New customer capture gives Redcape a record quarter

23 September, 2020 by Vanessa Cavasinni

Redcape Hotel Group (ASX: RDC) has forecasted that its operating EBITDA for the first quarter of FY21 will be higher than that of the same period last year.

In its FY20 financial results release on 19 August 2020, Redcape reported an Operating EBITDA for July 2020 above that of July 2019. Positive trading has continued and the first quarter of FY21 will deliver an operating forecast EBITDA of $24 million, ahead of the equivalent period in FY20 ($19.5 milion) – even if JobKeeper were excluded. Redcape is forecast to receive $4 million in JobKeeper payments in respect to Q1 FY21, but the group will not be eligible for any further JobKeeper payments.

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Given the current trading restrictions venues are facing, Redcape’s CEO Dan Brady attributes the extraordinary news down to not only the retention of new customers, but the capture of new ones. The acquisition of new customers has been a real focus for the group since the beginning of the shutdown.

“We’re putting it down to a real focus on acquiring new customers. We’ve been getting back the customers we had before, but also acquiring new customers.”

Customer engagement

Throughout the late March shutdown period and beyond, Redcape has been engaging with it’s 140,000+ customer database digitally, and one strategy was to learn from customer sentiment via regular survey. Early on, 1500 customers agreed to be surveyed throughout the shutdown period as to what they were after from their local pubs upon reopening.

“That allowed us to regularly ask those questions, get some excellent answers and be able to pivot our business around where customer sentiment and values were going. That’s meant that on the reopen we’ve been able to continue to stay connected to those customers, and not just win back our old customers but really grow the pie. So we’re seeing growth in all of our channels,” explained Brady.

While trading restrictions have been felt in Redcape’s larger F&B offerings, Brady notes that across the group’s accommodation, gaming and retail liquor streams it has seen real growth. One of the pivot strategies that Brady said has been most successful in driving that growth is responding to customer sentiment for the social impact of these community pubs.

“One of the great things that has emerged is that we’ve invested a lot of money into our customer management platform. We’ve relaunched of our communities public program, which really means that every transaction now at a Redcape hotel has a community contribution to it.”

Through the new program ‘pledge points’ are accumulated through every customer transaction, which is ultimately converted to a financial contribution from Redcape to local organisations that have been nominated by that venue’s patrons.

“We think this is the most tangible and common-sense approach to social impact that is so meaningful to our customers.

“This is a huge step forward for us. It’s means these community hotels really are the hub of their communities, and are driving community support through every transaction. It’s very exciting.”

Brady also attributes the growth of the business to the onflow of a renewed focus on staff satisfaction.

“Through COVID we went from a staff satisfaction measure to a staff connection measure, and we’re able to drive high results through shutdown despite the fact that our staff weren’t actually working.”

That staff connection has been transformed into some of the highest staff satisfaction levels the company has seen, which is being translated into record customer MPS levels.

“We do know from our value chain that if we do have high staff satisfaction, we’ll have hugely engaged customers, which then translates into financial results. Through this quarter we’ve seen record levels of staff satisfaction and customer MPS, which is why we’re very confident in saying we’ve got a fantastic base to be able to drive growth further through the organisation and also acquire more customers.”