The pub food market would be virtually unrecognisable to the customer of 30 years ago, as it responds ever more rapidly to changing consumer demands. Writing on the CGA Strategies blog, Scott Elliott has some interesting thoughts and insights on a pub food market that is constantly evolving…
And growing – food sales in pubs are now worth £7.5 billion a year and increasing by over 4%. CGA’s latest research quantified for the first time that more money was spent last year on food in pubs, than on food in licensed restaurants.
Going out for food meets many different needs…celebrations, date nights and family get togethers, and more. But for most people it is viewed as a treat. Restaurants used to get a larger share of this discretionary spend, however the food offer within pubs now is so varied that it can easily meet the different needs of most consumers…be that cheap and simple or Michelin star dining.
Understanding the ‘treat’ mindset
The best pub food retailers have done a fantastic job of leveraging their offer to tap into this treat spend mentality, but it is essential for all retailers to understand this mind set if they are to maximise spend per head and drive footfall in an engaging and relevant way.
Does this mean that driving down the price to consumers is business critical? For some parts of the value-driven market, yes. For most others, absolutely not. Some would say that this does not make sense in such a tough economic climate. Surely price is king? To those holding that opinion, why in the on trade, are all premium drink variants outperforming their mainstream counterparts…across every single drinks category? Treat spend mentality leads to premiumisation not price reduction.
Standard lagers have increasingly been rationalised over recent years to make way for trade up options such as world beer, craft beers and micro-brewery beers. Premium soft drinks are showing huge growth, particularly in food led outlets.
Trading up whilst going out less
Counter-intuitive as it may seem for many, these tough times have bred a mentality focused on going out less but trading up to enjoy more premium experiences and brands.
Premiumise or drive value
What other trends have we seen from the drinks sector that may be applicable to a modern, and increasingly sophisticated food proposition? We know that a lack of clarity around the offer (any offer) causes problems. Large parts of the market are premiumising to tap into treat spend. Another part of the market is driving value to maintain accessibility for cash strapped value-seekers.
It is the businesses or brands sitting in the middle of this scale that are exposed. Not being able to offer a competitive value proposition or one of enough quality to represent a treat, is a recipe that rarely works in drinks and will be no different in food. Knowing your place in the local landscape and flexing accordingly is very important – local, not national, benchmarking being essential here.
Bartender and waiter ‘advocacy’
CGA recently carried out research which found that 86% of drink consumers are ‘very receptive’ to bartender recommendations. Appropriate and well-timed advocacy is commonly found behind the bar, but it is not used enough in the dining area.
Significant value could be unlocked if more mainstream pubs adopt this process: if the average food pub up-sold 1 in 10 rump steaks to sirloin, then it would result in increased sales of £93 per month or an extra £1,116 per outlet per year. Not to be sniffed at for asking a question.
Easy trade up
Linked to this, drinks portfolio engineering to encourage trade up is a hot topic and CGA regularly advises on optimum pricing ladders. Similarly, food menus must allow easy trade up, with the price relationship between the standard offer and trade up being both appropriate and compelling.
Consumers must be able to easily match their mission and the food offer. Excessive price gaps between the entry level offer and the next trade up simply result in the customer choosing the cheapest option. This clearly does not tap into the ‘treat mentality’ and, for those consumers in this mission state, actually has the opposite emotional effect.
Brands work
Apart from a few categories, brand is king in creating consumer differentiation. Intuitively, this would not translate to food menu items but in the latest food research CGA actually found that branded pies (e.g. steak and ale with a branded ale) sell twice as much as their non-branded counterparts!
Small changes: big gains
Clearly, small changes to your menu could deliver big gains in your till. Further evidence that growing revenue is often about a willingness to make multiple, seemingly minor, changes rather than a single big bang.
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