What does innovation mean to food and beverage specialists, given their respective working structures and cultures? AccorHotels' CEO of global F&B, Amir Nahai told a recent panel discussion at Ecole hôtelière de Lausanne that, for the hotel group, innovation is all about getting closer to their customers. “We do this by focusing on being great hosts and entertainers, all the while taking local traditions and customs into consideration. That’s how we provide great customer experiences.”
In my view, as a senior lecturer at EHL and a former F&B professional, this is clearly one of the fundamentals of hospitality. You simply cannot seriously take on your competitors if your product, but more importantly your service mindset, isn’t right. For instance, the Four Seasons culture promotes respect: in the way we treat each other, in how we manage our people, and in how we conduct business. Then there is empowerment. That’s what allows you to provide not just great, but outstanding customer service.
In order to achieve product and service consistency, Nahai himself facilitates the communication process across operational units. He mentions that one of his key goals is to provide clear guidance on where it is they want to go, what experience they want to provide, how to get there – all in alignment with the organization’s key pillars. Not an easy task when considering that Accor employs over 240,000 individuals with annual revenues in excess of €5 billion per annum.
The other executives on the panel had somewhat different perspectives, given that one focused on airline catering, Gottfried Menge of gategroup, and the other, Thierry Lettry of UEFA, is involved in providing hospitality at major football events.
gategroup’s Menge explained that innovation can be a challenge based on the nature of serving three different experiences (in first, business, and economy classes) all on the same flight. Two years ago, gategroup launched its innovation lab, an initiative directly driven by their CEO. The goal of this top-down approach: to engage all employees to participate in creating a culture for innovation. The outcome: the ‘Absolutely One’ concept, where economy class passengers are provided with one substantial main course and where all other aspects of catering are sold through retail. The concept is ready to be launched in the fall of 2017. As gategroup indirectly competes with other major carriers for the same routes and in the same environment, they chose to become “more customer driven to solve the challenges”.
It is difficult to argue against gategroup’s approach towards innovation. The culture has to trickle down from the top and the key driver needs to provide that impulse. Creating a culture towards innovation, however, takes time. People need to feel and see that their ideas will find a sounding board and are heard beyond the grassroots level. More importantly, we need to accept failure. We need to allow our people to make mistakes so that we can learn from them. This is exactly what investors are looking for: people who have made mistakes before, in order to avoid them again in the future.
For his part, UEFA hospitality production manager, Thierry Lettry, says innovation takes place in the implementation process of foodservice offerings at stadiums which in itself can be challenging:
- Stadiums and their facilities are often unknown to UEFA in advance
- Foodservice providers need to be selected in a very short period of time
- A customer experience needs to be provided in a very tight service window, e.g. during match half-time.
“The leverage I use with my team is sustainability,” Lettry says.
“In order to be efficient, we clearly need to understand the environment and we need to know how to improve it to make the right choice to what matters to the client. We determine what the clients can see and what they can’t see and then apply a cost-efficiency and quality approach to it.”
Accor’s Amir Nahai and gategroup’s Menge rightly conclude that innovation is not about allocating budget but “more about the mindset” in how and what they do to get closer to their guests by creating value. Allocating a specific budget to an innovation project simply defeats the purpose. In order to make money, you have to spend money.
Heavy operating costs are still a challenge in low margin operations, but things are and have been changing. Today’s customers have evolved and are looking for simpler and more authentic features. Amir Nahai highlights here the fact that there are many other opportunities.
More and more high-end restaurants are moving from silverware to stainless steel cutlery, for example. It begins with the difference in purchasing price over the cost of silverware repairs or re-silvering, to the running costs in terms of staff and equipment for the burnishing machine. Other opportunities include a selection of more durable china and glassware or purchasing pre-processed high-end and quality produce that allows you to save on preparation costs.
gategroup, as a third-party supplier to airlines, operates in a more cost-sensitive and low-margin business environment, coupled with great constraints of what you can and cannot do on board aircraft. Based on this, low-cost demands are imposed on the airlines by the customers, and the airlines in turn pass these pressures on to their suppliers.
When it comes to incorporating local authenticity, flavor and touch, the panelists’ expectations were similar across their respective sectors of activity. Local suppliers are a must. “Being relevant for local people and international travelers has always been the holy grail,” Nahai says.
Creating customer experiences and the “wow” effect still lie at the heart of the F&B industry
gategroup works around the customer’s budgets and demands, and emphasizes that all travel should be an experience. Accor is looking to entertain their guests and be great hosts by, say, flambéing Crêpes Suzette at the table, which still has a ‘wow’ effect for customers. For UEFA, the focus clearly lies less on foodservice operations and more on process engineering, i.e. understanding what their 60,000-80,000 customers at a football match are experiencing (e.g. arrival, parking, security checks, ticketing etc.). This does not come as a surprise, considering that UEFA’s hospitality arm for Euro 2016 only accounted for three per cent of the tournament’s revenues, with broadcasting and TV rights accounting for the bulk of the business.
So what is the future for eating out in hotel restaurants?
Nahai responds that so many hotels get side-tracked and are just “averaging out” their F&B activities. “You really need to believe in your product,” he concludes. “If you don’t consider your product as great, you’ll be losing out”.
This is clearly becoming ever important in today’s world, where restaurants pop up in all shapes and forms to compete for customers against established institutions, chipping away at their market share. In order to be unique you need to add value that goes above and beyond the mere notion of price. An engaged service culture with a passion for people, a consistent and quality product, and the fostering of a culture of innovation through trial and error are the key pillars that will allow organizations to differentiate themselves from the competition.
EHL invited F&B specialists from various foodservice sectors to take part in a panel discussion forum around innovation and operations in the food and beverage industry at the school’s spring Career Fair on March 11, 2017. The session was moderated by business consultant, Michael A. McKay, the founder and presenter of ‘The McKay Interview’.