Elevating Spend Per Head in a Downturn

Generating more spend per head at a time when consumers are feeling the squeeze is a challenge. This article looks at how a handful of hospitality businesses have successfully navigated this, each in their own way. From a restaurant that targeted a new audience and doubled its spend per head to a holiday park that was able to capture the imagination of its younger guests and remove friction.

Inflation tends to make consumers more discerning. To soften the effect of having less to spend, they will often prioritise what matters to them most. Some may spend less on big-ticket items but more on experiences that bring them joy and allow them quality time with friends and family. Demand for affordable luxury often increases during periods of economic hardship. This is both an emotional and a practical response. For hospitality operators, it is a challenge and an opportunity. On the one hand, their guests have become less forgiving, and the operators themselves are feeling squeezed. On the other, the underlying demand remains strong.

Our environment has a significant influence over how we feel, think, and behave, and therefore where and how much we spend. Whenever I look out of the window of my office, which overlooks Torquay harbour, I can clearly see its effect on consumer behaviour. When the sun is shining, customers appear and the bars and restaurants quickly fill up. On a grey day, however, it is a different story. As well as reinforcing the importance of making hay while the sun shines, this demonstrates how deeply our surroundings affect us.

The Opening Sequence

As guests tend to visit out of choice, most are open to being won over by an experience. The impression gained during the opening sequence of an experience sets an expectation of quality, which influences willingness to spend. If the interior design has a feel-good factor, guests are more likely to feel optimistic about the overall experience and conclude that it is worth pushing the boat out. The key is that, while the environment has done the priming, the guest has reached their own conclusion. In general, people prefer to follow their own judgement

While you only get one chance to make a first impression, it is possible to create several first impressions. Last year, we were invited by a holiday park operator to redesign and refurbish the entrance and interior of a gaming arcade within one of its resorts. We would design and build the arcade, and the owner would then operate it for a season to measure its performance.

My research for the project included looking at arcades across the region and further afield, and I found some to be decidedly average. It was as if the focus had been on the machines while less thought had gone into the exterior and interior design, and the overall experience. Some looked like an afterthought and were nothing more than a room filled with machines. I concluded that, to feed into the imagination of younger guests, the idea of entering the arcade had to become more compelling. Furthermore, once inside, it needed to feel more exhilarating, immersive, and fun.

Our refurbishment interior designers got to work, and the result was an environment that felt more akin to entering a space capsule full of futuristic challenges and adventures than a room full of coin-operated machines. Unfortunately for the parents, a cashless system was also introduced, which encouraged a higher minimum spend. Moreover, by removing the bump down to earth of having to find change between games, the experience became more free-flowing and fun. At least for the children!

At the end of the first season, we were informed that the newly refurbished arcade was the only one, across an estate of thirteen holiday park sites, to generate both revenue and profit growth. Furthermore, it had overshot its targets by a country mile. As a result, it would be rolled out across the holiday park estate. The best results are often achieved when several changes that reinforce one another are brought in together. The results can then skyrocket. This example also demonstrates that when the experience is right, price becomes less important

Magnitude of Change

There is often a direct correlation between magnitude of change and commercial impact. Earlier this year, we worked with a restaurant that had, over the course of forty years, built up a very loyal following. However, the business faced a predicament: the majority of its patrons were reaching retirement age. The restaurant had an affluent student population on its doorstep and yet it was not attracting a young crowd. To secure its future, the business needed to attract a broader demographic while keeping all restaurant guests happy and generating more income. Furthermore, it needed to achieve all of this through refurbishment, without adding any space. It was a tall order

The first thing we noted was how this restaurant was already doing something quite exceptional: some guests were still regulars after 40 years. However, when we looked at how the space had been designed, we noticed a mismatch: it was too transactional. Even though the restaurant had built strong personal relationships with its guests, the environment was holding it back. Prior to this, we had witnessed how some independent establishments nearby had become popular with younger guests. These places tended to make each visit feel like an occasion, even if that was just a casual coffee and dessert. The restaurant was perfectly positioned to attract this demographic; it just needed to create the right experience

We then redesigned and refurbished the front of house by adding a service station to improve customer flow, along with a new bar and revised seating layout. These changes transformed how guests interacted with the space and each other, and created a far more relaxed yet premium environment. Aesthetics were carefully chosen to attract younger customers while giving patrons a sense of the familiar with a contemporary twist. It was a delicate balance: bold enough for people to notice a difference, without losing its essence

The real test came when some of the restaurant’s most loyal customers visited. They absolutely loved the restaurant refurbishment and were delighted to see their favourite restaurant enter a new chapter. The second test was passed when the refurbished restaurant became noticeably busier and younger guests began spilling in for slow brunches and evenings out with friends. The final test came when the owners reported that spend per head had doubled. Guests no longer saw it as a restaurant that just served a functional purpose. It had become a place to casually socialise, drink, dine, and celebrate at different times of the day and evening. Although the footprint remained the same, the environment had taken on an entirely different meaning.

Every Venue is Unique

Every venue is unique and the best approach for one is rarely the same for another.

In some cases, the greatest impact can be achieved by changing things that guests do not see. For example, we recently helped a food and beverage operator to achieve its best year yet by improving the back-of-house environment and redesigning the kitchen layout. This led to a faster turnaround time on food. Prior to this, longer wait times had led to a fall-off in spend per head during periods of high demand. As well as boosting productivity and throughput, these changes helped the kitchen to maintain consistently high standards. In turn, this encouraged a higher spend per head and more repeat business.

In other cases, our work involves discouraging certain behaviours. For example, if visitors are making excessive use of free Wi-Fi or consuming their own food, the space can be redesigned and refurbished to feel more curated and less functional. Sightlines can also be introduced to reduce the feeling of anonymity.

However, all of our projects have a common purpose: to help hospitality businesses perform at their very best. We achieve this through better design, which enables better experiences: a better experience for guests and a better experience for the operator. Both are essential for long-term success.

How we can help

Our goal is simple: to create environments that guests love and to enable hospitality businesses to thrive. We start with strategy, as it lays the foundation for and informs high-quality design and capital investment ideas. From there, we identify the areas where the most value can be realised, conduct feasibility and impact assessments, and develop plans and design concepts; providing operators with all of the information they need to make informed decisions. If a plan is agreed upon, we can then implement it either as a turnkey design-and-build service or by working within an existing supply chain. The founders of Gutxi are; Mark Green who brings over 25 years of hospitality and architectural design expertise, and myself John Gaughan, and I bring over 25 years of business strategy and business development experience. As a team we offer a unique blend of creative design and commercial experience. Behind us is a team of engineers, designers, fit-out project managers, and consultants with a broad range of specialist skills.

We design and build environments for leisure, sports and entertainment, social eating and drinking, quick-service dining and takeaways, competitive socialising as well as general resort facilities. Our customers include leading holiday park and resort operators as well as a host of restaurant, bar, entertainment, and leisure resort operators.