On 20 March, UK Prime Minister Boris Johnson announced, “… We are telling … cafes, pubs, bars, and restaurants to close tonight, as soon as they reasonably can, and not open tomorrow”.
For many businesses operating in the restaurant and food sector, the closures have had a devastating impact on staff and revenues and have even cast serious doubts on their viability.
Some restaurants, such as Leon in the UK, have performed fast pivots to move from dine-in to click-and-collect or home delivery of meals.
But the simple business model of one data-driven company — Gousto — has remained fundamentally intact. Its operation, centred on a fulfilment centre in Lincolnshire in the east of England, focuses on providing customers with ingredient and recipe kits for making meals, which are delivered to their homes.
Demand has been stoked by “people … not wanting to go to the supermarket and looking for an alternative means to get food on the table”, said Stephan Burow, ACMA, CGMA, the company’s vice-president of finance.
Burow, whose big-company background includes stints with the venture arm of customer data science company dunnhumby and with Unilever supporting global category strategy in Southeast Asia, described his role as covering financial control, financial planning and analysis, and also data analytics. And while his job description hasn’t formally expanded in recent weeks since the coronavirus hit the UK, his skills are more in demand. “… With customer demand outstripping supply or our ability to fulfil capacity, there has been a real need for particularly data analytics to help with daily forecasting of supply and demand”, Burow said.
Taking a business-wide view and a leadership role beyond finance has been especially crucial — “an opportunity to truly business partner”, he said.
Finance has the ability to help answer many questions in the business. “So … what does it mean for our customer care colleagues if we turn off … certain customers from ordering? …. What is our message going to be? How is marketing affected? What are our customer comms? What does it mean for the operation?” he said.
Prioritising existing customers
With production capacity temporarily constrained by the coronavirus outbreak, Gousto decided to focus on fulfilling existing customer orders rather than acquiring new ones. The reason was twofold, Burow said. As well as the emotional connection with customers, “I have probably paid a certain cost to acquire you, and therefore, I want to ensure that … my investment pays back.” He said customer acquisition had been though online discounts or Facebook advertising, with a more recent trend towards organic rather than paid channels.
In addition, Burow said, “We don't want to disappoint anybody that joins us.” He explained that while Gousto’s loyal customers are “probably more accepting of getting their delivery a day later but still getting food”, new customers who get one box might turn away and go somewhere else if the company was forced to change something with their delivery.
“It wouldn't be a great experience for them. It wouldn't be a great experience for us,” he said.
The business’s ability to quickly and easily change recipes means its supply chain is very flexible. “We're able to amend what we buy on a weekly basis, almost,” Burow said. For example, if potatoes were no longer available due to a lack of pickers, a fast move to rice-based menus can be made.
Social distancing is, however, having an impact on production — both for the food growers and in the factory. The business has introduced time windows in which people enter and exit the factory, as well as more space for people to eat their lunch and dinners, Burow said. “[It] obviously means a slight reduction of throughput. But at the end of the day … it's what we want to do, because the wellbeing of our employees is the most important thing.”
A data-driven business
Right from its start in 2012, Gousto has invested in capturing data and has built up “an innate understanding of both our operation internally but also our customer base”, Burow explained.
This data includes the device customers signed up on, their purchasing behaviour over the first four or eight weeks and beyond, and their socio-demographic background. It allows the business to predict how many orders and boxes each customer will want. This data gives “a much greater level of confidence [in] my financial forecasting”, he said.
He explained: “I am … able to build a much more robust plan, and particularly in these times [with the coronavirus] and COVID-19, we're able to see very early on a shift in ordering pattern, and we're able to extrapolate that, with a reasonable degree of confidence, to what it might mean for the rest of the year.”
His advice on creating data-driven businesses includes:
- Start to capture data. This is especially important for subscription or direct-to-consumer businesses and no matter where you are in your maturity curve. It also doesn't matter how rudimentary and basic this is. You can then dive into the detail later on — adding further angles or slices of data that would enable a better picture to be created as time goes on.
- Consider hiring people with data skills. Over time you can consider hiring for data analytical skills to enhance your capability.
- Understand consumer behaviour trends, patterns, or seasonality. This can give you a better view of forecasting. You can then start to build predictive capability.
- It’s never too late to start.
Gousto takes a top-down as well as a bottom-up approach to risk management. A mechanism allows any employee to raise any sort of risk. “It can be anything from … I don't know, a tissue on the floor that needs to be moved, to, ‘Oh, my goodness, we might have paid suppliers double.’”
Burow said: “I think as [the coronavirus] … became prominent and it became clear this was something that would disrupt not just our business but everybody, we put together a risk comms meeting which goes all the way up to the board.” Finance, he said, plays a role in assessing the cost of the risk involved but also considers whether it can be covered by insurance or working out the incremental cost of additional health and safety measures, for example.
Advice for finance leaders
For Burow, “mindset is everything in life” and “every crisis has opportunity”. His advice for other finance leaders includes:
- Get closer to the business. The crisis is an opportunity for management accountants to get close to the business. In the current crisis, this can be approached by saying, "Hey, I'm here to help out. Let me get started," Burow said.
- Look at the potential to fast-track change. The crisis can allow finance leaders to fast-track fundamental change in the business — organisationally, strategically, or financially. They may previously have seen this as desirable but may not have had the necessary stakeholder buy-in.
- Stay close to your teams. This is important in relation to your direct team members and also your peers.
- Be mindful of your emotional intelligence. Consider how people are feeling. With many people working at home it is easy to lose connection. There's a real risk in disconnecting with priorities or that employees feel down, with a resulting impact on productivity.
- Use a strong culture as a differentiator. For purposeful businesses with a strong culture, “it's an opportunity to shout about that”, he said. It can also be used as a point of differentiation between yours and other companies for recruitment purposes.
For more news and reporting on the coronavirus and how management accountants can handle challenges related to the outbreak, visit FM’s coronavirus resources page.
— Oliver Rowe (Oliver.Rowe@aicpa-cima.com) is an FM magazine senior editor.