It's a people business so get the right people

One of the clichés commonly expressed in the drinks and hospitality business is: "Of course, we are essentially a people business." It is a statement which is often repeated by people at all levels of the industry, but is it true? And if it is, is the industry any different from most other businesses?

I believe it is true and the hospitality industry is different from other sectors in that it remains highly labour-intensive and does involve an abnormally high level of people management, whether it be of the customers or the staff.

Unlike a factory or even a shop, in a hotel, pub or restaurant, not only are you inviting your customers to buy your product on the platform of quality and value, you are also providing him or her with a service that needs to be appropriate, caring and, at times, personalised.

In recognition of the strong "people" aspect of their business, the large chains of hotels, managed pubs and branded restaurants are investing more time and money training their staff in customer service skills and hospitality management than ever before.

Training

The education institutions are also responding to the increased demand for training. More certified qualifications are being introduced by the institutes of the industry, including the HCIMA and the British Institute of Innkeeping. Universities and colleges are introducing degree courses relevant to the industry.

Improvements in technology have helped us run our businesses more efficiently, but they do not take away the fact that customers still require regular face-to-face contact with those caring for them.

High-quality customer care is something that all pubs have to be committed to and skilled at, and I now want to consider this aspect from the perspective of the new pub companies, especially those involved in the operation of leased and tenanted estates.

Historically, these smaller pubs were located close to their customer bases, and a high proportion of their business was from the sale of liquor. Bar games and live music provided the entertainment. If the licensee ran a well-controlled unit and operated within the law, he could expect fairly minimal interference from regulators such as the police, magistrates and environmental health officers.

The relatively low entry fee meant that there was always a steady flow of potential licensees for this style of operation, particularly from the semi-skilled/supervisory work force. Although many of these people were relatively untrained for working in a service industry, the role was less complex and the customers less demanding than today.

Most new pub companies are looking to obtain property where value can be increased at rates well ahead of ongoing inflation without significant expenditure by themselves. The only people who can add this value will be above-average licensees with more initial funds than their predecessors.

In seeking these licensees, pub companies also need to be aware of the changed market place in which their pubs now operate. No longer can the majority survive on liquor sales alone and, in the case of rural pubs, 50% of the business will be on sales of food.

Making profit from the sale of food requires different skills and controls. Greater marketing effort by the licensee is required to attract customers, and better hospitality skills among his or her staff are essential to ensure that customers stay loyal. This requires time and investment in training, by both the pub company and the licensee.

Fundamental

The "agreement" between the landlord and tenant is fundamental. It must offer both parties a good living. It must encourage loyalty and trust, and it should not need to be policed. The landlord must be able to demonstrate how he will keep his side of the bargain in terms of property management, competitively priced and well-branded products, training and promotional support.

The involvement and commitment of the pub company's local business manager will also be vital. The first years will be the most critical and the most difficult. But if the business is offering a good-quality product, it is surprising how quickly word of mouth will stimulate interest and further enquiries.

My concluding comment would be that a new pub company must make sure that it has a licensee recruitment strategy and process in place before it takes possession of its first group of pubs, and that the support team, facilities and resources can be called on quickly thereafter. Failure on either count will take many years to correct.