Premiumisation and pub tenancies
Regular readers of our Pub Partners blog may have noticed the term ‘premiumisation’ cropping up now and again. It’s a term we often use amongst ourselves and when talking to prospective pub tenants and lessees about specific opportunities. Broadly speaking, premiumisation refers to the process of taking an existing pub offer and turning it into a premium offer, moving the pub from the value or mainstream end of market and transforming it into a premium site.
Premiumsation is something many of our licensees are embracing. With the right site, it’s a way of building your own unique business and maximising the potential in a pub. As a concept it is especially suitable for pub tenants and lessees - rather than managed houses - as they can create a unique atmosphere and offer in their pub, and also benefit from the additional revenue a premium offer can bring.
It’s an exciting time in the pub trade, not least because of the way pub tenants and lessees are innovating and creating really aspirational businesses. In the last decade or so we’ve seen pubs pushing the boundaries of what a pub actually is; with some carving out reputations for fine dining, others combining a pub with another business on site, and some setting up their own coffee roastery and barista service.
What does a premium pub look like?
Premium pubs come in all shapes and sizes, and that’s one of the unique selling points (USP) for this type of offer. Customers are attracted to them because they are different, have their own character and are not a brand or chain like a managed house or coffee shop brand.
At the same time, customers also want consistency. They want to know that every time they visit your pub they will get excellent customer service, fantastic food and their favourite drinks. While menus will change and different drinks offers are introduced, customers will know that they’re guaranteed a great experience.
Pubs now have to compete with a range of other businesses, like the high street coffee shops and restaurant chains, so it’s important that a premium pub shares some of the characteristics of these venues – high standards of customer service, consistency and attention to detail – while at the same time offering an alternative.
So to premiumise a pub, it’s not just a question of introducing premium drinks like craft beers or gin, it’s also about premiumising the entire business. Below are the key areas to pay attention to:
Ambiance and Environment
Many of our pubs that have been identified as suitable for premiumisation have a refurbishment plan in place to transform the interior and exterior. Premium pubs, while still keeping the main features of a traditional pub, need to provide an environment that a range of people will feel comfortable in. Somewhere for people to have a few drinks at the bar after work, somewhere to have a coffee and chat before the school pick up, somewhere to take the family out for lunch, or to have a business meeting with a new client.
Furnishings and decoration need to reflect the quality of your offer, different seating areas created to suit different uses, and creative lighting that provides ambience as well as illumination. Attention to detail is also very important. For example, provide boutique soap and hand lotion in the washrooms, print menus on high quality paper, and a water bowl and biscuits for four-legged customers.
Naturally your customers will expect excellent customer service. Training staff so they know exactly what’s expected of them and your high standards, is really important. In a premium pub staff must understand that their job is not only to serve drinks, take food orders, and clear tables, but also to ensure customers have a great experience.
That starts from the welcome they receive when they first walk in, to the moment they step out of the door to go home. But don’t expect staff to be able to do all of this without some guidance and training. Everything from how to prepare different drinks, to being able to talkabout items on the menu or the wine selection, will ensure your staff are knowledgeable and equipped to deliver a great customer service.
Premium Food Offer
An important area of growth for many pub tenants and lessees is in food. Customer demand and changing behaviours in how people want to spend their leisure time is providing pub operators with opportunities to attract customers because of their food offer.
That doesn’t mean you have to run a ‘gastro pub’ or fine dining restaurant. Instead excellent quality food and generous portions, all imaginatively presented, is what gets people returning again and again. Many pubs are building reputations for being very good at a certain type of cooking. For example, great for steaks, chops and ribs. Or for offering an Italian trattoria style menu - with stone baked pizzas and authentic rustic dishes – or other regional cooking.
Pubs that have already created a buzz around their food offering are pushing the boundaries still more by innovating with other ideas. One of our pub operators has installed a meat locker for ageing beef; their steaks are unique to the pub, no one else has the same flavour profile, and this is attracting new customers and providing existing customers with a compelling reason to keep visiting. Other pub operators are differentiating their food offer with smokehouses, street food, takeaway service, and reinventing the British classics.
Premium Drinks Offer
For many years asking for a G&T in a pub meant a slug of Gordons, ice and a slice and a bottle of tonic. Similarly a glass of wine would be the house white or the house red, and if you were really lucky the option of a glass of rose. Now, even the more old fashioned wet led pubs may have a small choice of spirits and wines, as well as a few bottles of craft beer behind the bar.
The trend to premium drinks – such as craft beers and speciality gins – is increasingly becoming mainstream, which means those pub operators at the premium end of the market need to be looking for the next big thing. That might be expanding the rangeof drinks available, rum is now growing in popularity, or even distilling or brewing your own.
As with food, creating a unique offer that no one else can match is a great USP. We’ve got a number of pub operators who have expanded their businesses to include an onsite microbrewery or gin distillery. This complementary business not only attracts customers to their pubs, but also provides another revenue stream through direct sales of their unique products.
Premium drinks are not limited to alcoholic drinks either. There’s no excuse for not being able to serve customers with a great cup of coffee, but some pubs are doing this better than others. Get the right equipment to be able to compete with the coffee shops, train your team so they can consistently serve great coffee, go a step further and offer something unique like your own roasted coffee beans or signature drinks.
Going Above And Beyond
Premiumisation doesn’t stop when you’ve refurbished your pub, trained your staff, launched a new menu and introduced speciality premium drinks. Successful pub tenants and lessees continue to innovate, raise standards and drive their businesses forward. It’s not an industry you can sit still in, otherwise your premium offer will soon look mainstream, but it is a very exciting business to be part of.