As a market leader, Greene King’s financial announcements are always carefully examined, not just for current performance, but also for progress against their announced strategic plan, and for indications of future strategy.
As part of Greene King’s preliminary results announcement last week, chief executive officer Rooney Anand provided a Strategy Update which will be of interest and relevance to many in the hospitality sector, and which we quote below using crossheads to identify specific areas of interest for readers.
“As we near the end of our current five-year plan and given the pace of change in consumer behaviour, we are evolving a new five-year plan to take us to 2020, building on the progress we have made so far.
Understanding customer behaviour
“We have taken steps already to get even closer to our customers and to understand their behaviour. For example, we increased investment in our digital platform and we launched the Greene King Leisure Spend Tracker during the year, reporting monthly GB household spending on eating out, drinking out and other leisure activities.
More choice, more control
“Customer behaviour is increasingly dynamic, presenting constant challenges to the industry. Consumers are going out less but when they do they are demanding more choice and more control over what they eat and drink. Increasingly, they also like to treat themselves to more premium products. We responded to these trends by broadening our offering in key drinks categories such as premium lager, craft ale, wine and cider, and by offering increased customisation on our menus.
Higher quality, more healthy
“Customers are also demanding higher quality, more healthy options and better consistency in what they eat and drink. We carried out two benchmarking exercises on key menu items to ensure we stay ahead of our competitors. As a result, we redesigned our burger offer, upgraded the quality of our steaks and added a number of healthier dishes to our menus. Importantly, we continue to win awards for the quality of our fish & chips, still our customers’ favourite dish.
“People are still looking for value and we saw an increase in the share of our sales from promotional activity, especially in food. In Loch Fyne Seafood & Grill, we increased communication of our offers through electronic direct mailing to our extensive customer database, while across Retail we broadened the number of sites with known value item pricing on lager.
Identifying forthcoming consumer trends
“In addition to addressing current trends, we have been working closely with the Trajectory Partnership, a leading consumer insight and futures consultancy, to analyse and identify forthcoming consumer trends in order to get a clearer understanding of how eating out and drinking out might change between now and 2025.
The main trends we have identified include: –
- ‘Vertical families’ – indicates the rising importance of inter-generational leisure occasions.
- ‘Digitalisation of leisure’ – the increase in use of and access to technology in leisure.
- ‘Value hunters’ – demonstrates that cost of living is likely to remain a central consumer issue.
- ‘Deregulation of life’ – where different activities are less associated with specific times of day.
“The implications of these trends for our business are significant and include the need to:
- Develop sites and offers that cater for different generations at the same occasions.
- Continue investing in our digital platform and our colleague training programmes to meet the challenges of a more demanding consumer, providing instant feedback to other customers.
- Maintain focus on delivering great value for our customers, even as the economy improves.
- Make our sites more convenient for our customers by increasing the occasions they use our pubs by expanding our daytime offer and becoming less reliant on ‘traditional’ pub eating and drinking occasions.
Focus of future strategy
“Using the analysis of current and future consumer trends, we will evolve the current strategy to accelerate our Retail expansion and to move beyond conventional pub offers. Specifically, our future strategy will focus on six key elements:
- Open a minimum of 30 new Retail sites per annum.
- Reposition and simplify the existing Retail estate to optimise growth and returns.
- Further improve value, service and quality to our customers.
- Investigate options to diversify the Retail offer including potential acquisitions.
- Reduce Pub Partners to 750 sites.
- Maintain investment in Brewing & Brands to drive market outperformance.”