Pubs diversifying in order to survive has been a common theme since the pandemic, Lumina Intelligence’s insights manager, Blonnie Whist told MCA’s Pub Conference yesterday.
The pub market is forecast to exceed its 2019 value by 3% in 2024 – a disappointing figure compared to inflation. A key factor in this slower recovery is outlet closures, with headline grabbing stats of between 20-30 pubs closing weekly across the pandemic
The market is forecast to grow +1.6% this year, year-on-year, behind the total eating out market at 2.6%. Whilst the total eating out market is forecast to recover to 109% of its 2019 value this year, and this is being driven by low ticket and food to go channels including fast food.
Lumina’s eating and drinking out panel data is currently painting a picture of consumers that are limiting discretionary visits – meaning pubs are having to do more to attract visitors and make more of those special occasions
Outlet closures are forecast to ease in the next 2 years as trading conditions improve and larger operators slow down estate restructuring efforts.
Lumina Intelligence expects net pub openings to offset closures in 2026, following years of annual decline as the improving economic landscape boosts investment prospects.
Whist said these declines have been driven by a number of pubcos restructuring to create leaner, more profitable portfolios in order to mitigate sector challenges and alleviate debt.
Recent estate rationalisation efforts have been seen in Revolution Bars Group undergoing a restructuring plan which will see the closure of 18 underperforming sites to regain profitability.
A recent focus of pub diversifation has been pubs with rooms, as operators look to capitalise on the increasing demand for staycations and the return of tourism.
Expanding into accommodation offers pubs the opportunity to diversify revenue streams, enhance market positioning, and attract a broader customer base seeking unique, boutique stay experiences. This approach capitalizes on the growing demand for staycations and enables pubs to maintain profitability in a changing economic landscape.
The pubs with rooms website Stay in a pub has predicted pub accommodation to grow in 2024 after it reported a 50% inc in voucher sales over the Christmas period.
Last year Heartwood Inns rebranded diversifying its proposition to include pubs with rooms, the group has since acquired multiple sites with its first pubs-with rooms opening in Dorking in February, following a multimillion-pound refurbishment. The opening marks Heartwoods first venture under a new strategy with a further four locations already underway for 2024.
The new openings will diversify Heartwood’s portfolio, capitalising on new revenue streams and strengthening its market positioning.
Meanwhile, Liberation Group has launched a new division, Butcombe Boutique Inns, and aims to become the leading operator of premium rooms in southern England, offering guests a unique, personalised, home-like stay.
Whist added that over the past year we have seen the growing importance of outdoor spaces for both consumer and operators.
For example, groups including Young’s and Star Pubs & Bars are investing in upgrading estates, with enhanced pub gardens set to capitalise on consumer demands for premium outdoor socialising experiences.
This trend is expected to continue into 2024 and during Summer months outdoor spaces drive visits, offering the chance for operators to boost capacity and maximise revenue opportunities through utilising outdoor space for drinking and dining particularly during key summer events such as the Euros.
Lumina data shows that during the month of July 1/10 consumers were more driven to choose an establishment if it had an outdoor space. This highlights the importance of these spaces especially during warmer periods and how well they are utilised
According to Lumina data from ODI Experience-focused concepts are expected to lead growth in the pubs & bars brand segment as they offer interactive social experiences and events that deliver value beyond cost, enriching out-of-home occasions.
Competitive socialising brands Boom: Battle Bar and NQ64 have grown exponentially and are seeing triple digit outlet growth since 2019. This is driven by strategic investments aimed at enhancing space efficiency within existing sites and continuous offer evolution.
The modularity provided by their multi-experience proposition is also advantageous by enabling the brands to optimize the mix of games and experiences by venue size and location as well as continue to innovate and refresh the offer to remain current without the requirement for wholesale change.
Lumina’s consumer data shows that almost 1 in 5 pub goers reported they never or rarely drink alcohol, meaning that there is a huge market for low 2 no, which has also grown 1.4ppts year-on-year.
Whist said there is an indication that adults aren’t necessarily always tee total, but are often also looking to reduce consumption and have a more balanced lifestyle. There are a few different factors underpinning these attitudes and behaviours, namely health and wellness, and an awareness of the impact of alcohol on our mental and physical health
Low 2 no consumer is typically younger with 18-24 year olds increasingly limiting their alcohol consumption, whilst men make up half of low2no consumers and interestingly this has seen an uptick of 3.9ppts year-on-year.
