LOOK BACK TO SEE FORWARD

Age and perspective can be a wonderful thing. Take, for instance, a forty-five year observation of the changes that have swept through the foodservice industry. If you’ve only been around for a relatively short time you may not have a clear view of the big picture.

If I can take you back to the 60s and 70s you would have seen a vastly different hospitality industry than you see today. Most notably the mix between pubs and restaurants was quite different to what you see today; the ratios have changed substantially since then.

At the time our population was hovering around the 16 million mark — about 20% less than it is today — but there were about 75% less restaurants than today and about three times the number of pubs, mostly small and medium sized. The fast food industry was in its infancy and the café culture we see today was unheard of. In other words, the public, in search of a quick, cheap feed didn’t have many choices. ‘Modern’ pub bistros, with elaborate, extensive menu boards became the fashion and quickly became a goldmine for professional pub operators.

Below the market level of the new style bistro operators, there existed another, simpler level of pub operation, for want of a better name let’s call it the ‘workingman’s pub’. These served simpler, more traditional fare to their predominate customer base, tradesmen and contractors, who in the days before mobile phones used to meet at the pub to negotiate their next few weeks work. These places functioned as a kind of labour exchange, as well as a community meeting and dining place.

It’s around this time that both social and technological changes started to drive a rapid evolution in the market. Several key things happened within a short space of time: first, migration into Australia shifted from mainly Europe, to the Asian region and many of the migrant families, in the search for a reasonable income, started restaurants featuring their national cuisine. The number of restaurants in Australia started to explode.

On top of this change in migration patterns, the fast food industry arrived on our shores from overseas and the explosion of outlets gave our population another cheap dining choice. Pub bistro operators started to feel the heat, but things were still OK and everybody was still making money, so there was no clear reason to discard tried and true foodservice concepts.

Then, suddenly, mobile phones appeared in the 80s and the old workingman’s pub was belted for a six — the working man no longer had a need or much of an excuse to go to the pub. To compound this technological change, rigorous enforcement of drink-driving Laws and the emergence of graphic road safety advertising encouraged people to dine out closer to home, often at the new cheap ‘n’ cheerful (but still full service) ethnic restaurant around the corner or the fast food place that had sprung up on every major intersection.

During this time smaller pubs started to become an endangered species and we saw a rapid decline in their numbers. Larger volume pubs were able to insulate themselves by exercising bulk buying power and were able to compete on price for quite a while, but the margins were shrinking steadily as labour costs and ingredient prices rose, in response to the laws of supply and demand. Food production did not keep pace with community consumption forcing prices up and skilled staff were getting thin on the ground and demanding higher and higher salaries.

The revenue and profit made from gaming in the larger pubs often masked the decline on foodservice profitability and many operators slipped into a loss situation on their food, but failed to realise it because of accounting practices that did not correctly isolate the true costs involved in running their bistros. Some operators were even happy to admit that they were prepared to subsidise their food in order to attract gaming customers.

Meanwhile the number of competing restaurants and fast food businesses increased steadily and many of them had a competitive advantage by operating under different cost structures brought about by taking advantage of cash purchasing, lax taxation enforcement and the employment of cheap labour – either family members or other staff who, for various reasons were prepared to work for less than award pay rates. This made it possible to offer very attractive pricing while still making a decent margin.

A relatively small percentage of pub operators saw the writing on the wall and realised that they either had to radically change the way they operated, or face a slow agonising demise – so the ‘gastro pub’ came into prominence. Essentially, these are a hybrid between mid-level restaurant and pub-style operation, featuring full service and good, modern food in a more intimate and comfortable environment than their larger cousins. They have higher costs than a bistro operation but are able to offset this with higher pricing, at a similar level to the restaurants they compete with.

These gastro pubs often have the competitive advantage of a more interesting environment than the restaurants around them, plus the added facility of spacious bars and private dining and function rooms, and in some cases, entertainment. Their food can be of the highest standard.

Meanwhile the larger bistros who still crank out the ol’ favourites are feeling the pinch. Unless they do it really well they will inevitably lose market share, slowly but surely. They’re not cheap anymore, but too many feature uninspiring food, served by disinterested and poorly trained staff and they make you queue for everything.

If you don’t change, you’ll end up where you’re headed . . .

Tony Eldred, www.eldtrain.com.au

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