The recent history of the pub sector has often been the story of ‘unintended consequences’ –from the smoking ban to the pubs code. However, MCA Pub Market Report shows that the pub sector is increasingly forging its own destiny, driven by a new generation of pub entrepreneurs. James Wallin investigates a new era of dynamism, professionalism and relevance for the sector.
As Sapient’s Peter Hansen pointed out at MCA’s The Pub Conference last month, the Government’s history of intervening in the pub sector has almost always failed to achieve its target and resulted in a number of negative consequences. The Beer Orders, the smoking ban and the changes to drink driving laws in Scotland are all examples of where the intent may have been laudable but the execution left much to be desired.
The latest opportunity to bandy around those two magic words is of course the pubs code. Pubcos and industry commentators have repeatedly stressed that the introduction of the Market Rent Only option will ultimately have the biggest negative impact on the very people the legislation is intended to help – tenants. The large tenanted pubcos have already begun to diversify their businesses away from pure tenanted pubs and securing investment for those publicans choosing to go free-of-tie will be a significant challenge – especially in the current economic climate.
But this is a story that has been told many times before. What is less of a focus but is explored in detail in MCA’s latest Pub Market Report are the intended consequences of the shifting attitudes of pub companies.
The report identifies that as the sector has battled the challenges above and countless other obstacles, it has redefined itself and emerged into a new era of dynamism, professionalism and relevance.
The sector is now in a strong position to do battle with casual dining, coffee shops and even the supermarkets after a period in which the role of the pub has been completely re-assessed.
William Lees-Jones, managing director of his family firm, JW Lees, put it succinctly at the Manchester brewer and pub operator’s annual conference last week.
He said: “We spent several years after the smoking ban putting up shelters and doing everything we could to retain those customers, who were all the while being tempted back to their homes by the supermarkets. It was a battle we were never going to win and it was only when we started to focus on how we attract a new type of customer that we could put the smoking ban behind us.”
As with other operators it was food that was the gateway to attracting this new audience for pubs JW Lees and it is food that continues to be the sector’s main focus in driving further sales.
Asked at the Pub Conference whether pubs had managed to take the fight to casual dining, MCA executive director Simon Stenning, said: “Certainly the sector has made big strides but there’s still a lot more to do. Across the sector the food offer needs to become more relevant but if pubs can get over that hurdle, then I think they can win against casual dining. Customers will tire slightly of the same old chains and that’s where pubs can step in. They are unique, they are part of their community and people feel a connection with pubs that they don’t necessarily with a pizza chain.”
This focus on food has led to new expertise entering the sector - from individual pubs partnering with street food operators to Punch’s fledgling relationship with Harry Ramsden’s.
But food is not the only area of growth and innovation over the past decade. The role of accommodation has also grown exponentially. In the same way that pubs can use their individuality as a selling point against casual dining, they can do the same for accommodation. It is an area that has been a key focus for Marston’s for many years while Punch is now developing its expertise in this area through its Punch Inns model.
Likewise events have grown from being an added extra to being a crucial part of the mix for many pubs. Former Geronimo Inns managing director Ed Turner intends to put events at the centre of his new venture – Buff & Bear Saloons. He told MCA last week: “These are going to be pubs that people are going to want to get on social media and talk about what they’ve just discovered.”
Punch chief executive Duncan Garrood, again speaking at The Pub Conference, stressed that even the most entrenched of wet-led pubs has the potential to evolve to be more things to more customers. But, he stressed, it is vital that in whatever field the pubs chooses to compete, quality is key.
He said: “Especially when it comes to food we have competition from so many fronts that customers won’t give us a second chance – we need to get it right first time.”
The Pub Market Report points to the importance of the smaller operators in the recalibration of the sector. While Enterprise Inns and Punch may be displaying the greatest ambitions in terms of the evolution of their model they are often relying on the skills and creativity of multiple operators, such as with Enterprise’s managed expert division.
The report shows that newer players, such as Authentic Pub Company, Brewhouse & Kitchen, Cirrus Inns and Weston Castle, are set to accelerate rapidly over the next few years, on the back of acquisitions of disposals from large pubcos and through forging these new partnerships with tenanted groups. In contrast, some of the giants of the high street, including Mitchells & Butlers and Wetherspoon’s are facing either sluggish growth or net closures.
As the pub sector now prepares for what is likely to be its next big challenge, with consumer confidence expected to nose dive following the vote to leave the EU, it is at least in control of its offer and aligned to customer needs. The large operators are more aware than ever of the need to capture the freshest and brightest new ideas and capitalise on the energy of newer entrants to the market.
It is for that reason that this year’s Tenanted Pub Summit, to be held in Birmingham on 10 November, will focus on this talent pool – introducing the operators who exemplify this new era of dynamism, professionalism and relevance.
They are the engine room of growth for the pub sector and no one can afford to underestimate them.
For more information about the Tenanted Pub Summit and the Pub Market Report contact sophie.barber@mca-insight.com
