, a pint in a Wetherspoon will never feel like value to me.
A stay at a flawless 5-star hotel, even at the eye-watering prices they often command, feels like value. But the minibar? Hell no. I’m also not the sort of person who will devour the £5 minibar Kitkat on arrival then replace it with a shop-bought version a few hours later.
Our concept of value expresses itself in how we choose to spend our time and money, and such choices are part of our expression of who we are. Unless you’re super-rich, spending money on something tends to mean eschewing something else. A fashionista who spends most of their disposable income on designer clothes may find value in a Tesco £3 Meal Deal. A tech enthusiast who always accoutres themselves in the latest gadgets, consoles, and headphones may buy all their clothes at Primark.
Value is also an essential condition for a successful hospitality business. Whatever you’re selling, at whatever price, your chosen target market needs to feel as if they’re getting value, or they will not come back. In order to achieve this, you need a degree of empathy with your guests. It’s one of the many reasons why I have never and will never operate a bottle service nightclub; I will never get my head around the value proposition of spending thousands of pounds on spirits and mixers in a dark room with loud music. I acknowledge that my own business is built on selling expensive cocktails in dark rooms with slightly quieter music, but I’ve always firmly believed that the experience we offer our guests constitutes excellent value. I’ve also always been confident that enough people share my assessment to make my business a success.
Until now, that is. Good hospitality businesses have tended to be recession-proof to a large degree because a poorer public will eschew big-ticket purchases such as home appliances long before they give up on a good night out. However, the current economic climate of rampant price inflation, just as people’s disposable income is squeezed by energy costs, mortgage rates and tax increases constitute something of a perfect storm. People – myself included – are making ever-trickier decisions about how they spend their money. In short, these weird economic conditions are doing weird things to our value perception. For the first time, when I sample the cocktails in my venues, I ask myself: does £14 plus service for this drink represent good value?
Unsettling fact
Speaking to friends and acquaintances in the industry, it strikes me that bar owners across the nation are asking themselves similar questions. Input costs are as high as they have ever been, and for many venues, sales remain below pre-pandemic levels. Even for those who are still doing well, in the words of one well-known multiple venue operator: “It does feel a little bit like the last days of Rome.” The unsettling fact is that, as uncertain and difficult as things seem right now, the UK economy is at the beginning of a long rocky road, and the pressure on disposable incomes in the next couple of years is only going to increase. More and more of our guests are going to be taking a long, hard look at where, when and how they spend their money. All of which only serves to amplify the importance of your value proposition as a bar. To put it bluntly, the only ways to improve your value proposition are to make your product cheaper, or to make it better.
Making drinks cheaper is an easy fix on the face of things, yet operators should rightly be very wary of slashing prices when costs of labour, ingredients and energy are higher than ever. Gross margin is – for good reason – something of a holy cow in the modern bar business. Every percentage point you lose is thousands of pounds off your bottom line.
On the other hand, I’m hearing widely that spend per head and visitor frequency is down in many cocktail bars. People are still treating themselves to cocktails, but fewer and further between. If every guest is spending the same time at a table in your lounge, but having one fewer drink, the implications for your turnover are grave. It’s why I’ve seriously considered sacrificing gross margin in some venues in order to bring the price of cocktails down to a point that might persuade our guests to splash out on that third or fourth cocktail. Hitting this value sweet spot would more than make up for the hit in increased sales. The challenge is finding it, and the risks and costs which accompany such a quest make it a daunting prospect.
Making your product ‘better’ represents a more complex challenge. Any bar that has survived the pandemic has probably already got a kickass brand ethos, order of service, and training programme. There are unlikely to be any silver bullets that will immediately tip the balance of your guests’ value perception. I’m talking about incremental gains, about engaging all staff to get their ideas of how value can be added to the guest experience. It could be a question of finessing guest interaction points; perhaps a tweak to staff uniform or dress code; an audit of the bar’s interior decor, identifying spots that look barren or tired, under or over-lit.
Keep a close eye on customer complaints and reviews, and send in mystery shoppers to identify points where the spell of a guest’s experience might be broken, and improve them.
What we’re talking about is a qualitative rather than quantitative experience of value. I believe this is ultimately more important than price, because if you can elevate a guest’s experience to the extent that they leave with the warm glow of a truly memorable night out, the bill will fade into insignificance. That’s where we’ll be focusing our energies this festive season. If we can succeed, it will be rewarding in more ways than one.