How Startups Can Survive In the Fickle Food And Drink Industry

Whether you are opening a restaurant, launching a cocktail bar, or starting a food and drink retail business, there’s no question that the industry sector you’ve chosen is one of the toughest to survive in. Amid fierce competition, fickle customers and fluctuating trends, how do startups survive?

In the two years since he opened his cocktail bar Liquor Lab, entrepreneur Matt Taylor’s sole aim has been to make it the ‘go to’ place for top quality cocktails. Situated on a lively leisure development in Telford, it is surrounded by numerous large chain competitors. While that naturally draws footfall, smaller independent venues like Taylor’s have to give potential customers a reason to pick them over the rest.

He says: “All the competitor chains serving cocktails rely heavily on their food menu to meet the high overheads; rent, rates etc., and the cocktails end up more of an afterthought. Instead of following convention and trying do everything, we focused on serve great cocktails and doing it better than anyone else.”

Being small also has its competitive advantage when it comes to innovation. Multi-site large chains take longer to implement new changes.

“We’re constantly looking at new ideas and ways to improve,” he says. “Serving a ‘cocktail of the week’ allows us to experiment with ideas, find out what our customers really like and keep our offering fresh and appealing.”

It is a challenging market for the industry, however over the past six months Liquor Lab has achieved 7% growth in like-for-like sales on the previous year. “In the future there may be an opportunity to adapt the business model to open in another location,” says Taylor.

When North Street Bistro, based in Burnham Market, Norfolk, opened in 2017 it was a café by day and a restaurant by night. But within a couple of months owners Holly Wells and Dan Fancett were scaling down the lunchtime services and opening more evenings to reflect customer demand.

“Focusing on dinner service allowed us to realise massive goals such as being included in the Michelin Guide and Good Food Guide,” says Wells. “That’s a great achievement that also helps to publicise your restaurant.”

Within a year of opening competition had also started to increase with two new restaurants opening nearby. Wells says they simply stayed focused on their guests and improving their own offering.

“You have to know your brand and what you are good at to differentiate yourself from other places,” she says. “Dan is an experienced chef, and our niche is to create consistency in our guests’ experience and offer a personal touch in an intimate dining setting.”

Some restaurants have survived by following and adapting to changing trends in food and dining. But as Wells points out, this is also an industry where classic French cooking techniques have stood the test of time and never go out of style.

“By avoiding dining trends and consumer fads we will avoid the peaks and troughs of popularity that we see in other areas of the industry,” she says.

Food and drink startups in the retail space are competing in a market dominated by the major multiples. But not everyone chooses to go that route, and many brands are selling direct to consumers, offering subscription models, and even selling via social media.

The UK tea market has been growing, partly the result of people becoming more aware of the health benefits, especially green tea and infusions. Founded in 2012 Bird & Blend Tea Co. creates and sells a range of blends of tea through its seven retail stores and  its website. Founder and managing director Mike Turner says their success is the result of their focus on customer experience.

He says: “The tea itself is only part of it. Every aspect of our customer interactions forms part of our product offering. That means we don’t have to worry about competitors that often focus on specialist areas of tea.”

The company has undergone rapid growth, doubling in size every year for the first four years. Any business at the leading edge of its industry can expect to have companies striving to emulate their product and service strategy on their tail.

“We have to keep creating new products to maintain the excitement and momentum, and now we’re getting our customers involved in that,” says Turner. “We’re also trialling AI to improve the online experience and give in store customers new ways of getting hands on with the products.”

Baking, particularly hand crafted breads, is also enjoying resurgence in the UK. In 2014, after completing a bakery course Liz Wilson started selling bread to a few neighbours in her hometown of Fulham in London. As sales quickly increased she launched her micro bakery Ma Baker and teaching bread-making classes in her kitchen.

Her breads are made with organic ingredients and no artificial additives and have won numerous awards, most recently two Great Taste Awards. Over the last 12 months Wilson has seen turnover and profit double, and competition in the sector start to grow.

She says: “Today people are much more interested in what is in their breads and how it is made, and are prepared to pay more for a quality product. Competition is good for business. It makes me stay at the top of my game, creating delicious breads that ensure customer loyalty.”

Competition, and added uncertainty from Brexit aside, it seems that now is a great time to be in the food and beverage industry, as Ben Little, founder and director of innovation consultancy Fearlessly Frank, explains.

“From emerging new technology to major consumer trends such as veganism, it’s clear that consumers are seeking a new food order,” he says. “Sugar, fat and old school brands are out, soon to be replaced by tech-enabled smarter eating. There’s also a growing movement to better understand the provenance of what we eat. It’s a revolution.”

[“source=forbes”]