Revolutionising Hospitality: Navigating Customer Behaviour in an Ever Changing Industry

As the hospitality industry faced unprecedented challenges in the wake of Covid, it was important to adapt to a new normal and bring a fresh perspective to operations. However, amidst the recovery efforts, another crisis looms large – the cost of living.

Throughout tumultuous times, changing customer behaviour has been at the heart of decisions made by those within the industry. LSG Purchasing seeks to reiterate how examining evolving consumer needs can in fact open up new opportunities for business owners rather than hinder them. 

Understanding Customer Behaviour

HDI, a renowned insight business that specialises in providing valuable data and analysis to businesses across various sectors, helps businesses understand their customers’ behaviour and identify areas of opportunity for growth. 

Below, Mark Bentley, Business Development Director at HDI emphasises the challenging landscape that the sector currently faces but also highlights the potential for enterprising business owners to thrive. 

Let’s look beyond the headlines 

Reading some of the recent headlines in the mainstream media, you’d be forgiven for thinking that we’re all staying at home and no longer going out to pubs, bars and restaurants. As the cost-of-living crisis grips the nation, we’re all entertaining at home and spending more time sat on our sofas thanks to new seasons of TV shows such as Succession and Ted Lasso. Thankfully, the reality is very different, and there’s a need to look beyond the lazy headlines to really understand what’s happening in terms of customer behaviour.

Hospitality has faced unprecedented challenges in the last few years – from the pandemic, with its periods of enforced closure, trading restrictions and general uncertainty, to the cost-of-living crisis that we’re currently facing. Along the way there’s certainly been some bizarre moments, such as the debates over whether a sausage roll could be classed as a substantial meal. I’m sure most of us will hope the challenges of the pandemic years are firmly confined to the history books, but it’s worth taking a moment to reflect on what’s changed since those pre-covid days and to what extent the world we’re living in now is genuinely different. 

Out of necessity, the use of technology accelerated rapidly, with employees leaving their offices and adopting systems such as Microsoft Teams, with enforced working from home demonstrating that many roles could be fulfilled just as effectively remotely rather than always being based in a traditional office environment. Delivery services saw a rapid rise, including the phenomenal growth of Amazon for anything and everything that you could possibly ever want to buy from physical shops, while delivery aggregators such as Deliveroo, Just Eat and UberEats all experienced significant sales growth as we opted for the convenience of eating in when going out wasn’t an option.

When pubs, bars and restaurants reopened and were legally required to offer table service, technology was a key part of the solution, with order-and-pay apps proliferating and the unexpected renaissance of the QR code. In terms of drinks choices, pubs, bars and restaurants saw a huge shift in their drink sales mix, with premiumisation trends accelerating and categories such as world lager enjoying meteoric growth, while cocktails, shots and bombs all enjoyed a significant upturn in sales. 

Many of the changes that happened during the pandemic can be regarded as “accelerated trends”, and I would see all the examples outlined above sitting under this category. However, it’s fair to say that there’s subsequently been a degree of normalisation at play, with things settling down but continuing to trend ahead of pre-pandemic levels. Many of us have returned to working in offices, but hybrid working arrangements are now far more common than they were previously. Amazon delivery vans are ubiquitous on our streets, but their sales softened in 2022 as life returned to “normal”, while remaining way ahead of pre-pandemic levels. For food delivery we see a similar pattern, with data from our HDI panel data for the 12 weeks ending 18 April 2023, tracking the debit and credit card spending of 10.2 million unique customers, showing that delivery now represents nearly £12 in every £100 spent in hospitality, up from just over £6.50 per £100 pre-pandemic. 

In pubs, bars and restaurants, order-and-pay apps and QR code-based ordering systems are now far more readily available than pre-pandemic, but their usage has dropped off markedly. Many people like the convenience of being able to order and pay from their table without having to queue at the bar or wait for table service, but the ritual of ordering at the bar is something that many of us love. When it comes to drinks choices, there’s been an expected slowdown in cocktails, shots and bombs sales, but premium choices are still very much the order of the day, even in the midst of a cost-of-living crisis, as demonstrated by the continued phenomenal growth of world lager brands like Madri Excepcional and Birra Moretti. 

Reflecting on the last few years, it’s clear to see that there has been lots of changes, but in many respects, not much has changed. We may currently be facing some significant headwinds, but if we can take anything from the last few years, it’s that we’re social beings and have an innate desire to want to spend time with others. This is where hospitality well and truly comes into its own, delivering experiences that you simply cannot get at home. Let’s look beyond the headlines, properly understand how customer behaviour is changing and focus on how we can ensure hospitality continues to give people reasons to visit.

Embracing the changing times

If there were any lessons learnt from the pandemic, it’s that the hospitality industry is more than capable of making improvements to customer experiences, and will be more than capable of ensuring these expectations from customers are met again throughout current and future challenges. Customer behaviours are not static; they evolve with societal, technological, and economic changes.

LSG Purchasing is proud of its association with innovative and fresh-thinking operators and supporters of the UK independent hospitality sector. If you want to take your business to the next level and excel through difficult times, give us a call to learn more about what we can do for you. 

Mark Bentley is the business development director of HDI and can be reached via hello@hdinsights.com.