If there’s one thing hospitality business owners can all agree on, it’s that the industry is going through a challenging period.
A recent report from CreditorWatch predicts that 1 in 13 Australian hospitality businesses are facing significant risk. The pressures of inflation and the cost-of-living crisis have meant consumers are cutting back on discretionary spending, and with supply costs continuing to rise, venue owners are facing obstacles with revenue management.
How can you navigate the current issues in the hospitality industry? How can you make sense of the macro trends in hospitality and apply them specifically to your business? It might be time to use data and insight to support that gut feeling you have about your crucial next step.
Distil’s agency director Naomi Ross spoke with Andrew Knox from Golden Thread on the benefits of conducting market research to gain a competitive advantage through an informed perspective on consumer behaviour, preferences, and trends.
But firstly, what is market research? It’s a review of your customer, the category, and the competition through a tailored research approach. As Andrew explains, “the outcomes of that research will give you a really clear picture of what's going on, and that will help guide your decision making.”
Generally, market research can be boiled down to two types: quantitative (numbers-based data and surveys) and qualitative (interviews and focus groups). These research methods are distinct but are often required in tandem to fully gauge hospitality management needs.
As Andrew describes, initial qual research will inform your approach to quant data collection: “You talk to people and get a feel for what’s happening...You then go away and design a survey that will tell you how big those ideas are.”
He points out that relatively low profit margins in the hospitality sector, in comparison to other industries, have resulted in a reluctance to invest in market research. But with competition at an all-time high, data-driven decisions based on customer insight can give you an edge.
“One little nugget of customer insight can be the difference between surviving and thriving.”
Andrew Knox, Golden Thread
Depending on your scope, allowing four to eight weeks for a research project to run its course will garner the best results and enable recruitment specialists to track down the right participants. It’s important to remember that a larger sample size increases the likelihood of your data accurately representing the broader market.
Naomi asked Andrew about concerns a hospitality business might have about return on investment, particularly in the current socio-economic climate. He compares the work done by Golden Thread to the analogy of guiding a ship – small changes in course can lead to significant changes in destination over time.
“It’s a small investment to get it right...a subtle change [can make] a huge difference in the long term.”
Andrew went on to describe the importance of independent consultation to obtain an objective and balanced perspective, particularly when internal opinions aren’t unified.
“We’re living in a time of echo chambers, so a lot of operators that I speak to probably think they are doing their due diligence and speaking to customers. But more and more these days, they’re actually just speaking to their own network.”
Check out bloopers from this interview on our TikTok!
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