Pubs are as much a part of life in the UK as fish and chips, cricket, and that favourite British pastime, queuing. But recent years have seen more locals shutting up shop, or struggling to survive in the face of rising property prices, as well as punters drinking less, or opting to drink at home. What can embattled pub bosses do to improve their businesses’ fortunes, boost sales, and attract more customers? And how might a little investment be best used to increase profits?
Fewer pubs – more diversity
It’s a sad fact pub numbers have fallen, with as many as 31 closing every week, according to the Campaign for Real Ale. Many properties are converted for sale as flats, while others become supermarkets or other commercial premises. Britons are also drinking less – an average of 7.7 litres of alcohol was consumed per head in the UK in 2013, compared with 9.5 litres in 2004, the British Beer and Pub Association calculates.
However, there are reasons for optimism. The face of the average landlord is changing - more young people are entering the industry, recent research from Barclays indicates, while one in five pubs is solely run by a woman. This greater diversity behind the bar is also seeing increased innovation in what pubs offer, with the average turnover of pubs growing by 23 per cent as a result.
There’s more to life than lager and crisps
Ambitious landlords are introducing better food, varied wine menus, live entertainment, even cocktails to win custom. Others are providing services never traditionally associated with public houses. Pub is The Hub, a not-for-profit organisation that aims to keep local pubs open, has helped more than 500 hostelries around the UK to expand to include post offices, farm shops, and libraries in remote rural areas. Elsewhere, facilities such as creches, pensioner lunch clubs, and film societies have been introduced to attract clientele who may not drink alcohol, but still want to congregate. In tourist areas, pubs are renting out canoes and bikes to visitors, or setting up campsites, as well as providing all the usual pints and pub lunches. The Prince of Wales in Bridgend, Wales, has even opened a history and heritage centre documenting the building’s story, and that of the local area to attract more trade. Boost Capital has witnessed more pub bosses applying for loans to put increasingly imaginative plans into action, all with a view to widening their appeal, and increasing profits.
What customers want
At a simple level, publicans who want to improve their numbers should start with the basics – determining the local market, and what people really crave. Look at competition in your area, the pricing of drinks and food in nearby pubs, and, importantly, what isn’t being offered by other landlords. Compare this against your own business. Undertake market research of customers: do they want homemade bar snacks; an upmarket gastropub menu; promotional events; or live music? Common attractions, such as Sky Sports packages showing big games, or amusement machines, could boost revenue – though the cost of rental varies across companies and estates, and should be carefully weighed up.
When did you last decorate the pub, or refurbish premises? As much as a third of the business Boost Capital has done in the past has been with those working in hospitality, and bridging gaps in fluctuating cashflow, plus revamping tired surroundings are two of the most common reasons business owners in this industry seek out loans. It’s more than a spring clean of the business – we’ve seen many small and medium-sized enterprises (SMEs) vastly improve their turnover and profits by creating a more sophisticated atmosphere, increasing covers, extending the bar area, or reinventing the enterprise as an entertainment destination, rather than just remaining as an ordinary watering hole.
Craft ale revolution
Bucking the downward trend of pubs has been the growth in craft beers in Britain in the last decade. When Gordon Brown introduced tax incentives in 2002 for breweries producing fewer than 3 million litres of beer a year, he set in motion a craft ale revolution that has seen UK breweries mushroom to 1,300 - more per capita than any country in the world. And drinkers are thirsty for these new beers, with cask ales sales estimated to reach a fifth of all on-trade receipts by 2020, the annual Cask Report calculates. This is a market that savvy pub bosses shouldn’t ignore, when one considers that beer already accounts for 64 per cent of the average pub’s wet sales.
Cask ales are unique to pubs, since they can’t be sold in supermarkets - a major selling point for those specialising in this area. Cask enthusiasts also visit pubs more often than other drinkers, the Cask Report shows, so rotating guest beers could lure in this keen and curious crowd. Hold a beer festival, marketing the uniqueness of your pub via social media, an increasingly popular tool with the beer-drinking demographic. Invest in staff training, since these customers are discriminating, and expect a pint to be properly kept. But don’t make the error of stocking too many ales, and potentially damaging quality or profitability.
This British beer renaissance, combined with the increasingly entrepreneurial zeal of many publicans, are genuine reasons for optimism in an industry that continues to face its challenges. And those in the licensed trade should also be cheered they have more choice in terms of funding than ever before, from alternative finance providers like Boost Capital, as well as the invaluable help provided by specialist pub finance brokers who are expert at guiding those looking for investment capital. Research your customers, consider offering more than the standard pub formula, then decide which changes may yield future rewards. Pubs will remain a vital part of Britain’s make-up – but they must evolve to remain relevant to the communities they serve.
By Alex Littner, Managing Director of Boost Capital