Trends In The Pub Industry – Pub Tenancies And Leases
Date added: Mon, 11/09/2017 - 10:00
The Great British Pub has undergone a transformation in recent years, with some pubs closing and others thriving. Innovative and entrepreneurial operators, focused on spotting the next opportunity and staying ahead of the market, run the ones that are thriving.
Pub companies like Greene King have to ensure that their pub tenants and licensees have access to expert business support to enable them to succeed in this competitive and dynamic marketplace. To this end the Business Development Manager (BDM) has an important role to play.
Essentially BDMs are personal business consultants for our business partners (aka licensees, operators, tenants etc.). As well as being experienced in all aspects of small business, start-ups and multiple business models, they also have very specific expertise in the pub industry.
However, while knowing the pub industry inside out is essential, the industry is constantly evolving and therefore BDMs need to be at the cutting edge of new trends and innovation. Working with their business partners BDMs can advise on what direction a pub should be taking, where there are easy gains to be made, and where investment may be required; all with a view of where the pub sits (or wants to sit) in the marketplace.
We asked two of our Business Development Managers, Paul Wishart and Nick Lawson, about current trends in the industry and what opportunities are available to licensees
Where Is The Pub Industry Is Headed?
One key trend in the tenanted or leased pub sector is ‘premiumisation’. This is a move away from the wet-led value end of the market, and to some extent the mainstream market, to offering customers a premium and unique pub experience.
This is being driven by customer demand. Pub tenants and leaseholders are ideally placed to deliver this model, as they are able to create a bespoke atmosphere and offer in their pubs.
Nick: “The future is innovation and premiumisation. Where the managed sector – such as Greene King’s brands like Chef & Brewer and Hungry Horse – are a mainstream offering, the pub tenant and pub lease sector is all about premiumisation. I think that’s the future.
However, many ‘premium’ products have now filtered into the mainstream, such as craft beers and premium gins that have seen a huge surge of interest in recent years. This means that licensees at the premium end of the market need to find the ‘next big thing’ and differentiate their pub from the mainstream offering.
Creating Something Unique
Paul: “At the premium end I think what you’re going to see are more and more people looking to create something unique within their business. So for example, business partners developing a gin distillery within their pub.
“I think that will also be the same with food, such as having a meat locker inside the pub, where meat is aged for over 200 days and takes on the character that only that pub can create. So the flavour profiling is different from anywhere else.
“In terms of category expansion I think rum is probably going to come through as the next big spirit, and again the opportunity for distilling that will come through, as it is something that can be done with relative ease.
“There will be more and more striving towards creating something totally unique to your business.”
Opportunities To Do More With Food
As mentioned above, food has become an important part of the premium pub offer in recent years.
Paul: “In last few years in Scotland [Paul is BDM for the North of Scotland] the evolution of food has been seismic across the country. We’re no longer thinking just on a wet-led basis, we’ve got to think about how we can tap into new markets, and food is a key part of that.”
“At the mainstream end it’s going to be pushing the food agenda and expanding the draft range.
“The value end of the business unfortunately is going to continue to decline as the wet-led model is struggling. Therefore pub companies like Greene King and their operators need to work towards repositioning those pubs and try to introduce food or create something that makes those pubs different.”
For those pubs that are already doing a great food offer there are still opportunities to explore. Specialising in a particular type of food, whether that’s ‘Great British Classics’ or having your own unique 200 day aged steak from the on-site meat locker, creates more opportunities to deliver what customers want. Many pubs are increasing their food offer to include everything from private dining experiences, to street food in the beer garden.
One opportunity that has great potential in the future is providing a food delivery service. This has become a viable option with the advent of companies like Deliveroo and Just Eat.
Paul: Using Deliveroo and Just Eat, a fully delivered option for a pub is going to become more important as time goes by. We’ve run a few trials up in Scotland, with varying levels of success. One in particular has been hugely successful and now constitutes around 20% of the pub’s food sales every week.
“As that marketplace gets busier, as you’ll have companies like Amazon and Uber going into the marketplace shortly, it’ll put more and more pressure on companies like Deliveroo to reduce their rate and it’ll become more accessible to more businesses. If you can get into that early and establish yourself, I think it will be hugely beneficial in the future for any pub.
“Of course there are certain things that don’t travel well but arguable most of our pubs will serve a better burger and chips than perhaps the local chip shop or kebab van. Those traditional favourites are things we [pubs] have built our reputation on, the best steak pie, or the best fish and chips, or the best burger and chips. It’s something that will become more and more important as time goes on.”
The Digital Revolution
Digital start-ups like Deliveroo and Uber, have created new opportunities for more traditional businesses like pubs. In other ways too digitalisation has changed the way businesses are run, and how key activities such as marketing and managing staff are done.
Having a social media and web presence is now an important tool in any pub licensee’s marketing toolkit, but they can’t entirely replace traditional promotional activities either.
Nick: “There are some people out there that are great on social media. They have a great Facebook page, but they don’t have a website or very good communications, visuals, outside the pub. In my view you have to get all aspects right, all parts of the machine have to work at the same time.
“On the other hand there are also some really good examples of excellent operators and offers, but they’re not strong on social media and they don’t promote their pub. You wonder how much more business they could attract, and how the business could grow if they got these things right.”
Outsourcing some business activities, such as social media or digital marketing, is something many small businesses are doing to ensure they get it right.
Paul: “Some of the switched on operators will be able to manage it themselves, but certainly the multiple operators will outsource it. They understand the importance of social media but they also understand that they don’t have the time to do it themselves.
“Launching a new pub offer is a good example where outsourcing can help. We have a company we use that do launch packages for investments for us. They’ll visit the pub, meet with the business partners and do the whole build up and launch campaign on Facebook. They’ll also launch the website and manage the marketing for a 3 month period and keep the momentum going. Thereafter they’ll also offer the business partner the option to carry on the service and ensure that this is done effectively.
“If this is left to the business partners they can often be far to caught up in other things such as getting the bar stocked, setting up the kitchen, training the staff – the 101 things you have to do when you launch an investment – and therefore the social media element of it can often become an afterthought.”
Other digital tools are delivering important insights and support to pub business partners that were previously unavailable to them. One such area is in managing labour effectively, ensuring that the pub is not over or under staffed.
Nick: “There are various platforms like S4 Labour, which is a resourcing tool that allows licensees to schedule their labour depending on how busy they think they’re going to be. It can be linked to your sales forecast and the weather forecast to get a better idea of how much labour you need. Many businesses either spend too much on labour or not enough. These tools help them manage their labour resourcing and help them predict whether they can take more money with more staff, or save money by reducing their staffing at slack times, especially with the minimum wage.”
These subscription based SaaS tools are affordable for many operators, not just the larger multiple operators, and can deliver significant cost and time savings - as well as giving peace of mind.
The trends and opportunities shared by Paul and Nick above are just a snapshot of how innovative the industry has become, and how successful licensees are using all the tools at their disposal to keep ahead of the market.
If you want to find out more about running a pub with Greene King and being part of this exciting and dynamic industry, please get in touch with the Pub Partners team. Call 01284 714497.