United Kingdom
Cheers or fears for the British Pub Trade? - Dominic Stammers
Over the last few years the industry has weathered a perfect storm of the smoking ban, increasing taxes, a drop in consumer spending during and since the recession, and far greater competition from supermarkets leading to the decline of the wet-led offering – that was certainly the consensus at the recent UK Pub Retail Summit.
In common with other parts of the Leisure and Hospitality industry those operators who have adapted have performed well and those that haven’t, especially those heavily geared through securitised structures, have struggled.
The food-led offering continues to be of paramount importance with brands such as Harvester, Taybarn and Brewers Fayre becoming a renewed focus for the larger operators. There has also been a rise in the number of gastro-pub brands bringing new ideas to the table. Additionally, increasing numbers of smaller operators are challenging the standard model of pub or bar and offering the consumer fresh and novel concepts.
So what are the key challenges facing the UK Pub trade in 2011? Here we look at our top 6:
Consumer trends
The challenge for the pub trade is to reverse the trend of ‘staying in’ being the new ‘going out’. The post-recession consumer is more informed than ever and will seek even greater value. Pubs will have to adapt and will have to provide something different and exciting for the consumer but that offers value and convenience. An enticing food offering will be a must.
Competition
The supermarkets determined efforts to discount alcohol heavily continue to upset the pub trade. This cost advantage is aided by tax legislation which seems geared to maintain a price differential between the on and off trade.
Licensing legislation
The intention of the Government’s proposed changes to the Licensing Act is to empower individuals, families and local communities to shape and determine local licensing. However, this significant shift in power holds enormous concern for all operators of licensed premises from the quiet local to the destination clubs.
Financing
As pub and bar groups come to refinance the strength of covenant will be vital to the bank, and the level of finance and the cost of that borrowing will be of paramount importance to the pub group. Getting this balance right will be critical to success in 2011 and beyond.
Staffing
As with most service operations, pubs and bars suffer from staff turnover and this is exacerbated during recessionary times. The challenge for ambitious groups looking to expand is to recruit, retain and develop the best talent available with the modern consumer demanding ever increasing levels of customer service.
Technology
With a wave of technology sweeping through the industry, those who ride the crest will have a dramatic competitive advantage. Smartphones allow easy searches for eateries, pubs and bars and can displays offers and provide customer reviews.
Websites such as fancyapint.com and apps like “barfinder” along with Facebook, twitter and others offer a revolutionary opportunity for the industry. Those who do not embrace this new technology may be left behind.
Over the next few months we will be writing a series of articles focusing on these key issues and exploring developments in the trade.
Contacts
Dominic Stammers
Senior Audit Manager
Telephone:
020 7486 5888
Email Dominic
Mark Edwards
Audit Manager
Telephone:
020 7486 5888
Email Mark
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