Guest comment by Kate Vacovec
The past few years have certainly presented an influx of headwinds for our industry to navigate. Initially, we all felt like Covid-19 was the peak of this crisis pattern. However, one could argue that it was in fact the trigger.
From a business standpoint, the challenges we’ve faced in a post-Covid world throughout 2023 were just as difficult to overcome. With ongoing supply chain challenges amidst economic recovery, the cost-of-living crisis, erratic consumer spending patterns, conflict in Ukraine and crisis in the Middle East – this year has been hard for all teams and functions across our sector.
During times like these, the CFO function provides a critical voice at the table for all strategic initiatives to ensure the best outcomes for the business – they remain both a commercial and strategic thought partner to their leadership teams.
In 2024, the focus will be to accelerate profitable transaction growth and system sales year-on year, but the reality is that the industry is still facing tough headwinds.
Brands will need to counter these obstacles with a clear plan towards achieving their business priorities – by addressing the upcoming challenges and embracing the change, reimagining value for customers, cutting through to their audiences, and improving consumer experience.
The fact of the matter is our consumers are price conscious, and we need to adapt as business to highlight our focus on value for our customers in these market conditions
As we look ahead after more than three years of sustained crisis, I believe there’s a deep yearning from consumers and employees to enter a ‘recovery phase.’ This is where we’ll start to see a change, or exploration of new ways of living, working, healing, and innovating. In turn, this will dramatically change how businesses interact with consumers, and how organisations lead and engage with their employees in 2024 and beyond.
For example, we are intent on setting the bedrock for Pizza Hut to become the number one choice for pizza in the UK and Europe. What this looks like for us is to become the number one choice in the pizza category for our customers, partners and stakeholders. This can only be achieved by putting our customers at the heart of our decisions as a company. The fact of the matter is our consumers are price conscious, and we need to adapt as business to highlight our focus on value for our customers in these market conditions.
In a similar way, we need to make sure that our talent is ready to adapt to the changes that we are still getting used to in a post-covid world. It is important to work towards profit and growth, but it is also important to manage the expectations of employees.
In terms of what we’ll likely need to navigate next year, there’s still a high risk of some type of financial slowdown. While post-covid, we saw consumers react quickly after Lockdown with some unexpected ‘revenge spend’ in certain categories or industries, the expectation is that the slower growth will impact consumer spending in the longer term. This means consumers will have less to spend but will wrestle with the reality of being able to afford less.
Banking on heritage, or legacy may not be the way forward when it comes to getting the cut through that brands are looking for
The question we pose is therefore, how do brands reimagine value? Instead of focusing on price wars or discounting to appeal to customers’ need for value, I think we’ll explore value through other means like ease, quality, and experience. Consumers don’t want to be reminded that times are tough!
After the peak of the crises that we’ve faced in 2023, there is a rebel culture emerging. With the Covid-19 aftermath, global growth outlook deteriorating, high government debt levels and interest rates, threat of global conflict, rapidly advancing tech, disruptive ideas, and culture will be more important than ever to resonate with consumers, especially Gen Z.
Banking on heritage, or legacy may not be the way forward when it comes to getting the cut through that brands are looking for. This also applies to ways of working within organisations and recruiting top talent.
With so much choice and information being pushed towards consumers, its even more important for companies to reduce the choice burden and information overload. This will likely be done via investment in digital technology to better personalise and enhance the customers’ experience to make things easier.
This will also need to be a focus for employers – leveraging technology to improve employee experience and drive simplicity too.
And while 2024 is likely to be another turbulent year, I am incredibly excited about the next twelve months. For me, it starts with adopting a positive mindset, which means looking at the aforementioned change and challenge as an opportunity rather than a burden. When you are uncomfortable, you are learning – and 2024 will certainly be a year of growth for many CFOs!
Kate Vacovec is Chief Financial Officer for Pizza Hut UK & Europe