More politics on the corporate agenda

The restaurant and pub industry knows it has an image problem - specifically with the country's political leaders.

A new poll of senior directors shows that while 57% think that consumers have a positive view of the sector, and 45% believe that potential employees also have a positive opinion, a mere 18% feel the same is true of the Government.

A survey carried out in December by Peach Factory, shows that 58% of bosses in operating companies think that the Government actually has a negative perception of the broad eating and drinking-out market. (See table).

Not surprisingly that figure is even higher among just pub company executives, many of whom have been toiling in the political front line over licensing and smoking.

With political issues sure to increase in importance over the coming months and years, that poses a major challenge for the sector. Government relations will have to be given more prominence on board agendas, but that won't in itself guarantee the relationship is going to get any better.

Few industry leaders, for instance, believe that a change in Government will make any different. The same survey shows that 69% believe a new administration after the next General Election would have "no discernible effect" on the sector, with only 27% thinking change would be positive. The scepticism is again highest among pub and bar operators.

Pub players have had to be more politically active in recent times, but with Government advisers now saying that obesity is the most serious threat to the future health of the nation - more serious than even smoking or alcohol misuse - the eating-out end of the market should expect even tougher intervention.

The multiple grocery market is already in the firing line, but offers little encouragement. As Sian Harrington, former deputy editor of The Grocer magazine and a leading commentator on the retail food sector, said at a recent Peach Factory event, Tesco's might come out on top as the favourite of ordinary consumers, but those aren't the people the Government is listening to. Ministers pay more attention to the views of special interest groups, such as Which?, formerly the Consumers Association, in forming their attitudes, she warns.

There is some irony in the fact that many in the pub and restaurant arena see the supermarket lobby as having more weight, better access and more influence, while the multiple retailers believe that the licensed trade has been the more effective, particularly over limiting the backlash over binge drinking.

The obvious lesson from the supermarkets' experience is that restaurant and pub chains are going to have to learn to live with a constant barrage of legislation and political initiatives. Learning to anticipate and stay ahead of the political mood will be a new and increasing challenge.

If the supermarkets have got it right, that will also mean keeping close to the public and consumer mood.

Another lesson that both the out-of-home and in-home markets could learn is to talk to one another more, rather than see the other as the enemy. A united food and drinks market approach would be an intriguing outcome.

It is interesting that the Peach Factory survey revealed that while 67% of drinks-led businesses had lobbied an MP or contacted a minister in the last year, the figure among food-led operations was only 25%. That figure is certain to change.

The Peach Factory survey also asked how industry bosses saw their businesses and what would be the important issues for them in the future.

When asked in which areas they thought their businesses were ahead of the market, the five top replies in order of importance were quality of product, business strategy, concept development, innovation and customer service. The two areas they collectively felt they lagged the market were consumer research and IT.

When asked which would be the most important issues for their businesses over the next five years, the top answers in order were customer service, innovation and change, growth and profit.

However, a greater clue to how business will develop their agendas in the near future came with the answers to the question of which issues would increase in importance over a five-year period.

The top two replies remained customer service and innovation and change. The next four answers were more revealing - management development, social responsibility, customer research and employer reputation.

These "softer" issues could move up the agenda faster than many anticipate. If nothing else, they are about improving the standing and image of the market with those three important constituencies - consumers, potential employees and the Government.

With health and the environment spearheading the legislative onslaught, social responsibility will become a key weapon in the sector's armoury. Because of the issues surrounding binge drinking and smoking, pub operators are more likely to be already taking the subject seriously.

Issues such as product provenance are already to the front of mind, but "green" initiatives, such as Starbucks decision to make all its London deliveries only by electric vehicles, for example, may become more common.

The big challenge in all this is not to forget your consumers and employees while spending more time and effort fending off the Government. The trick, of course, would be to involve both customers and staff on your side in those issues.

The corporate agenda may become more crowded in months to come, but the good news is that prospect is not getting the industry down - far from it.

The final survey question was "how optimistic are you about prospects for the overall market in the coming five years?". In all 79% of bosses are either very or fairly optimistic, with only 7% showing any signs of pessimism. Business leadership is no problem then.

(Table A)
Industry image
How do you think the industry is perceived by the following groups?

Government
Negatively 58%
Positively 18%
No opinion either way 25%

Consumers
Negatively 18%
Positively 57%
No opinion either way 25%

Potential employees
Negatively 36%
Positively 45%
No opinion either way 19%

Source: Survey of senior directors of restaurant and pub companies conducted during December 2006 by Peach Factory and Demographix

(Table B)
How will a change of Government at the next General Election affect the sector?
No discernible effect 69%
Positive effect 27%
Negative effect 4%
Source: Survey of senior directors of restaurant and pub companies conducted during December 2006 by Peach Factory and Demographix

(Table c)
How optimistic are you about prospects for the overall market in the coming five years?
Very optimistic 22%
Fairly optimistic 57%
Neither optimistic or pessimistic 14%
Fairly pessimistic 7%

Food-led businesses are most optimistic with 39% very optimistic and none pessimistic

Source: Survey of senior directors of restaurant and pub companies conducted during December 2006 by Peach Factory and Demographix