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Sunshine Summit

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At the 14th , over 250 senior executives -attended from 35 countries, from Saudi Arabia and Egypt to New Zealand and Canada, with discussion ranging over international chain development, brand revival, hot new concepts, future eating trends and responses to social and dietary pressures. Excerpts from the report

The conference theme of ‘Broadening horizons’ was amply reflected at a lively and wide-ranging CEO round-table discussion. Five top European chain operators, moderated by Ignasi Ferrer, CEO of Spain’s Eat Out Group, were frank about the challenges and compromises of exporting their brand cultures.

“Don’t kid yourself that you won’t make big mistakes,” confided Henry McGovern, founder and chairman/CEO of Poland’s AmRest, which now has 800 restaurants in 13 countries. “You are going to screw up – on people or on locations – and it’s best to face that up-front. The main thing is to know where you have made mistakes and have a strategy for getting out of them or living with them.”

Never forget what your brand stood for, warned Mario C. Bauer, CEO of Vapiano Franchising International. But practical issues needed flexibility, whether smaller portion sizes in Asia or halal in the Middle East. Vapiano invested in beautiful tables with marble dividers when it took its Italian fast-casual formula to Korea but it was evident that diners wanted to share. “We ended up getting rid of the marble,” Bauer observed.

Jean-Michel Orieux, CEO of Paul UK, recounted fundamental product and service issues in the Middle East. “People don’t buy bread in Dubai,” he told delegates. The French bakery and patisserie chain also found much greater emphasis on table service. Adaptation of the offer was demanding but fruitful. Dubai now boasted the world’s largest branch of Paul, with $10 m sales and a mix of 90% full service restaurant to 10% retail compared with the French norm of 30% restaurant to 70% retail.

Dubai also posed problems for UK pan-Asian fast-casual chain Wagamama when it entered the Middle East in 2003. , operations director for the Danish-owned Japanese restaur-ant group Sticks ‘n’ Sushi, formerly managed Wagamama’s overseas expansion. He recalled the priority mistakenly given to salads and vegetarian dishes – “we soon found that ramen and hot soups outsold everything else,” he pointed out. “The reality was that we did not properly analyse what the guests in Dubai wanted and our local partners were blinded by our success in the UK.”

Complications were also encountered by most of the panellists on practical issues, from installing TVs in bars at US restaur-ants to training, translation of manuals, travel to distant markets and selection of partners. Richard Bergfors, CEO of Sweden’s Max, admitted that his company language was still Swedish, “which can be a problem when working in the -Middle East”. But at the moment the really big decision concerned going abroad at all. “It took 20 years for us to decide whether to move from the northern part of Sweden,” he said. “The hardest thing is losing some of the control.”

Franchisees had to learn French at Paul. It forced them to immerse themselves in the DNA. “I think this is why the brand and its values are so strong,” Orieux commented. Partners also needed plenty of on-going support: “If a franchisee is in crisis you have to find a way to help – at the end of the day it’s not him or her failing but the brand.” Mario Bauer of Vapiano agreed that you should never make any compromises on partners: “Turn down five potentials if you have to in order to build up a strong relationship of trust.”

Emergent opportunities

Further of international challenges came from Gretel Weiss, publisher and editor-in-chief of ‘FoodService Eur-ope & Middle East’. Away-from-home consumption across the continent continued to reflect post-2008 economic pressures, she indicated. Traffic counts were down in many countries and had to be counteracted by higher menu prices.

One factor was competition from on-line shopping with its 24 hours-per-day, 7 days-a-week accessibility. “It’s getting so convenient to organise our life from at home,” she pointed out. While eating-out cannot be migrated to the Internet, declining footfall could hurt business.
People still needed to get around and travel hubs were becoming real foodservice hot-spots “the new high streets”. Airport and train station operators were taking their F&B portfolios to a higher brand and design level, avoiding sameness and duplication and giving travellers better use of their time.

More opportunities were emerging for niche offers as well as the big brands. Important demands: familiar – but health-ier – fare and good coffee and breakfast offers. Gretel Weiss also examined the roots and evolution of popular foodservice platforms, using three examples: pizza, sushi and beer. But she emphasised that strict separation between concepts and segments is collapsing. Everywhere, lines are blurring: between retail and restaurants, online and off-line, city and countryside, local and exotic cuisines, main meals and snacks, eating and drinking. Guests wanted ever-more flexible solutions which integrated with their lifestyles.

Culinary super-star

Denmark’s gastronomic game-changer Claus Meyer demonstrated the inspirational thinking – and showmanship – which helped propel him to culinary super-stardom in a part of the world once better-known for canned meatballs. Meyer’s international profile owed much to his espousal of the New Nordic Cuisine manifesto and his co-founding of noma, voted Best Restaurant in the World for three consecutive years.
But his entrepreneurial energy extended to a string of innovative foodservice formats, including Meyer’s Bageri and Deli, Nam Nam (Singaporean partnership) and a new multi-outlet centre in Copenhagen harbour called The Standard, which included a contemporary Indian restaurant, two other restaurants, a jazz club and two bars. His current interests were estimated to turn over £85 m annually and employ 750 people.

Meyer said that much of his culinary inspiration was sparked by new wave Spanish chefs at the end of the last century. But too much attention went, he felt, on kitchen magic. “We wanted to celebrate nature, not the chef.” Hence the New Nordic Diet, a consumer-driven movement which celebrated real meal solutions. It was possible, he believed, to “combat poverty with deliciousness.”

Putting a new twist on social statistics, Meyer postulated a direct relationship between the rising divorce rate and growing use of microwave ovens. He was candid about the shortcomings of his own childhood, battling with obesity and the time management obsessions of his father. “My mission became: save children from the life I had,” he told delegates.

Digital dynamics

The increased importance of communications technology led Kory Spiroff, vice-president for Europe, Middle East and Africa (EMEA) at internationally-spread home delivery specialist Domino’s Pizza. to make a remarkable statement. Today’s chain was essentially “an IT company which happens to sell pizza.” Telephone ordering was once the lifeline but on-line ordering was now a vital option in all key markets. “I wouldn’t recommend going into any market without it,” he told delegates.

The technology continued to evolve, both in areas like ordering via mobile devices and in improvements to on-line shopping cart and wallet facilities. He predicted that 80% of Domino’s sales would be on-line within ten years. And while TV advertising was once considered the Holy Grail of QSR promotion and awareness-building, the Internet now levelled the playing field.

Bucking the trends

The Summit’s popular ‘Hot concepts on stage’ slot this year featured fresh thinking from two Mediterranean countries. 100 Montaditos contradicted Spain’s high unemployment and economic stringency by opening over 100 restaurants last year following a decade of “exponential growth” which saw 300 branches open in 26 countries. Putting a strong focus on quality, value and price, this fast-casual offer combines specially formulated, fresh-baked, tapa-sized baguette rolls filled with meats, cheeses, sauces and other toppings.

Prepared at open-view workstations, the food is served in a casual but convivial counter-service environment accompanied by beer in glass tankards. Last year the chain sold over 24 m litres. A big element in the brand’s success: tactical pricing with sandwiches promoted at just €1 on some nights and beer at €2.

Since 2009, 100 Montaditos has expanded to Portugal, France and, in early 2011, USA, with franchises spreading across Latin America and other parts of the world. New units opened at the rate of one every three days. Chain owners Grupo Restalia also operated the beer pub franchise La Sureña and TGB, a “massclusive” gourmet burger concept, This year’s other hot concept hailed from Italy and focused on affordable luxury. Federico Grom, chairman of Gromart, started the Grom ice cream parlour chain in Turin in 2003 with his friend and business partner Guido Martinetti. He admitted to numerous mistakes, not least a lack of finance and, worse, little know-ledge of making ice cream or, more specifically, the high quality, lower fat gelato version which became the chain’s focus. “But ignorance becomes creativity,” he told the audience.

Since then, Grom stores had spread through Italy and to other countries, including the USA where massive publicity in a high profile newspaper was helped by promoting zabaglione gelato served with Chateau d’Yquem. Grom now has more than 60 units, with local partners in the Gulf and Japan, and continues to win converts, thanks to its insistence on traditional methods and a policy of ingredient control through ownership of its own farm.

Family ownership

Opportunities for offering customers an affordable daily treat were also a driving force at Paul International, with 500 stores in 29 countries. Demonstrating the integrity and continuity possible with five generations of family management, Paul’s success as a purveyor of authentic French bakery and patisserie dates back more than 120 years. Key success factors include the dramatic but cosy black styling of the chain’s stores, authentic French recipes and visible baking (and kitchens) which emphasise the savoir faire of the chain’s bakers and pastry-makers. “Bread is very much at the heart of our story,” said Jean-Michel Orieux, CEO of Paul UK.

International openings exceeded those in the home market for the first time in 2012, with over 160 of Paul’s 550 shops now outside France. Strategy since 2000 benefited from health and social initiatives including a commitment to greater diversity and employment of handicapped workers, use of recycled packaging, reductions in fat, sugar and salt content and supply changes in terms of farms and raw materials (including organic).

Social commitments were also viewed as essential at Sweden’s 110-unit Max Hamburger Restaurants, another family-owned business with growing international ambitions. “People don’t want to support companies that don’t take responsibility,” declared CEO Richard Bergfors. Max did so by striving to be green, labelling all its products with climate impact labels, maintaining climate-neutral policies such as tree-planting in Africa and implementing numerous schemes in areas such as packaging recycling, wind power and solar panels. Menu policies include lower-carb options and elimination of transfats. Max was started by Bergfors’ father in a small mining community in the North of Sweden in 1958. Advantages of family ownership include a short decision chain. “We can be flexible and fast and that has been a big competitive advantage,” Bergfors said.

Re-energising a 1960s experience

“An ailing brand in an ailing category” was how conference host Chris Muller introduced the turnaround story at TGI Friday’s UK, presented by managing director Karen Forrester. The memorabilia-packed singles bar concept pioneered by Alan Stillman in 1960s New York went on to revolutionise themed casual dining in Europe after it opened in Birmingham in 1986. But by 2007, when joint venture partner Whitbread sold its stake to concentrate on coffee bars and other interests, the brand had been leapfrogged and sidelined.

Karen Forrester joined the ailing UK chain in 2007 from Irish pub chain O’Neill’s. “We had the promise but we just did not live up to it,” she told delegates. Two-for-one discounting had taken hold and the guest experience often got closer to a “wet Monday”. Annual turnover among the front-line staff so critical to the concept’s appeal was 137% while for managers it was 70%. Many of the people who had built an “awesome knowledge” of Friday’s extensive menu had left and replacement personnel often lacked the same passion. For an “emotional brand which makes an emotional connection,” that was disastrous.

Steps taken to re-ignite the passion included revival of badge-based recognition, pruning of underperformers and insistence on retraining every single member of staff every year. Maximum focus was given to the experiential elements of the brand offer. The changes helped the chain achieve 16 quarters of continuous growth.

Creating your own luck

Does luck play a part in such situations? UK psychologist and former magician Richard Wiseman cited results from an in-depth University of Hertfordshire survey which researched 10,000 people who considered themselves very lucky or very unlucky, Wiseman concluded that luck was “just another illusion”. People were better off if they did not associate difficulty with luck. It was more about attitude. Widening conclusions to business behaviour, Wiseman considered approaches to minimising risk. Group brainstorming was, he felt, “a terrible way of generating ideas” because too often dominant characters took over. Individual problem-solving where participants were encouraged to visualise processes rather than goals was much more effective.

Fresh ways of thinking was also a goal of Czech economist Tomáš Sedlá?cek, author of the international bestseller, ‘The Economics of Good and Evil’ and currently a member of the National Economic Council in Prague. He questioned the use of the term depression for the current gloomy financial climate. It was closer to manic depression, and the attendant -manias were, he felt, potentially more dangerous than the depression itself.

Even if a silver bullet could be found, it would not solve the problem, he believed. It would be like treating an alcoholic by only addressing the hangovers rather than the core problem of addiction. In the same way, governments treated their country’s economic woes with mechanisms such as budget deficits rather than getting to root causes like over-consumption and enslavement to debt. “Greece is ahead of the rest of us,” he suggested. “It will just take us 20 years longer to go bankrupt.”

Market fragmentation

Also alluding to Europe’s struggling “weakonomy”, David Bosshart, CEO of the GDI for economic and social studies, suggested that the people in charge in today’s world had less to be in charge of. “The central banks are the real CEOs,” he declared. As the Western world became more conservative and risk-averse, there was ever-greater fragmentation in markets and consumer needs. “You cannot re-invent ’s or Starbucks today,” he suggested. “They became big when there was a much more homogenous market.”

People today were a lot more complex. Europe’s population kept on ageing and there were signs of a post-familial era as women became more independent and less ready to have children, and more people lived alone. But there were signs that sharing and swapping were becoming more important. He cited Toolpool – “like a carpool but with tools” – and buyback programmes on mobile phones. There was also a move to “liquid space”, exemplified by Starbucks’ installation of capsule accommodation for its Japanese staff to enable them to stay overnight rather than face a late-night trek home.

Paradigm shift

Chris Muller of the University of Boston suggested a paradigm shift in how -people eat at home, at work, and on the go. For most Westerners, food was no longer just about survival. He picked out 8 Big Ideas:

  • We all desperately search food skills.
  • Improving children’s dietary habits as early as possible has long term benefits for society.
  • Workplace canteens have become a much more acceptable part of people’s lifestyles.
  • The working lunch is less about lunch, more about work. “Desk food” is being redefined.
  • Shopping and eating are now inextricably linked. To quote Ikea, “you can’t do business with hungry customers”.
  • The dawning of the “age of the epicurious” means enormous change in the consumer’s food knowledge base.
  • Gourmet dining is increasingly a hand-held experience as street food concepts expand (there actually is a “foie gras truffle McMuffin”).
  • Foodservice has become integral to travel hub usage.

The 15th European FoodService Summit is scheduled to take place during (22), 23, 24 September 2014.
www.efss.ch