The Windsor Castle pub in London’s Notting Hill is a quintessential example of the classic English public house.
Dating back to 1835, the exposed ceiling beams, wood-panelled walls and snug benches reek of a cultural tradition as strong as those that surround its royal namesake.
The pub is also a business and has to compete with other licensed establishments (of which in London there are many) in a rapidly shrinking market.
It is a fine illustration of the sort of challenges that its owner, Mitchells & Butlers (M&B), is trying to meet in a complex but innovative way, using IT as an enabler to improve sales, profits and customer satisfaction.
I met M&B operations director Robin Young there, doing his rounds and meeting with one of the pub’s regular customers and some of the organisation’s regional staff.
Sales, profit and customer satisfaction is almost a mantra throughout the company and, accordingly, Young repeats the phrase often.
M&B began life as a part of the brewing giant Bass, he explains, before government regulations forced the brewer to divest itself of its portfolio of licenced premises.
Up until a few years ago, M&B had a much wider remit which also included nightclubs and hotels.
During a period of consolidation, the company decided to concentrate the casual dining market in response to rapidly declining alcohol sales across the industry.
The company now owns 1650 licenced premises across the UK which serve 425 million drinks and 125 million meals a year. It is a publicly listed FTSE 250 company with £1.8bn turnover and £300m a year profit.
Young maintains that, in terms of the number of sites, it is the number-one casual dining company in the UK, ahead even of burger giants McDonalds that comes in second.
Catering for all tastes
M&B’s market proposition is clearly very different from its nearest rival.
Where McDonalds has tried to re-create an identical customer experience in every restaurant, M&B has separated its offering out into 10 separate business units to cater for a mix of tastes.
Much of its pub estate has no chain-branding at all and sell on their individuality. Other branches are more obviously chains, such as the Toby Carvery, O’Neill’s and All Bar One brands.
The eclectic business model is probably only made possible with a central IT strategy to support it.
M&B has also streamlined its supply network, choosing to partner with one food logistics supplier, Brakes, and one drinks logistics supplier Tradeteam.
This approach has been copied in IT operations, with a big outsourcing contract being awarded to Fujitsu, explains Young.
Each of the 10 business units is headed up by a manager with P&L accountabilities. Each site is managed by staff as if they were running their own business.
The IT strategy supports this federation of control by allowing business units and individual premises to tailor their own business processes and offerings to the specific brand that caters for a particular sort of customer.
One of the key ways this strategy manifests itself is through the menu management system. Each business unit can devise their own menu from a recommended set of dishes for which the ingredients are sourced centrally through Brakes.
Different menus for 16 brands are developed in cycles each year.
M&B operates a newly deployed menu management system based on a Stibo application, stock and waste-and-labour platforms provided by RedPrairie and Torex’s point-of-sale applications (recently acquired by Micros).
“Our food development teams put together a dish, deploy the data on the automated menu platform and integrate the demands with suppliers through the GS1 bar code industry standards. Stock automatically depletes and is replenished through ordering via the logistics companies. Our technology journey is now starting to really deliver some fantastic efficiency and guest benefit,” he says.
Integrating all of the IT that supports these back-end business processes will allow the company to develop its policy of treating suppliers as partners.
“Our menu-creation guys put together a dish on their new automated system. We know automatically what to order off the Brakes catalogue. When the dish is cooked, the stock list is amended automatically,” says Young.
The next stage is to allow Brakes to make auto-drops using M&B data on stock usage, and restrict the manual ordering process to special dishes only.
It’s a way of enticing Brakes to share the financial risk on food stocks, which have a finite shelf-life and a possibility of wastage.
Young insists that rather than forcing each establishment to operate in the same way, the systems allow them to adapt their offering while enjoying the economies of scale and efficiencies of a large corporate, thereby getting a competitive advantage over other casual dining businesses.
The degree of autonomy is important, says Young, because the last two years have been characterised by a culture of central control as the company attempted to get its finances into an even keel.
Now this has been achieved, the corporate strategy has shifted to a more democratic culture.
Young’s own strategy is driven by a need to update the company’s IT infrastructure, which he says is sorely in need of a refresh to reflect developments in the casual dining industry.
The Fujitsu-hosted datacentre is a big part of that, as is re-cabling the pub estate which, looking around the Windsor Castle, is not a challenge that can be dismissed lightly.
This is the bedrock on which he hopes to build a better working environment for staff with a till replacement programme.
The new tills will have the facility to run training videos so that kitchen staff can be shown how to cook new dishes. It is key to reducing the menu refresh cycle from six months to eight weeks and it means menus can be easily swapped around if the weather changes suddenly.
“The staff are excited about this because for them, IT is just old and painful,” says Young.
Another infrastructure development is he addition of wi-fi throughout all the company’s sites.
Young believes it will add to the customer experience, even in olde-worlde inns like the Windsor Castle, but it will also open up choices for staff too.
The Bluetooth Chip and PIN terminals that waiting staff use to take bill payments don’t work perfectly in all the sites, especially the larger premises, so wi-fi connectivity should help that.
The company recognises the value of social networking and one of the company’s business units, Toby Restaurants, has over 330,000 fans on Facebook. With the wi-fi network in place, the company can engage with customers on-premise, giving them news about favourite products or collecting valuable feedback on customer satisfaction.