Success and failure in extraordinary times

Some musings on why some businesses have survived and prospered while others have fallen by the wayside.

What do you have to do to be successful at the moment? It’s interesting to examine the statistics on hospitality businesses that have come and gone during the last three years — recent history can yield some useful clues for the future. In my business we are in an unusual position to do this; we have the information.

Our marketing strategy is based on an accurate database of 15,500 hospitality and food service businesses in our State. The database is used to send emails and to identify multiple ownership. Keeping it up to date is a mammoth task, but it provides us with an unusual opportunity to assess what is really happening — rather than having to rely on ‘gut feeling’.

Lessons from the past

To assess the current situation (Covid pandemic) it is worth looking back at the effect of other economic upheavals. The recession in the early 90’s is a good example — it took quite a toll. About one third of all hospitality businesses in the State failed during the period between mid 1991 and the end of 1993. The first to go were the older, up-market restaurants who had let their standards fall but were still charging top dollar. They were soon followed by the poorly performing, mid level restaurants and the smaller old style pubs. As money became tight, the public became extremely conscious of value. There was a very black period in 1992 where I was pulling about forty businesses a week off our database.


Don’t try to reinvent the wheel

The threat of falling trade prompted all kinds of entrepreneurial behaviour. Prices fell about one third across the board. All kinds of cheap but tasty dishes were resurrected from depression cookbooks (based on shanks, liver tripe and other cheap meat cuts; thus forcing the pie manufacturers down-market to lips, sphincters and arteries. Where did all the meat go?). At the same time, service standards were driven up and complacent or incompetent staff were driven out. The public was re-educated in value for money hospitality — and they’re not about to let
that go.

Classical, formal dining almost died. You’ll only find it in a few places now. That’s not to say you won’t find high standards; they’re higher now than they have ever been at the top end of the market. Fine dining is more relaxed now; we seem to be developing our own national style at last — good technical skills, relaxed service and multicultural cuisine, I call it Eurasian-Pacific. It’s lighter, healthier, colourful and tasty — the best of the old world with the fresh, exotic flavours of the new.

Experience, wise heads leading young, spirited teams

The optimum structure is experience leading youth

The places that are really buzzing are those that manage to capture the spirit of today — as they have always done. The formula I see working the best seems to be a combination of the creativity of the young and the business management of the older, more experienced operators. When the older operator tries to be the creator, it doesn’t seem to work nearly as well.

It’s not nearly as easy as it looks to an outsider. The businesses that failed in   

the 90’s recession have long been replaced — many by people with no hospitality management experience, the expectation of making a fortune and a fat redundancy cheque. We’re now back to a greater number of hospitality businesses (a 400% increase since 1990), but the public is now more discerning, educated and money is
again tight.

To learn more about the topics discussed in this article please consider the following courses,

For documentation to support the management systems discussed in this article, please visit our resources website.

If you are not sure where to start, contact us now to speak with a consultant.

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