Income generation is harder than ever

The provocation for this article is indeed a provocation. Arts organisations have been diversifying income for years, and doing so alongside extraordinarily skilled budget management that ensures value for money and delivers incredible levels of activity on extremely tight budgets, often including income streams of many sorts. We will continue to do that, though achieving it with current constraints is harder than ever. This means demands on the sector are even greater and committed creativity throughout our companies is essential.
 
The current challenges are immense and painfully obvious. At the same time as attempting to recover from the upheaval of the past few years, financial pressures are delivering a real ‘kicker’. Increased energy prices and a full-blown cost-of-living crisis are making it tougher than ever to make projects viable or to balance revenue budgets. Inflation has turned previously balanced budgets into deficits and made leaders and boards, at all scales, equally worried about how to ensure immediate viability, let alone long-term sustainability.
 
Alongside this, in our industry it is hard to pass on cost-of-living increases to audiences and customers. And for those organisations with Arts Council England, Local Authority or similar income streams, their value is fast diminishing as every pound delivers less.

Response requires vigilance and imaginaton

There is an upper limit for ticket prices – and much more to say on the importance of flexible pricing and active ticket inventory management – at least outside the bubble of high-demand West End productions. And for a while, we have been seeing signs of reduced consumer confidence. In our Rooftop Restaurant, for example, we have seen an increase in two-course orders, rather than three, since our post-pandemic reopening. And in our Riverside Café and our Shop, there has been reduced footfall.

Food and drink is one area where we are having to increase prices. If not, we will lose any profit. Responding to fluctuating prices and supply shortages and even, very sadly, longstanding suppliers going out of business, requires vigilance and imagination. Our approach is multi-faceted. 

Starting with not compromising on quality, continuing to use locally sourced products; costing and checking against invoices for every item, and every week; and reducing menu choices. We try to make every transaction fun and easy, linking sales opportunities when we can, for example ticket sales and restaurant bookings. 

We share a Visit App with booking confirmations which enables booking ahead. Through that we have seen sales of higher value products – such as double shots and fizz – and reduced queues as a result increases spontaneous sales.  

Royal Shakespeare Theatre auditiorium

Multi-faceted approach

In terms of queues, we recently upgraded our EPOS (Electronic Point of Sale) system, reducing transaction time to three seconds from ten. This has made a material difference. Smaller changes such as adding boiled sweets, mints and jellybeans to the bars all make a difference.
 
We spend time making sure our merchandise is attractive to a full range of visitors, that some is only available “in the moment” (ie buy now, it’s not available through our online shop) and that the range is regularly refreshed. We have recently designed ranges in house, for example Bah Humbug products, and see increasing popularity of clothing such as Shakespeare-themed babygrows.
 
To increase reach and maximise opportunity beyond ticket purchasers, we make sure we use our public spaces as intensively as possible outside performance times. Sunday lunches, afternoon teas, compostable takeaway tea stands and caddies (RSC branded of course) are increasingly popular. 

And we refresh our photography four times a year. Whenever our buildings are not being used for the creative programme, we look to hire them. But there is a delicate balance to be found between direct delivery of our charitable beneficiaries and generating the income to make that possible.

The key thing is our people

There is a lot more we want to do inspired by so many good examples in the sector. We don’t yet have ‘one basket functionality’ and are sure that this will increase sales. We are interested in exploring in-seat in-person ordering and in increasing outdoor catering. And at a larger scale, in attempting to monetise our digital development work, in new ways of partnering with corporates and in licensing our brand.

Above all though, the key thing is our people. It can be hard to recruit sufficient brilliant people, pay pressure is very real, and we are still experiencing Covid sickness absence. Once working with us though, our colleagues are the key to success. They are enthusiastic, energetic, committed; they are bought in to the need for unbeatable relationships with customers and visitors; and they understand and are able to respond in an appropriately commercial manner, for example, with a well-placed ‘up-sell’. In the end, this is what will make increased income possible.

Committing to the importance of income generation, to incremental increase as well as step changing new activity, has long been part of our lives. Maintaining energy and belief that despite everything it is possible is our task for now.

Catherine Mallyon is Executive Director of the Royal Shakespeare Company.
www.rsc.org.uk/
@TheRSC | @CathMallyon