Food sales continue to be critical in maintaining and growing pub revenues, and Mintel’s recent Pub Catering report provides useful insights into the increasing competition in the market and how operators are striving to build their brands, attract consumers, and innovate.
Overall, continuing pub closures constrain the size of this market, as does competition from many dining outlets – including the ever-growing coffee shop sector, which is also starting to look more seriously at its food offerings. However, Mintel suggests that consumers overall see pub catering as a value-for-money category which, with operators’ efforts to innovate and promote, should help the sector to grow.
As can be seen below, that growth could move revenues up by £1.2 billion or more by 2017.
Market factors
Whilst eating out remains high in consumers list of priorities, the need to save money has also risen and overtaken dining out as a top priority, requiring operators to work hard to maintain or rekindle their customers’ interest and prevent further migration to takeaways, coffee shops and the like.
Mintel believes that the market will continue to polarise, with concepts increasingly tailored to the needs and demands of specific consumer groups. In particular, both the Pre-/No Family and Retired lifestages are expected to grow strongly.
Attitudes towards pub catering
25% of pub diners say they have reduced their spend on food in pubs over the last year, though price promotions are still prolific in this marketplace. However, they also remain prevalent across the wider eating-out market, with the result that many consumers are ‘promiscuous’ in terms of venue choice – seeking and using vouchers when making their choice of venue.
This level of promotional discounting has damaged brand loyalty levels and also undermined perceptions of ‘quality’: diners are sceptical that standards are maintained for discounted meals.
Menu innovation opportunities
25% of diners state that they prefer pubs with dishes that are different from standard pub food, and 29% often order from the specials board, emphasizing the need for menu innovation.
And only 20% state that price affects which pub they visit more than menu, highlighting that pubs can compete on grounds other than price.
20% of pub users believe that good quality snacks usually mean good food on the rest of the menu, and nearly 20% are interested in seeing a wider variety of snacks at pubs/bars, whilst 11% want to buy dips (such as salsa) to go with pub snacks.
Freshly baked snacks such as morning goods also offer pubs the opportunity to compete with coffee shops, but pubs will need to develop their offering to be successful here by adding hot drinks ranges, breakfast menus and/or Wi-Fi provision.
In Summary
The trend towards food-led pubs continues in an increasingly competitive market – both amongst pubs, and their eating venue competitors. Poor weather, horsemeat scandal, the need to economise, and rising customer expectations, all add to the pressures on pub operators.
Pubs must therefore be effective in communicating both their offer, and its specific added value(s), in order to make customers aware of the enjoyable ‘experience’ they can expect, and the menu range and attractions available to them.
Pub operators will continue to need to innovate, whether to compete against other pubs, to target and attract specific sectors – the Retired market, for example, that will seek comfort amongst other criteria – or to compete with coffee shops or take-aways in their area.
In all this, communications will be essential in order to build loyalty, attract and retain customers: no doubt social media will play an important part in this.
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