The Pub Conference will return on 2 July 2019. To be the first to hear about our 2019 programme, please register your interest by emailing Ubaidah.Abowath@mca‑insight.com.
People, product and pricing were the three strands of focus for the 2018 MCA Pub Conference, which brought together senior representatives of over 50 pub operators, investors and suppliers. The pub sector has re-established its position as the growth driver for the wider eating and drinking out market, and after a long period of annual decline, MCA predicts it is set to return to positive outlet growth within the next five years.
The 2018 Pub Conference delivered insight on:
- Trends attracting investors to pubs Read more >>
- The importance of company culture Read more >>
- Consumers’ attitudes towards cocktails and craft beer Read more >>
- Understanding the customer digital journey Read more >>
- Supporting and developing people Read more >>
- How the pub sector can work together to promote itself as an attractive long-term employer Read more >>
- How gamified simulations can help tackle training challenges Read more >>
- The power of joint ventures Read more >>
- Steve Richards on delivery and what pubs can learn from restaurants Read more >>
- MCA’s UK Pub Market Report 2018 Read more >>
- New River: the game-changing acquisition of Hawthorn Leisure Read more >>
- Discounting strategies Read more >>
- JD Wetherspoon’s pricing strategy and app Read more >>
Trends attracting investors to pubs
“Food has been important for a long time, but restaurant companies are becoming more interested in the pub market, whether that’s transplanting their menu and operations straight into pubs, or simply wanting to open pub businesses within their portfolio”, said Graeme Smith, managing director of consulting firm AlixPartners. “If you put the same menu in a pub as you do in a restaurant, the net promoter score will generally be more positive in the pub environment”, he noted.
Accommodation is an area that AlixPartners sees as a great way to convert unused space and drive demand during quieter times, such as breakfast. He believes this trend is expected to continue and is attracting investors. He also spoke about the success seen by the likes of Flight Club, Bounce and Swingers, and pointed out that the experience side of leisure is a trend set to continue, adding “Let’s not forget that it’s where dartboards originated, and is a very traditional pub activity”.
Looking at the market as a whole, he said it was quite fragmented. He pointed out that a large number of pubs could use good retailing skills to drive profitability and growth. However, he added that the market is “really buoyant”, with activity across all its subsectors. “It has been robust and resilient for the past two years, and that kind of state attracts investment. We are also seeing good support from banks in terms of supporting that growth. For businesses in the sector looking to grow, there are a multitude of options, both across equity and debt”.
The importance of company culture
New World Trading Company (NWTC) representatives spoke about their aim “to find and develop like-minded people who share our values”, which include ambition, individuality, integrity and happiness at work. Chief executive Chris Hill was joined on stage by NWTC’s HR director Natasha Waterfield, and three employees – beer guru Lauren Soderberg, senior operations manager Leane Patching, and Tribes development manager Tamara Johnson – who had evolved their career paths in the company to suit their strengths and what they were most passionate about. Waterfield explained that the company sets out to identify people’s skillsets and work with those skills to develop a career path for them. “NTWC has allowed people to grow and be involved in different aspects of the businesses, and I think that’s what allowed us to retain some of the greatest people and to react to innovations,” she said. “Don’t try to squeeze people into roles. There is always a role for good people in your business,” added Hill.
Consumers’ attitudes towards cocktails and craft beer
Melissa Yorke, sales director GB on-trade at Diageo, stated that cocktails are now worth about £500m in total on-trade sales. “People don’t see them as a treat anymore. They have become normalised and people expect to be able to go into a pub and get a well-made cocktail.” On the subject of craft beer, she said it might surprise some that 35% of people who drink beer have never tried craft beer. “It is a statistic that might shock a few people, as we think that craft beer is pretty mainstream, but it is still only about 5% of the total volume of the beer category.”
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Understanding the customer digital journey
Colin Sullivan, new business sales director of Eagle Eye, talked about the importance for pubs to understand their customers and their digital journey. However, he warned companies not to fall into the trap of analysis paralysis, i.e. collecting lots of data but not turning it into something intelligent, is critical before businesses can set about taking action.
Supporting and developing people
Fuller’s chief executive Simon Emeny stated that the company anticipates they will need around 4,000 colleagues over the next 18 months, just to continue to run their pubs to the standard that they do now. He explained that people are encouraged to give their personality to Fuller’s pubs, because this is the only way to compete in a marketplace where customers have an increasing choice of dining experiences. As part of this, the pubco-brewer introduced Five Golden Rules of Engaging Service, which has a strong emphasis on “engaging all team members in delivering an experience, not just functionally serving a customer”.
Kitchen staff development and retention has been the biggest challenge for Fuller’s, he said, adding that the company has significantly increased investment in training and infrastructure. In addition, its chefs now have access to a range of financial and non-financial benefits, which put them ‘on par’ with what its most senior managers are offered, while air conditioning has been installed.
Emeny also accused Westminster of failing to recognise the importance that the hospitality sector plays in the economy, adding that politicians had put the industry to the “back of the queue” by not prioritising apprenticeships in the sector.
How the pub sector can work together to promote itself as an attractive long-term employer
When discussing how to attract, retain and nurture people working in hospitality, the focus can inevitably turn to building a career in management. Though this may be key in attracting ambitious leaders to the trade, this should not be the only focus, according to Adam Gregory, managing director of Be At One. “We should not assume everyone wants to be a manager […], bartending is becoming really well regarded as an aspirational position to be in.” Training includes three weeks of closed-bar work and closely mentored mixing, with a five-week plan to become a certified bartender. “They should automatically be able to grab bottles without reading labels. There are no prep lists behind the bar – they need to know how to make all 108 cocktails,” he said. For Gregory this is just one of the stories that needs to be told more loudly in order to attract more people to the industry. “It’s one of the very few [sectors] where you can start at the bottom and work your way through lots of different businesses and do lots of really cool stuff.”
Tamsyn Hawkins, people director at St Austell Brewery, added: “We attract huge diversity. There’s an opportunity to do more, and approach people who perhaps haven’t had a traditional academic route. I would put myself in that category, having had the opportunity to grow into the role I hold now, purely because I’ve worked in the service industry.”
Greg Mangham, founder & chief executive of the new charity Only A Pavement Away, added to the topic by explaining how the charity aims to help homeless and vulnerable people into careers in hospitality, in turn helping solve recruitment issues within the pub sector.
How gamified simulations can help tackle training challenges
Krister Kristiansen, UK MD of Attensi, discussed how gamified simulations can enhance training, and in turn improve customer experience and consistency across staff. He explained how gamified simulations encourage repeated learning, which is a more effective approach than one-off initiatives. The gamified training concept can support a variety of requirements, including both role-specific training and general knowledge of menus, drinks and regulations. Attensi has worked with the likes of EAT. and Itsu, both seeing the value of gamified simulations for helping staff deliver exceptional customer service.
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The power of joint ventures
Speaking about its joint venture with Charles Wells, Steve Wilkins, co-founder of Little Gems Country Dining, said the Charles Wells business was “the right cultural fit for the partnership”, with the geographical location and quality portfolio of sites also key factors in the decision to work together. “Over the next three to four years, we have to deliver a sustainable managed house business for Charles Wells,” said Wilkins, adding “it’s not just about quick wins”, but about putting long-term plans in place.
Steve Richards on delivery and what pubs can learn from restaurants
Steve Richards, chief executive of Casual Dining Group and deputy chairman of UKHospitality, stated that getting the balance right between being a national business and ‘localness’, which customers love about pubs, is crucial. He also commented on delivery, explaining that “as long as the concept is simple and deliverable, then you can really use these channels”. He added that operators don’t need to see delivery as a threat, commenting that the launch of virtual brand Stack & Grill has been “tremendous for us”.
MCA’s UK Pub Market Report 2018
Steve Gotham, director of insight at MCA, and Simon Stenning, strategic advisor at MCA, presented the headline messages from MCA’s latest Pub Market Report, which shows that growth in pub sector turnover is set to outpace the wider eating-out market for the first time since 2008. The market is forecast to reach a value of £22.5bn in 2018, up 1.6%, ahead of the 1.5% expected for the total eating-out market. Total pub numbers remain in decline, however MCA expects outlet growth to be flat from 2021, and to turn positive from 2023. With the end in sight for tenanted conversion and disposal programmes, the underlying growth in managed and independent pubs is likely to drive overall growth.
The fastest growing pub and bar brands over the past year are all wet-led, tapping into consumer demand for distinctive, premiumised offerings that are not easily replicated at home. However, the report highlights that in a value-focused market, pub performance could arguably be stronger. Food-led pubs have faced considerable external pressures but the report stresses that the segment needs to show the same level of innovation and new product development as wet-led brands. Other potential revenue drivers for pubs include accommodation.
New River: the game-changing acquisition of Hawthorn Leisure
Mark Davies, chief financial officer at NewRiver, discussed the acquisition of Hawthorn Leisure, explaining that both NewRiver and Hawthorn Leisure have a similar ethos and an aligned business culture. These factors, combined very little geographical overlap, create strong opportunities to scale up the growth of the business. “We want to combine best practice across the estate. We will continue to invest in operations, finance, marketing, supply chain and distribution, and we will be maintaining the Hawthorn brand. There is also a lot of capex investment opportunity, particularly in applying some of the great successes in the Hawthorn portfolio to the NewRiver portfolio,” he explained.
Discounting is a controversial subject, and one Charlie McVeigh, the founder of Draft House, was in favour of – given the right approach. McVeigh said that well executed, clear and consistent discounting promotions can drive sales during quiet times of the week. Rohan Pradhan, chief operating officer at Deliveroo, shared the idea of incremental growth through targeted discounting. Although Deliveroo doesn’t price products on behalf of operators, he explained that they can build tools to target customers so they spend on occasions they would not have considered, adding that volumes on the food delivery platform rise when discounting. Hippo Inns co-founder Ian Edward agreed with the premise of discounting being best executed with a targeted strategy. “Discounting is the devil’s business”, he said. “If you go down the discounting route without thinking it through, you will destroy your business.”
JD Wetherspoon’s pricing strategy and app
JD Wetherspoon chairman Tim Martin has shrugged off praise about his group’s “scientific” pricing strategy, insisting “we don’t know what we’re doing”. “I’ve just been to three pubs within a mile of each other, and the prices bear no resemblance to anything. I call it RPS – random pricing syndrome. It’s very difficult for people to counteract because even we don’t know what we’re doing,” he said. The comments follow earlier praise at the conference from Hippo Inns co-founder Ian Edward who suggested that real thought had gone into JDW’s pricing. He referenced an FT analysis of JDW’s pricing, which used the group’s highly successful app to establish significant price differentiation across the regional estate. Discussing JDW’s app, which has become one of the most successful of its kind, despite his own technophobia, Martin warned against using too much IT. “It’s very expensive, it’s a double-edged sword, it doesn’t always do what it says it will do. […] I think the answer is never be a leader. Go last. Wait until everyone else has got it,” he added.