Pub Catering - UK - July 2008

SUMMARY

Abstract

The introduction of the smoking ban, spiralling raw material, energy and employment costs, terrible summer weather and the continued erosion of the beer market have piled troubles on pubs in recent years. While these threats continue to erode margins, the greatest concern for industry executives is the prospect of a slowdown in consumer spending.

Pubs are undergoing something of a metamorphosis: the smoking ban has created a change of atmosphere and customer profile with more women, families and older generations now eating and drinking in such establishments. However, customers are less regular and declining in numbers by around 2.5% since 2003. Cheap supermarket prices have led people to drink more at home. Some pubs have not been able to adapt and move with the times and are closing at a rate of 27 a week. Pub food has been the saviour for many and represents an increasing 29% of pub sales; in the last five years this has grown from 23%. Revenue from food is predicted to grow by 3% annually for the next few years.

This report looks at the hypothesis: "Why hasn't food saved the traditional British pub?" It provides consumer behaviour and attitudinal data towards eating in pubs and what influences their choices, trade comment on what changes are being made to keep up with changing customer needs and insight into the future trends and issues facing the industry.

Key report themes:

• Will consumers continue to spend their stretched incomes on eating out in pubs?
• With rising costs, will pub catering continue to deliver sufficient margins to keep food on the agenda?
• What impact has the smoking ban had on pubs?
• Is there a need for pubs to diversify?
• How have changing consumer trends affected pubs?
• How important is food in terms of pub revenue?

TABLE OF CONTENTS

Table of Contents

• Issues in the Market
• Key issues
• Definition
• Abbreviations
• Market in Brief
• Market conditions
• The changing face of customers
• Changing eating habits
• Diversifying
• Pubcos and breweries
• Internal Market Environment
• Key points
• Eating out market
  • Figure 1: The UK market for eating out*, by sector, 2003-07
• Pub visiting
  • Figure 2: Pub/bar visiting for a drink or a meal in the last 12 months, 2003-07
  • Figure 3: Frequency of visiting pubs/bars for a drink only, 2003-07
  • Figure 4: Frequency of visiting pubs/bars for a meal, 2003-07
• Attitudes towards social drinking
  • Figure 5: Agreement with selected lifestyle statements regarding drinking, 2003-07
• Food for thoughts
  • Figure 6: Agreement with selected lifestyle statements regarding food, 2003-07
• A mixed bag of tastes
  • Figure 7: Types of restaurants visited in the last three months, 2003-07
• Food prices
• Beer and alcohol prices
• Legislation
• Smoking ban
• Other red tape
• Unfair competition and practices
• New opportunities
  • Figure 8: Frequency of eating breakfast out of the home, March 2007
• A very British summer
• Broader Market Environment
• Key points
• Economy in sombre mood
  • Figure 9: GfK NOP Consumer Confidence Index, 2007 and 2008
  • Figure 10: Trends in personal disposable income and consumer expenditure, 2003-13
• Working hours on the increase
  • Figure 11: Amount of time spent on occupation on an average working day, 2003-07
• The wealthier classes grow in numbers
  • Figure 12: Forecast adult population trends, by socio-economic group, 2003-13
• Golden oldies are growing fastest
  • Figure 13: Forecast adult population trends, by lifestage, 2003-13
  • Figure 14: Trends in the age structure of the UK population, by gender, 2003-13
• Table for one
  • Figure 15: UK household sizes, 2003-13
• Competitive Context
• Key points
• Eating out is still a priority
  • Figure 16: Expenditure priorities, 2007 and 2008
• Eating out expenditure is on the increase
  • Figure 17: Consumer expenditure on selected leisure goods and activities, 2003-07
  • Figure 18: Forecast of the UK market for eating out, 2003-13
• Strengths and Weaknesses in the Market
• Strengths
• Strength of the eating out market
• Casual dining
• Population growth and demographic profile
• Smoking ban
• Changing culture
• Weaknesses
• Rising (food) costs
• Belt tightening
• Changing culture
• Oversupply and competition
• Supermarkets
• Market Size and Forecast
• Key points
• Tougher times ahead
  • Figure 19: Forecast of the pub catering market, 2003-13
• The past
• The present
  • Figure 20: Pub industry statistics, UK, Nov 2007
• The future
• Factors used in forecast
• Outlet Numbers and Market Share
• Key points
• Calling time
  • Figure 21: Pub outlets, 2003-08
  • Figure 22: Top pub operators by turnover 2007 and total outlet numbers, January 2008
• Companies and Products
• Key points
• Major Players
• Admiral Taverns Ltd
  • Figure 23: Admiral Taverns turnover, 2005 and 2006
• Enterprise Inns Plc
  • Figure 24: Admiral Taverns turnover, 2003-07
• Greene King Plc
  • Figure 25: Greene King Plc turnover, 2004-07
• Mitchells & Butlers Plc
  • Figure 26: Mitchells & Butlers turnover, 2003-07
• Punch Taverns
  • Figure 27: Punch Taverns turnover, 2003-07
• Other Operators
• Geronimo Inns
  • Figure 28: Geronimo Inns Group Ltd turnover, 2006 and 2007
• JD Wetherspoon
  • Figure 29: JD Wetherspoon Plc turnover, 2003-07
• Whitbread Plc
  • Figure 30: Whitbread (Pub Restaurant) turnover, 2006/07 and 2007/08
• Trade Perspective: Changing Consumer Behaviour
• Key points
• Trade Perspective: The Importance of Food for Pubs
• Key points
• ...but not for everyone
• Gastro trends
• Supermarket: friend or foe?
• Breakfast and coffee mornings
• Light bites
• Trade Perspective: The Smoking Ban Effect
• Key points
• Targeting the female market
• Drinks on the up
• Trade Perspective: Is There a Need for Pubs to Diversify?
• Key points
• Prospects and barriers to growth
• Brand Communication and Promotion
• Key points
  • Figure 44: Advertising expenditure by selected pub operators, by channel, 2007/08
• Beefeater Steak Houses Ltd
• JD Wetherspoon plc
• Harvester Restaurants
• Pitcher & Piano
  • Figure 45: Advertising expenditure, by selected pub operators, 2003-07
• Frequency of Eating in a Pub
• Key points
  • Figure 46: Frequency of eating in a pub, 2006 and 2008
• Who eats and when?
• Appendix: Frequency of Eating in a Pub
  • Figure 57: Frequency of eating in a pub, by detailed demographics, April 2008