Why we must keep the consumer on our side

11 January 2001
Why we must keep the consumer on our side

Simon King is the remarkable waiter who last year won the Young Chef Young Waiter contest at which Anton Mosimann, Jennifer Sharpe and myself were judges. London's Ritz hotel - where Simon worked - prompted an interesting discussion at our table.

Some months earlier, I had been invited to what was my first Ritz breakfast. Curiously, a Ritz breakfast felt more indulgent than the Ritz dinners I had previously experienced. But what to make of the jaw-dropping breakfast prices? Continental breakfast was priced £18.50, English breakfast £22.50, and eggs Benedict £23.50.

How, I wondered, could it get away with it? Then it hit me. For some diners, a numbingly outrageous tab is part of the attraction. Why else would Ian Schrager's achingly hip new Spoon restaurant at London's Sanderson hotel be packing them in at £125-plus per head?

To an ex-New Yorker such as myself (who loathes paying full retail prices), British consumers have always seemed gullible. They sheepishly pay over the odds for almost everything - cars, phone bills, restaurant meals, you name it. However, with encouragement from the media, consumers are beginning to fight back. Banks have recently cut back cash-machine charges; car manufacturers are stuck with huge unsold inventories; and we all know about the recent petrol strike. After decades of lethargy, what is driving this new consumer power?

The Internet, I suspect, is playing a big role. Clicking a mouse now makes prices charged the world over comparable with those in Britain. And the growth in Britons travelling abroad has much the same effect. Manufacturers and retailers in this country are now less able (or likely) to act as kings of the jungle and set prices with impunity. One can sense the power shift from the price-setters' greed to the customers' need.

Should we as caterers be worried? Are we soon going to see the harsh spotlight of consumer pressure directed at us? I doubt it, because we have for some years been responding intelligently to that pressure.

Evidence, at least in London, shows that customers are increasingly prepared to pay premium prices. Who would have been prepared, as recently as a decade ago, to pay more than 80p for a sandwich, or 40p for a coffee, both of which would all too often have been of questionable quality? Yet customers these days think nothing of paying up to £4 for a sandwich, and £2 for a coffee. And why? Significantly improved products, ambience and service. In short, packaging.

The British, at least, are learning that when it comes to food and service, quality comes at a price.

In spite of this, the public still wants value for money. Increasingly, they are eschewing expensive Michelin-starred restaurants that are now tripping over each other to hand back their stars. Instead, customers are looking for less-exclusive, livelier and affordable dining experiences. This has forced many restaurateurs to restructure their menus and pricing policies.

In reality, there isn't that much room for manoeuvre. Britain is a small island where property is in short supply. As a result, restaurant rents and building costs are - and will remain - higher than overseas, and in turn force us to charge more than our foreign counterparts.

Occasionally, journalists try to portray our industry as piratical, with misleading focus on the mark-ups, for example, on mineral water and wine. But some high-profile restaurateurs have publicly and successfully defended the industry's position.

Ours is high-risk, low-yield business where even seemingly busy restaurants may not always be covering their costs. Some of the public are beginning to understand this, and for that reason and because we have learnt to better merchandise our products, customers are not likely to regard us as profiteering - provided we offer a good all-round package.

That is why I think that our industry - for the most part - has its house in order and has little to fear from the new consumer awakening.

What to make, then, of the £23 breakfast and the £125 dinner? I guess that there will always be a market for rich lemming-like fools.

Michael Gottlieb is president of the Restaurant Association and proprietor of Café Spice restaurants and Pencom (Service That Sells) UK

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