70% of hospitality businesses fail.
That statistic scares the hell out of most new hospitality businesses – every new restaurant, coffee shop, and hotel has to face it when they dare to presume that people would want to go there. Customers are extremely fickle, and even large players aren’t safe from the changes in customer taste.
Daniel Spinath is one man who’s played those odds, and won. He’s the CEO of Crepeaffaire, which today boasts 24 locations across Europe and the Middle East. Daniel has also gone on to found a ready-to-consume cocktail business and a hospitality venture fund – so he’s cracked it.
I wanted to understand the difference between successful and failing food businesses.
Business and pleasure
I asked Daniel to cast his mind back to the start of Crepeaffaire.
‘I think it was just after 9/11 when the idea came up [for Crepeaffaire]’ he began. ‘I grew up with crepes, holidays, associations, the South of France… and had a very strong strategy and consumer marketing background.’
I realised that Daniel spoke ambidextrously. On the one hand, he was obviously romantically invested in his project. You go and study hospitality in Switzerland, which he had, because you believe in all that stuff – in commitment to excellence in service and food. On the other, he slipped into corporate vernacular from his days as a management consultant – sometimes mid-sentence.
‘It was around that time, I was thinking about whether I should not do something real instead of being a corporate slave,’ said Daniel. ‘And since my first love was hospitality and food, that would be the right way to go… if only I had the right idea to exploit.’
And with crepes, ‘Wow. A product that I like, that people love, and generally it’s a scalable product, people know what it is – but there’s no real branded or systematic concept out there.’
If you’ve not been, Crepeaffaire is a branded crepe diner where you can buy various crepes in the categories of sweet, savoury, or vegan – and a crepe and a coffee will set you back around £8.00. It is branded and systematic in other words. It’s closer to Starbucks than an artisanal coffee shop, and Daniel has even cited Howard Schultz as among his influences.
‘Basically,’ said Daniel, ‘I think what we’ve done successfully, is clearly positioning the product as an envelope which you can fill with different things and you can localise. It’s not just your sweet indulgence, it also becomes a clear meal proposition… we have been very successful in tapping into that by saying, “Okay, somebody wants a Mexican crepe. We’ll make them a Mexican crepe.” “Why not do the Indian crepe?”
‘I think that’s become sustainable not just by getting into sudden trends, but basically looking at the underlying point of what people want.’
‘One, crepes have been around for a long time. Two, people understand and know crepes. Three, the product itself is very versatile as long as you “steal” from other categories and don’t make it too much of a trendy kind of thing as you’re positioning it. If you are going to execute it well, it is sustainable.’
A Mexican crepe from crepeaffaire contains marinated chicken, grains, quinoa, soured cream, salsa, cheese, and chillies. He had used the word “sustainable”, but to me, that sounded like it could be a novelty. I asked him what he meant by a “trend”, and how he distinguished between that and timelessly good food.
‘At the time, frozen yoghurt was seen as the thing that was just all over the place. It worked in California – so it was going to work everywhere. And everybody likes ice cream, [so] everybody likes yoghurt.’
‘And it basically has been dying a relatively slow, slow death. It’s sometimes very difficult to make that call. I think the key thing is to understand how people associate, what people associate the product with. Learn from how the product has developed in maybe another geography.’
‘People’ insisted Daniel, ‘want something which is good, good value, quick, easy, on-the-go. They want something which is wholesome, and that’s very important to me. From day one we have been using great quality ingredients. On flour, we now have a very successful gluten free business, vegan.’
‘[The crepe] was basically always seen as a treat, an indulgent kind of product that people love. So if you earn the reputation, the right brand, and the right product – it will work, but might just work only short term, because it’s another trend and then it’s over.’
Why do food brands die?
I wanted to turn Daniel’s attention to what went wrong with many businesses. At the minute, there are some high profile “casual dining” casualties – in particular, the Jamie Oliver restaurant chain. It felt like a booming category of eatery was disappearing overnight.
‘I think that people do get tired of brands. They [can] feel that something is milked too much. Jamie Oliver is a great example of a great guy who was extremely media savvy, who’s done a lot of good things for restaurants generally, but Jamie’s Italian felt kind of pedestrian… and people become more and more, “oh yeah, just another brand.”
‘Some of these concepts are just tired. It’s not particularly quick. The value is okay but it’s not particularly exciting. Is there a real level of convenience there to make up for that? No.’
‘McDonald’s on the other hand does it extremely well. They don’t try to pretend to be somebody they are not. It’s like, “No, we do these burgers,” and people don’t get tired of McDonald’s. They were, but they relaunched themselves extremely well.’
‘I think this is where we see street food businesses doing quite well. It’s fresh, [it’s] new, [it’s] variety, some of it is sustainable… you need to continuously be on the forefront in order to make it happen. It’s not just on the product side, it’s also on ordering, speed, your décor, your music. Standing still is very bad in this business.’
Is the way people eat food changing?
‘It is changing. You don’t have the distinct breakfast, lunch, dinner, moments anymore. I mean people eat all through the day. They are a lot more demanding nowadays about quality than they were like 15, 20 years ago in this country. They are a lot more interested in the origin of products, transparency, and speed.’
Why companies succeed
So what had Crepeaffaire done right?
‘I think the positioning of crepes, not just being this one off or once a month type of sweet indulgent snack, to it becoming a savoury meal which has worked, has resonated’ he said.
‘We still made a lot of mistakes, but we are learning from them and they are not irreversible, so this is how it took off. First originally in London and then outside of London and now we are a national player.’
And what was the biggest mistake he personally had made?
‘It’s mainly been around euphoria after you have been very successful on something, and all of a sudden you think you can duplicate it somewhere else without putting in the painstaking location research it needs… which means really understanding consumer behaviour, numbers without making too quick a decision.’
‘Consumer behavior has changed enormously since mobile phones and social media has come into play. And it has an enormous effect on the mobility of people and the way they consume. And I think that’s going to continue.’
I asked Daniel what were some signs of a company he knew would be successful.
‘Aside from the product and whether the product is known or not known, I think the starting point is always first how relevant is the product? Very often I see proposals being pitched, with the mention, “Oh this is unique.” Uniqueness is great, but uniqueness is not a benefit in its own right. It needs to be relevant.’
What did he mean by relevance?
‘Meaning that people see it as there is a need for it, there is a want for it. Whether it’s in food or anything else, it’s basically just, “Hey, this addresses a pain that I have,” rather than, “What the hell am I going to do with this?” And it’s very difficult sometimes, particularly with new product ranges, to see it unless you start doing a bit of testing. I would never invest in something which has not already been somewhat gently tested or reviewed.’
‘Secondly, it’s the team behind it. What’s their track record? What’s their level of enthusiasm? What does the business plan look like? Is it all about the uniqueness and the sexiness of this whole thing which is just going to create so much social media buzz that it’s just going to work? No, that doesn’t work. They need to have a very sensible business plan behind it. Proof of concept and the team and the business plan behind it.’
‘The perceived entry barrier into this business is relatively low, so it’s kind of like, “Okay, well I’ve got the money, how difficult can it be to… I’ve got a friend who’s a graphic designer and I know somebody who’s a chef, so how hard is it to do this?”
Well obviously it is difficult, because you [need] to create a concept. So yes, therefore you will see a lot of concepts come and go. And a lot of people who were bankers, say, “Okay you know, let me do this because it’s going to be cool and I can make it work.”
Finally, did Daniel have any advice for people considering having a go at launching a hospitality venture?
‘Think before you leave your corporate job. Seriously… most people who start a business like mine, which is kind of creating a new category. It is… to be honest with you, I thought at the time it was a rational exercise, and most people who do it, they think it is. It’s not. If you take the risk, if you risk weigh it, it’s suicide.’
‘If you are in a good job… you need to know yourself very well. Can I actually do this? Going away from a big corporate job into doing your own thing.’
‘Do I have the financial reserves to do it if it goes wrong? Do I have the mental kind of power to do it? Basically, a big think. You need to be very, very, very convinced about what it is you want to do, and have thought a lot about the things you give up before you do it.’