Costa licenses APT's Test & Learn Management System
Applied Predictive Technologies (APT) has announced that Costa, the UK’s favourite coffee shop, has signed an agreement to license APT’s Test & Learn Management System™.
Costa will use APT to test strategic initiatives across its network of more than 1,600 coffee shops in the UK. With this agreement, Costa joins over 25 industry-leading restaurant brands, such as McDonald’s APMEA, Subway, and Olive Garden, that use APT’s cloud-based Test & Learn™ software to evaluate a wide range of business initiatives, including menu strategies, pricing, marketing and media, labour and operations, and capital investments.
“As the UK’s favourite coffee shop, it is critical for Costa to have the best tools in place to rapidly generate insights that create value for our business,” said Matthew Price, Finance Director at Costa.
“APT is instrumental in improving the analytic rigor and speed with which we make decisions on store investment and the right range of products. The ability to automate complex analytic processes has not only provided more accurate decisions, but it has significantly decreased the time required to understand the impact of each new idea.”
“We are excited to work with one of the UK’s leading brands,” said APT Chairman Jim Manzi. “We look forward to a long-term partnership with Costa as they continue to make empirically-driven decisions.”
Rupert Naylor, VP UK, Applied Predictive Technologies, said: "Restaurant executives make many decisions every year, including: How much capital should we invest in restaurant refits? Should we raise prices on some menu items? Should we invest in digital menu boards? Should we replace our traditional menus with tablets? How many team members should we have in a restaurant at a given time? The list goes on and on. What is common about all of these decisions is that the outcome is unknown until tested in the real world. That’s where our Test & Learn approach comes in.
“Over two dozen restaurant chains license APT’s software to help them answer three critical questions about any proposed initiative: First, will this initiative work if rolled out across the chain (e.g. is it profitable to stay open later?)? Second, in which locations will this initiative work best (e.g. urban but not rural locations)? And finally, how can we tailor and target a rollout for maximum profitability (e.g. opening one hour later in only high-volume urban restaurants)?
“APT works directly with executive teams to understand testing priorities. Tests range from small hard-to-measure changes, such as removing an underperforming menu item, to bold transformative initiatives, such as introducing a new value menu, changing service style, or large shifts in marketing spend.
“Test & Learn analysis is generally owned by teams located in finance or marketing, which manage test requests from across their organisation. Once a user logs into APT’s cloud-based software, it walks them through each step in arriving at answers to key business questions, from test design to control group selection to automatic segmentation of results.
“Restaurants that work with APT typically generate tens of millions of pounds in incremental profit by reducing the cost of testing, increasing the speed of test analysis, improving the accuracy of measured results (thus enabling more confident decisions), and targeting program rollouts to the locations predicted to respond profitably."
APT provides the technology for companies to 'test and learn' about every area of their business. It recently received $100 million investment from Goldman Sachs, representative of the bank's confidence in the growing field of cloud-based predictive analytics.
Driver shortages: Why the industry needs to be worried
While driver shortages are a global problem, with a recent survey from the International Road Transport Union suggesting that driver shortages are expected to increase by 25% year-on-year across its 23 member countries, the issue has very much made itself felt for UK businesses in recent weeks.
A perfect storm of factors, which many within the industry have been wary of, and warning about, for months, have led to a situation wherein businesses are suddenly facing significant difficulties around transporting goods to shelves on time, as well as inflated operating costs for doing so.
What’s more, the public may also see price rises as a result due to demand outmatching supply for certain product lines, which in turn brings with it the risk of customer dissatisfaction and a hit to brand and stakeholder reputation. Given that this price inflation has been speculated to hit in October, when the extended grace period on Brexit customs checks comes to an end, the worst may be yet to come.
"Steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole"
That said, we have already been hearing reports of service interruption due to lack of driver availability, meaning that volumes aren’t being transported, or delivered, to required schedules and lead times. A real-world example of this occurred on the weekend of 4-6 June with convenience retailer Nisa, with deliveries to Nisa outlets across the UK affected by driver shortages to its logistics provider DHL.
But where has this skills shortage stemmed from?
Supply is the primary issue. Specifically, the number of available EU drivers has decreased by up to 15,000 drivers due to Brexit alone, and this has been further exacerbated by drivers returning to their home country during the COVID-19 pandemic, as well as changes to foreign exchange rates making UK a less desirable place to live and work. This, alongside the recent need to manage IR35 tax changes, has also led to significant inflation in driver and transport costs.
COVID-19 complications have also meant that there have been no HGV driver tests over the past year, meaning the expected 6,000-7,000 new drivers over the past year have not appeared. With the return of the hospitality sector we understand that this is a significant challenge with, for instance, order delivery lead times being extended.
It is little surprise, therefore, that the Road Haulage Association (RHA) earlier this month became the latest in a long line of industry spokespeople to write to the government about the driver shortage for trucks. The letter echoed the view held by much of the industry, that the cause of this issue is both multi-faceted and, at least in some aspects, long-standing.
So, many in the industry are in agreement as to the driving factors behind this crisis. But what can be done?
Simply enough, outside of businesses completely reorganising their supply chain network, external support is needed. In the short-term, the government should consider providing the industry with financial aid, and this can also be supported more widely with legislative change.
Specifically, immigration policy could be updated to place drivers on the shortage occupations list, which would go some way towards easing the burden created by foreign drivers returning to their home countries. Looking elsewhere, government should also look for ways to increase the availability of HGV driver tests after the blockage created by the coronavirus lockdowns.
Looking more long-term, steps must be taken to make a career in the industry a more attractive proposition for younger drivers, which will require a joint effort from government, industry bodies, and the sector as a whole. As it stands, multiple sources suggest that the average age of truck drivers in the UK is 48, with only one in every hundred drivers under the age of 25. We must therefore do more to increase the talent pipeline coming into the industry if we are to offset more significant skills shortages further down the line.
On the back of a turbulent year for the supply chain industry, it has become increasingly clear that the long-foretold shortage of drivers is now having a tangible and, in places, crippling effect on supply chains.
Drivers, and the wider supply chain industry, have rightly been recognised for the seismic role they played in keeping the nation moving and fed over the past year under unprecedented strain. If this level of service is to continue, we must now see Government answer calls to provide the support the sector needs, and work hand-in-hand with the industry to find a solution. If we do not see concrete action to this effect soon, we are likely to be in for a turbulent few months.
Rob Wright is executive director at SCALA, a leading provider of management services for the supply chain and logistics sector