Interview

A chat with Paul - CEO of Aus Venue Co

Australia’s second largest hospitality group sees a 28% increase in average order using Mr Yum.

Our Co-Founder Adrian, sat down with Paul Waterson - CEO of Australian Venue Co. to chat about their journey & the rollout of Mr Yum table ordering across 150+ pubs Australia-wide. From Bearded hipsters to Elderflower cocktails, the two chat about all the important stuff. But seriously, if you want to learn how you can increase average spend, drive yield for certain products & improve the customer experience - this is for you.

  • Ease of online ordering and no longer having to wait in queues.
  • Better descriptions of cocktail ingredients and the translation option is vital for venues in tourist hotspots.
  • Much higher yield on products with good placement ie. at the top of the menu.
  • Not to cut labour costs, rather add value to the customer’s experience.
  • Increase in data to help manage the business, and know when a regular customer returns.

Adrian: Tell me a bit about AVC.

Paul: I'm a bit of an accidental publican, to be honest. We bought our first pub, back about 5 - 6 years ago, really just for a place to have a beer with a few mates, because, you know, every bloke wants to own a pub. It was a market that's really fragmented and hence we thought we'd try and buy a few more, and we did. We brought in a private equity firm called KKR as partners into the business. It’s grown through acquisitions and through building new pubs and greenfields and brownfield development.

Adrian: That’s great. It’s been a very quick journey. What sparked your interest in this on-premise table ordering initially. Before we metYou were already in that headspace, we didn’t bring that idea to you, you were already right there.

Paul: We’d been thinking about it for quite some time, it probably came from personal experience as a consumer as much as a publican. It’s the classic Friday night at the footy, at the Duke of Wellington, you want to get a couple of quick beers with your mates before you run to the MCG. You're sitting at a table, you're having a cracking yarn with your mates, the queue at the bar's 4 deep, and you think, "Well, who can be stuffed actually going up?" You leave the conversation, you don’t get that much time with your mates at the best of times. I thought, "Jeez, wouldn't it be great if there was a way you could actually just order your beer, and bring it to you?" 
And then we looked at how we could do it, we didn’t have any real solution. We knew the problem, what we wanted to do. Until we met you guys we weren’t quite sure on how to address the issue we had in the business.

Adrian: Yeah because it’s not easy to build.

Paul: You made it look easy *laughs*

Adrian: *laughs* Yeah, it might look like it from the outside.

Adrian: What has the uptake been as a percentage of revenue, pre-covid and then now over the covid period and beyond, in this ‘new normal’.

Paul: It's been fascinating to watch. We rolled out, I think our first 90 pubs in 10 or 12 weeks and the uptake between those venues was anywhere from 5% to as high as 32% or 33%. Since we've reopened, now we've got venues with 80% of the sales going through Mr Yum, which is pretty staggering.

Adrian: Why would you want it to go through Mr Yum?

Paul: First of all, we're getting a much higher average transaction value. So, it's about 28% higher than what we're getting when someone just goes up and orders over the bar. It’s the ‘do you want fries with that’ model and the suggestive selling that comes with the tool. I think it’s yield management as well. When we first rolled out the tool at Hopscotch, it was going pretty well, and I looked at the sales of Stone & Wood beer. The sales of Stone & Wood just went through the roof one week, and I could not work out, "Well, what the hell's going on with Stone & Wood sales?" And Stone & Wood is one of those beers for us that's not as high yielding as perhaps other beers, and so it wasn't a particular beer that we sell really hard. We went and looked at Mr Yum, and surely enough, it was the first beer on our actual menu. 

Adrian: At the top of the menu--

Paul: At the top of the menu. So we realised we've got a really untapped potential here of looking at how we can put the best-yielding beers and food higher up to try and drive that yield even further. So I think that's probably the average transaction uplift has been higher than we anticipated. The other thing is being able to offer personalisation. Being a big business with 170 pubs, it’s really hard for us to know the name of every punter that walks through the door.

Adrian: Impossible.

Paul: It’s Impossible. We really rely on the venue managers to have great relationships with their locals. This is a very early stage of knowing that 80% of your spend now in these pubs with such high uptake, we know the mobile number that that’s coming from. So we know when that mobile number goes into another pub and order from it we can walk up to them and say, ‘g’day Baza really good to see you mate you know he is your first furphy on us!’ That’s pretty staggering to someone who is like ‘mate I don’t know how you know me but you need a beer I like’. That builds that brand connectivity. I think the other thing is being able to provide personalisation, because you've got your bearded hipsters, they love the really detailed, really rich craft beers. If you can see that, we've got a new launch going on at another pub. You can invite them specifically, knowing that they've got a special interest in that type of beer.

Adrian: All those turtle-neck wearers, yeah.

Paul: Exactly, exactly.

Adrian: Is it worth it? How does the labour model work when you're actually adding an extra level of service now? Does that cost like a bunch extra?

Paul: We never looked at this as a way to save labour and I think that’s can be the misconception that you’re doing it to try and reduce it to the staffing level so we we started with that position we are definitely not doing this to reduce the amount of staff that we have we did it to try and remove the value adding or just to focus on the value adding parts of a customer transaction and that’s not happening their credit card and it’s not ringing up a sale on the till it’s actually going and talking to the punters is asking them how their meals guy doing the check back saying if I want another drink how they’re going with the tool how their day is and so we’re trying to pivot the staff that we have to work towards that. As a metric we look at labour as a percentage of sales as a key operating metric and pubs typically operate at about 25% of sales is the labour cost. Those venues now that are operating at 80% Mr Yum sales, are still running at about 23%. Certainly hasn’t reduced or increased the labour cost. I wouldn't go into this looking for massive labour savings.

Adrian: It’s more for a pub and bar increasing that top-line revenue, increasing average spend-per-head. 

Paul: Yeah. I wouldn’t go into this looking for massive labour savings. It definitely shouldn’t cost you any more in labour.

Adrian: It’s only the cafes and restaurants that did have table service and can now potentially remove that.

Paul: We did it to focus on the value-adding parts of the customer transaction. In most of our pubs, we're not offering table service in the first place. So, it's actually additive. So there's a lot of opportunities to manage yield, to drive extra sales, drive those uplifts.

Paul: It’s a customer service opportunity, not a cost-saving opportunity. Where we saw a great uplift was in cocktail bars in particular.They had very strong uplifts because you can get very descriptive in what the individual menu items are, in what you perhaps can’t when you're standing there ordering a bar, thinking "Oh, there's a queue right behind me… I'd better actually just make a call. Rightio, I'll have an espresso martini." Whereas now you think, "Okay, yeah, that one's got elderflower in it." Whatever you guys are into these days.

Adrian: Aww me? I'm the elderflower… the turtle neck doesn't always mean elderflower *laughs*

Paul: *laughs* It gives you the ability to look at individual items in menus and the ability to filter. Then we saw really good uplifts in usage of language in some of those venues that are more exposed to tourists. So Southbank here in Melbourne, King Street Wharf in Sydney. You get quite a lot of people using the interpretation function as well.

Adrian: Wow. What do you think the future - 10-20 years ahead - pub and bar space looks like? On-premise ordering?  Loyalty and experience? Any thoughts?

Paul:  The core pub offering will largely consist of the type of food and booze we offer, the family friendly nature of pubs hasn’t changed. 

Adrian: The chicken parma isn’t going anywhere.

Paul: Yeah, there’s nothing wrong with doing great food, that’s the market we want to participate in. I think you will definitely see greater personalisation. More than 80% of our transactions are card transactions including the Mr Yum transactions, so you’ve got a lot of data, which enables you to manage your business. People weren’t doing that a lot previously, so there’s a lot, so there's a lot of opportunities to manage yield, to drive extra sales, drive those uplifts. In an environment where costs are increasing, you need to have those levers that you can pull. I think that's what this tool does. It puts the data in the hands of the people choosing what beers to order, choose what food to have on the menu.

Adrian: Yes... E-commerce stores I guess that’s been frustrating and exciting for us coming into the hospital industry just seeing how the margins can be really tough and then you’ve got the retail industry through the GFC has transformed itself and become so data-led 10 plus years ago and now they know everything about the customer all the things that they’re doing and have all these advantages. Whereas the hospo industry has such amazing turnover yet the margins are so low, so something definitely has to change on that front.

Paul: Oh there has to be a fundamental change to the structure. I’m a relentless reader of reviews. We get about 200 reviews per day across the business. I’ll sit down every day and read every one of them and Mr Yum has also given me a whole other source or reviews that looks at things in a different way perhaps to what you would get on something like a Facebook or Google--

Adrian: Oh so this is the feedback within the product 

Paul: Yeah, it gives you a whole new rich source of data that people are doing in real time and that usage of that feedback loop within the tool is much higher than someone has to physically go log onto Facebook, which people don’t do. Yeah I mean for 200 like that would be like .3% of our transactions with someone leaving us a review so we know how we’re going, whereas with Mr Yum it’s much higher because it's really easy to bang click on your number straight after your purchase.

Adrian: Mate thank you so much cheers!

Paul: Cheers!

Adrian: Thanks for those kind words and really helpful information for pub and bar owners!

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