Wholesale stores turning into cooking studios

14 August 2017

Metro CEO Olaf Koch about new habits in the catering and restaurant trade, the hosts’ passion and the eternal life of corner shops

Olaf Koch, Chairman of the Management Board

METRO CEO Olaf Koch about new habits in the catering and restaurant trade, the hosts' passion and the eternal life of corner shops

Mr Koch, Kaufhof is gone, Media-Saturn is gone. Are you taking the METRO Group apart until nothing is left of it?
Not at all. The primary motivation for the split was a stronger focussing. The two new companies enjoy exciting perspectives, but de facto no overlaps and synergies. A conglomerate like the former METRO Group simply did not make sense anymore and so the time for a change had come. That's what we have done in order to create added value for our customers, employees and shareholders. We have made the wholesale and food business independent, this was a consistent move.

METRO now only consists of Real and, mainly, the METRO wholesale stores. How will the target group change in this constellation?
Our core customers in the wholesale trade continue to be the small and medium-sized businesses.

Who exactly is that?
In Southern and Western Europe we are concentrating on business people in the hotel and restaurant sector, in Eastern Europe on kiosks and small retail traders - in countries like Rumania and Russia these are the most important customers.

Have corner shops survived there? After all, they have been extinct in our country for a long time already.
In Eastern Europe, small, independent retailers still have a 40 per cent share in total sales in the food retail trade; in Germany by contrast less than ten per cent. However, they are maintaining this share constantly, which means that even here the small neighbourhood shops are not vanishing. But the focus of our business here in Germany and in Western Europe is on the restaurant and catering business.

Who are you targeting - the kebab shops or the gourmet restaurants?
Kebab meat is mostly provided by specialists. We offer the great variety of merchandise, in France our clients are rather the fine-dining restaurants whilst in Germany we attend to a wide range of inns and restaurants with direct delivery. Of the global sales volume of about 30 billion euros in the wholesale business, already four billion euros proceed from by direct delivery. And this sector is growing at a two-digit rate, the customers want the products to be delivered to them. This is a clear trend.

Then the time will come when you don't need stores anymore?
Oh no, the opposite is the case: even in the future the stores will play an important role for supporting our customers in an ideal way. Besides the provision of tailored assortments the stores are increasingly becoming the meeting place and venue of inspiration for our customers. In Southern Europe this trend has advanced so far that we have our own cooking studios in the stores where meals are prepared from eight o'clock in the morning to eight o'clock in the evening. The restaurant managers like to drop in for exchanging their views with the cooks or colleagues, taste fresh goods or take a sip of wine. The standard products - oil, rice, milk - are preferably ordered for house delivery, but inspirations and fresh food are taken from the store.

At our METRO store the atmosphere is rather dreary, nobody is cooking there...
Just wait and see! In Germany we have not yet introduced this concept. At locations like Venice our wholesale store is an attractive magnet for the restaurant trade. The gist of the trade business is building up relations.

We thought that in the digital world orders will be handled between machines in the future without involving any people. So, why build new relations?
Digitisation in the first place will lead to an increase in relations. By rendering processes more efficient the restaurant managers or caterers will have more free time for the creative part, for their passion, cooking and the contact with their clients. We help by relieving them from administrative tasks, bookkeeping, HR administration, etc.

Do you as a wholesaler plan to take care of the bookkeeping of pizzerias?
Not directly, but we have noticed that there are hardly any mature solutions for our customers in the restaurant business. That's why we have founded an "Accelerator" with a partner in order to come to know start-ups and develop their ideas, helping them establish their business and ultimately bring their disruptive ideas to our customers, the restaurant owners and caterers. Already in September our third programme for founders with digital solutions for the restaurant trade will be launched.

Are there so many new ideas in the catering and restaurant trade?
Absolutely, even if at first glance some of them do not seem so very spectacular. "Frag Paul" (ask Paul) for example is a digital assistant who takes care of the complete HR administration. The son of a restaurant owner had this idea and he knows from his own experience how many hours of work are running up and so he developed this platform - one of the most successful start-ups in this sector.

Second example: Flowtify. With it, restaurant managers document compliance with the hygiene provisions as demanded by the authorities. Up until today, this has been done on paper, paper, paper. Thanks to Flowtify, this task has now been taken over by the smartphone and tablet computer and the restaurant manager is permanently keeping the overview.

How do you as METRO benefit from this? Are you the co-owner of those start-ups?
Jointly with our partner "Techstars" we initially hold a five per cent share in the start-ups, at the moment we have about 30 companies on board. As soon as the start-ups have reached a certain degree of maturity, we also participate with a higher share, currently this is the case with four enterprises. What is almost even more important for the founders than capital is our unique coverage. We are active in 35 countries, have 21 million customers and contacts to restaurant managers in the whole of Europe. What do you think how many firms does this sector comprise?

Tell us.
1.8 million in Europe alone. The restaurant and caterer trade is an enormous industry, but unbelievably fragmented. Who is to open 1.8 million doors? This is rather expensive. For us this is easier with our established customer relations, not least because the restaurant managers have more confidence in us than in others. They are rightly distrustful.

Not everything that was sold them as innovation in the past and cost much money was actually helpful. The monetarization of digital table reservations for example works more reliably in America than in Europe. There, table rotation can be controlled more effectively, in other words: customers are encouraged to clear the table quickly after finishing their meals. Consequently, a restaurant manager can market the table more frequently. In Europe this is factually unimaginable. Restaurant owners always ask: how much value added do I get from an innovation? As far as their own homepage is concerned, this question is answered quickly, today it is essential to have one and so we make it available to them free of charge.

You pay restaurants the internet homepage?
If our customers wish, we settle this for them. Within ten minutes the complete homepage is available. Ready for use.

Do you offer this service to all professional customers?
No, today this only applies to the restaurant and caterer business, which we equip with digital tools such as with electronic cash registers, for example. They record the clients' order with the smartphone, transmit it error-free to the kitchen within a nano second and have 100 per cent documentation - which is more and more required by the legislator for the restaurant trade, incidentally Europe-wide.

So this is the end of dirty money deals for the restaurant owners?
For politicians transparency is just as important as for restaurant owners and customers. And with the new cash register system and the data the entrepreneur gets an immense value added. With the respective cockpit he can control: what table, what service staff, what menu has the highest productivity? We are also making available this system to our restaurant and caterer customers in order to contribute to their success. For the restaurants this means: more efficiency, fewer costs, less capital tie-up, less spoilage. Less food is thrown away.

But then you are selling less food.
Right, but for me that's worth it! I am convinced that thanks to such tools we win more customers and enhance their loyalty. So in the end we will earn more.

And what does all that mean for the restaurant-goers? May or must they order the meal already from home with the smartphone in the future?
This will absolutely be possible, even if in some respects the restaurant trade is likely to remain a low-tech sector. At a restaurant, people may prefer leaving behind the electronic gadgets which surround them all day long. On the other hand, a generation is growing up that expects the use of smartphones. At some point, young people will find it funny if they cannot order with the mobile phone.

Another example from our "Accelerator" is the Start-up Lunchio: I use the smartphone to reserve a seat, order spaghetti carbonara and a bottle of water to go with it, and I pay the bill in advance. This is comfortable for customers who are in a hurry at lunch break and super for the restaurant because the stay in the restaurant is reduced to a minimum.

When are you going to take the next step and open your own restaurants?
This will not happen, we will not build up a system catering business, we would never compete with our customers. It is just the diversity which makes the charming difference for this sector and that's why we are eating out at our favourite restaurant.

Mr Koch, after the split-up of the Group you personally bought METRO shares for more than one million euros. Is it that at least the boss must believe in the success if nobody else does?
This interpretation is rather cynical and it would be negligent considering the amount involved. As a matter of principle, I only invest if I am absolutely convinced.

The interview was managed by Georg Meck. It was published by the Frankfurter Allgemeinen Sonntagszeitung (fas.media) on 13/08/2017.