Several restaurants in London have managed to increase average customer spend and have announced expansion plants. They tell WLC how they’ve managed to succeed in such torrid times for the industry.
Michael Sager, owner of the two Sager + Wilde wine bars and Fare in Old Street, confesses that he’s still blown away by the support he’s received from his customers.
His core Sager + Wilde sites, Hackney Road and Paradise Row, are now trading in line with last year’s figures and the average spend is up.
“We were worried that people would spend less because they’ve been buying much more in retail, but that’s not true,” he told Wine List Confidential.
With a simple and affordable Italian-themed menu, and a cash rather than percentage margin on wine sales, Sager said that average spend has always been relatively low. However, he has seen an uptick post-lockdown.
“Pre-Covid, average spend at Paradise Row was £32 per head, but now it’s £37 or £38,” he said.
Virgilio Gennaro, wine director of Michelin-starred Italian restaurant Locanda Locatelli, said that increased average spending is helping to mitigate the reduction in diner numbers.
“We are managing to increase the average spend per person, and for the month of July we had an increase of 14% on wine and 76% on all other drinks,” he said. “Our drink sales mix is geared much more towards wine, so we had an overall 24% increase on total drinks spending per person compared to last year.”
Like many restaurants, Locanda Locatelli has reduced the number of services it offers from 14 down to five. Compared to last year, covers are down 30%, “mainly due to social distancing rules”.
However, due to increased customer spending, total drinks sales are down by only 13%, less than half the shortfall in covers.
Reasons for success
Asked why spending was increasing, Sager said the nature of his sites has helped, with Paradise Row located in a railway arch with a high ceiling and an outdoor terrace.
He also stressed the importance of “value perception”. “Our cheapest glass of wine starts at £5 and beer at £4.50. You have to make sure everything is as good value as it can be,” he said, noting that his 5-7pm daily deal of £10 for a drink and a bowl of pasta attracts diners and allows him to turn tables fast.
“Even pre-Covid we were never at capacity if I’m honest, no-one in London is except the really small places,” he added. Sager said he believes in the importance of having multiple sittings in one evening.
“If you were to find a way to incentivise your customers to come through the door at 5pm and leave at 7:30pm, and then encourage later sittings, it’s possible,” he said. “Most places don’t want to open at 5pm, it means extra costs as staff have to be in earlier, but for me, now is the time you really have to diversify your offering. If there’s money to be made at 5pm, then you have a responsibility as a business to try and take it.”
Having a large mailing list and adopting a personal and honest approach has also been key.
“We’ve just been very transparent about our communication and what we’re doing, but it’s still beyond me why people have been so supportive,” Sager mused.
The hybrid model
As restaurants closed in March, some decided to re-open as shops, selling produce from their suppliers to generate some much-needed income.
For Alexandre Bal, co-owner and director of shop-cum-wine bar and restaurant Authentique, this was something he was already familiar with.
“As we have a hybrid structure, it was fairly easy for us to transition to being only a shop,” he said.
The site was re-designed in line with health and safety parameters and the team put together an extensive delivery offering which included wine, cheese, charcuterie, breads, cooked meals and pastries as well as essential products like flour, eggs and milk. The retail side of the business went from constituting 30% of sales to being responsible for all of its income.
Like Sager, Bal stressed the importance of effective communication.
“We started sending weekly newsletters to our customers (before it was monthly) with an updated menu and new products we kept sourcing from France or crafting in the kitchen,” he said. “We also posted on Instagram daily and advertised in-store with posters and our blackboard about our new products and services.”
Authentique’s bar has now reopened three days a week and Bal hopes to offer the full kitchen menu and wine list every day from September.
He has just taken on a new member of staff in order to help set up an e-commerce site that should be operational within six to eight weeks. The team is also planning to open a second site, a French bakery, wine and food shop in November this year.
Sager likewise has plans to expand his business. Based in both Paris and London, he has decided to launch his own wine import company next month. He will buy directly from wineries in Europe and will sell to retailers, bars and restaurants in the UK, as well as to his own customers through his website.
Despite the success of these businesses, their future remains uncertain.
Sager is concerned about the impact of the end of furloughing and also the balance of sales during August as a result of the Eat Out to Help Out scheme.
“It’s absurd, we’ve seen bookings go up massively in the last three days due to the scheme,” he said. “On a Tuesday we’re taking what we would normally on a Thursday. That’s cool, but I want to see what our Saturday looks like, because maybe the people that would have gone out and smashed it on a Saturday are now coming on a Tuesday.”
He confirmed that sales dipped yesterday, stating “Thursday is quiet now”.
However, apart from his dislike of the ubiquity of large chains, he said that UK hospitality “is not broken”.
“There’s been some backlash in the press recently – people are miffed about the hospitality sector getting a bailout. You can’t compare it to banks getting bailouts in 2008, this is just not direct money coming in, it’s 13 days of people getting a discount,” he added.