When Enterprise Inns chief executive Ted Tuppen last week predicted that 2008 would be "difficult for some pubs", the industry sat up and took notice. As the head of the UK's second-largest pub owner and operator, he has more than 7,700 pubs under his control in a property empire worth £5.7b, so he is a man worth listening to.
Tuppen revealed his concerns that the "value for money" pub food market was becoming overcrowded, and he advised licensees to "do it really well or not at all" when it comes to grub.
He said that £1 in every £5 spent in Enterprise pubs goes on food, after the company boosted its food offer to offset drinks losses compounded by the introduction of the smoking ban in England and falling levels of beer consumption generally.
But how do you formulate your food offer? The pub market is increasingly fragmented on the issue. The lower end of the market is offering a menu of sandwiches, wraps and burgers in the £5-a-head bracket, while the so-called premium pub market is seeing the line between pub and restaurant become increasingly blurred.
Food has been the fall-back position for a pub market fundamentally altered by legislated changes in recent years. While the liberalisation of trading hours in the Licensing Act 2003 has, on the whole, failed to lead to a rise in alcohol sales volumes, it has been the smoking ban, and its knock-on effect on customer composition, that has had the most serious effect.
But in their focus on the casual diner, pubs are not just competing against each other. High-street dining chains from La Tasca to Strada have unveiled plans to increase the size of their estates over the next 12 months, while competition for the lunch pound will intensify, particularly from fast-food chains.
"The worst thing you can do is ignore the fact that the industry is going more with food," said Patrick Dardis, retail director at Young's. "We believe we can give restaurant-quality food at really good-value prices. You cannot produce food of quality cheaply."
Young's, which operates primarily in London and the South-east, has forced itself to evaluate its estate and push its offering towards the premium end of the pub market. Dardis said that the restructuring gave the group a chance to evaluate its pubs - a mixture of quality food outlets, community pubs and sports-led boozers - with an effectively blank slate.
"At the time, there was a lot of movement into the low-end pricing division, and I was surprised at how many pub companies jumped on that bandwagon," he said. "We had an opportunity to look for a niche in the marketplace.
"We wanted to look at the more discerning end and improve our mix of males and females. We had a 90% to 10% split in some pubs now we have a closer to 60:40 split."
Young's now gives full autonomy to its chefs to develop individual menus, while every one of its managers is taking advanced wine courses. The returns from this strategy have been stark, with average turnover per pub rising from £10,000 to £20,000 a week.
But how much does the tag of "premium" or "value for money" actually mean? Nigel Bunting, retail director at Shepherd Neame, insists that the group does not position its pubs as premium or otherwise.
"We are 375 individual pubs with an offering that is tailored for that community," he said. "We try to make each offering unique, but you always have to look at the local market."
He added: "We consistently want to deliver value rather than price. There has been a quicker flight to quality. It would have happened over a number of years, but the smoking ban has speeded this process up."
Standing out in a crowd will become vitally important in 2008, particularly with such operators as Admiral Taverns looking to introduce new revenue streams to previously underperforming pubs.
With wet-led, male-dominated pubs increasingly becoming an anachronism, offering food in itself will no longer be a differentiator.
But it will not all be about premium dining.
Sam Pedder, head of food at Admiral, which has more than 2,700 pubs in its portfolio, said: "I do not agree with serving crap food, but I do not agree that pubs should be under pressure to serve a full menu. There is nothing wrong with just doing sandwiches at lunchtime if you just do really good sandwiches."
By Christopher Walton