The Overlooked Market -
Why we should capitalise on business spending
Have you ever looked at a menu, or a wine list, and wondered who in their right mind would order that? Who orders the $300 steak? How many bottles of $750 champagne do they sell? You must have to be on an expense account to order that.
And that is exactly the point. Many successful restaurants have built their businesses around catering to their corporate clients. What’s more, the size of this market is much larger than you might imagine. However, when developers and landlords are looking to gauge the size of the F&B market, business spending is often an overlooked component.
This is a glaring error as business spending on Food and Hospitality is estimated to be in excess of $12 billion, or about 15% of the total F&B market. Whereas the overseas tourist market is concentrated in certain, well-known and well-defined areas, business spending is found all over the country. It has its own needs and demands and we will touch on several of those here.
Business spending, as defined by both the Tax Office and the Bureau of Statistics, is that expenditure which gets paid through a company’s accounts for the purpose of conducting business. Colleagues from the same office going out for lunch does not count. The office Christmas lunch does. So, too, does meeting a prospective client for a coffee or holding a quarterly sales meeting in a private dining room at a restaurant.
So much of creating and maintaining a successful business is marketing – establishing the position and brand you wish to create and show to the world. Where you take a potential client says as much about your business as any slide deck or brochure. Having a serious business meeting in an inappropriate venue can be as damaging to a commercial relationship as getting your pricing wrong.
In effect, for the time that you are out with a client or with out-of-area managers or at the company Christmas function, the restaurant’s brand becomes your brand. Hats and stars are wonderful achievements for chefs and restaurateurs as they recognise excellence in Food and Hospitality. One of the their overlooked but very important side effects is that they establish the chef/restaurant’s brand. Businesses want to associate themselves with other successful ventures.
For Hospitality venues, this transference is a very large part of their custom. Many highly rated restaurants would not be able to survive if it wasn’t for business spending.
It’s almost axiomatic to say that business spending often takes place during the week. For F&B outlets, however, this is vital piece of custom as it happens at times when there is little other demand. Tuesday lunch is not generally a busy part of the week for restaurateurs, however, it is prime time for business meetings. Furthermore, because the Tax Man picks up part of the check, spending per head for business gatherings is often much higher than it is for personal dining.
Not only do corporate clients want to be in places that make them look good, they then want those successful F&B brands to treat them as something special. That is the reason why so many successful restaurants have private dining rooms, or tables in the kitchen. Certainly, many foodies enjoy and seek out those experiences, but week in/week out, corporate clients are the ones who make the most use of those facilities. Furthermore, they are happy to pay for the privilege as, again, getting the top service/experience from a top F&B brand makes the corporate client look very good.
So to go back to the questions we posed at the top of this blog: Why do restaurants offer expensive dishes and lots of name wines at top prices? Because in the world of corporate marketing, it pays to buy them.