What does premiumisation mean for your pub?

In recent years, many pub companies like Greene King have invested heavily in their pubs so that operators can deliver a higher quality, premium customer experience with products to match. We call this ‘premiumisation’ and it’s something prospective pub tenants need to know about because it can be the key to increasing profits and developing a successful pub business.

Pub tenants and leaseholders are ideally suited to delivering a premium offer. Unlike the managed house sector, which delivers a consistent brand offer across all pubs in a chain, pub tenants have the flexibility to deliver something different and unique in their pub.

If you’re thinking about taking on a pub tenancy we recommend that you explore how to grow the business with premiumisation. So we asked our Business Development Managers to share the benefits and steps to take to capitalise on this trend. Here’s a digest of what they said:

How does premiumisation work in the pub trade?

In basic terms it means selling higher quality (or perceived higher quality) products to the consumer. The ability to increase your cash margin on these brands enables operators to take more cash, even if sales are in decline. 

Premiumisation isn’t only about offering premium products. If a pub is currently trading at the value end of the market, premiumisation could mean taking it up a level and making it more of a mainstream offer.

5 benefits of premiumisation

1. Increased cash margins and better profits.

2. Ability to drive footfall by meeting demand for premium products.

3. Increases the range and diversity of a pub’s offer – something for everyone.

4. Creates interest and opportunities to market new products and experiences.

5. More choice improves the customer experience.

How to use premiumisation in your pub

Premiumisation is about providing the best and most relevant offering for the customer base and demographic of the business. It’s subjective and dependent upon your starting level within the business, so it’s about moving the offer to a new level.

However, what some licensees may think is premium is just the new mainstream; customer expectations have moved forward (you can get full table service in McDonald’s!) so make sure you understand what your customers perceive to be premium. Gin was the ‘next big thing’ five years ago but many operators are still promoting their gin range and gin-related events as if they’re ahead of the curve. That’s fine if your customers are also late adopters, but not if your customer base expects your pub to be switched on to the latest trends.

Keeping up-to-date is essential, so make sure you read the trade press and your PubCo’s communications to stay ahead and spot emerging trends and brands.

Be innovative and bold with the range and your product choices. Set yourself above the mainstream with some aspirational products or suppliers.

Many brands offer great support and materials to help you promote a premium offer. Our regular tenant roadshows are a good opportunity to get help. Suppliers are invited to deliver presentations to our pub partners and key topics are often the latest industry trends and how to deliver them. Use these events to get the support you need.

When introducing premium products, amazing attention to detail in all areas is really important. It’s not just about stocking a premium range of spirits or ales, it’s also about the service and your standards. A premium drink sold in a cheap glass, served on a sticky bar with threadbare beer mats doesn’t deliver the customer experience required.

High prices are not a sign of a premium product. They must also deliver what your customers perceive to be value for money. Therefore, a quality lager or ale, sold in the right glassware, maintained at the optimum temperature, treated with care and attention may have a higher price than a cheap pint but the right customers will value this product and be prepared to pay for it.

Premiumisation can also be applied to your menus and food offer. It could be the difference between offering standard frozen catering chips and handcut, double-fried homemade chips. Or it might about developing a fine dining experience in your restaurant, and premium quality snacks and pub classics in your bar.

When our BDMs talk to prospective pub operators about their plans for a new pub, we’re looking for people with ideas for taking that pub to the next level and who are open to the concept of premiumisation. That’s because for many pubs it’s the most effective way to attract and retain customers, stand out from competitors, and increase profits for the pub tenant and PubCo.

Tell us about your ideas! If you’re interested in taking on a pub tenancy or lease, get in touch with our team to discuss your ideas and plans. Call 01284 714497.