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Market snapshot: themed pubs

07 July 2005
Market snapshot: themed pubs

Themed pubs generated sales of some £350m in 2003, according to market researcher Mintel, accounting for 1.4% of all spending in pubs, but nevertheless somewhat down on their peak of £382m in 2000.

The concept of the themed pub first took off in the 1990s, rising from some 43 outlets in 1993, to 489 in 2000 but by 2003 was down to 425, it argues.

As with so much of the hospitality industry, how you define the sector is somewhat problematic.

Themed pubs will normally be larger than an average pub, with a greater turnover and normally located in town centres. They will often have a relatively sophisticated food offering and, unsurprisingly, a distinct theme in terms of their décor and design.

Most commentators, including Mintel, split the market into country-themed, such as Mitchell & Butlers' O'Neill's (Irish is the most popular themed nationality) and Regent Inns' Walkabout chains.

Then there is sport-themed, such as the Sports Café chain, and entertainment themed, such as M&B's 70s-disco-themed Flares brand.

This last category, however, is more blurred, with some brands, such as Luminar's Chicago Rock Café and Jumpin' Jak's crossing over between the restaurant and pub market.

Other categories include children or family-themed, including brands such as Spirit's Wacky Warehouse, Greene King's Hungry Horse and Whitbread's Brewers Fayre.

But there is an issue about where the themed pubs market actually ends.

Mike Coughtrey, head of pubs and restaurants at accountancy firm KPMG, argues that, technically, any pub chain with a consistent identity or brand inside can be considered a themed pub.

This would then bring chains such as All Bar One, Pitcher & Piano, Tom Cobleigh into the equation and even, possibly, high-street brands such as Laurel's Yates, Slug & Lettuce and Litten Tree brands.

Key trends
The very success of the market in the 1990s has become something of a millstone more recently, argues Coughtrey.

"The market has come off the boil a little. Some of the newer generation of bars are getting more of a premium on their beers because they are now offering something different," he suggests.

The drinking population, particularly younger drinkers, is notoriously transient and, while themed bars took the sector upmarket in the 1990s, for many of them their image has since become tired or they have become considered too mainstream.

"People are massively design-sensitive now," agrees Trevor Watson of Davis Coffer Lyons.

While this means that when a theme works it is likely to work well, it also means themed pubs need constantly to be looking at renewing and refreshing themselves, something that can be problematic for the larger brands, he suggests.

The bigger themed bars therefore can lose custom to smaller, design-led chains such as Dogma, which can often be more "cutting edge" or fleet of foot.

There can also be a problem in that, the bigger you become, the harder it is to maintain the consistency and appeal of the theme that was once your main selling point, Watson argues.

This was the case with chains such as O'Neill's, which ran into difficulties when it launched an over-ambitious conversion programme, he says. "People, particularly in some of the more rural locations, really did not want Irish pubs, so the brand was no longer adding value."

Customer fatigue with well-known themes has led to greater demand for sophisticated outlets offering quality food and drink within an environment that is design-led but where the theme is muted or, even better, neutral, agrees Mintel.

There has also been increased competition from specific drink-themed clubs such as Revolution or Babushka.

The extra cost involved in converting a pub to a themed outlet has also counted against the sector in recent years.

The future
Mintel, for one, is gloomy about the prospects for the themed pub sector, forecasting turnover dropping to £317m by 2007 and the number of outlets reducing to 350 (see table below).

With trading volumes falling across the board, and wet sales under pressure, many themed pubs are likely to struggle in years to come and will overall fare worse than standard pubs, it argues.

It suggests operators will need to widen the customer base, which is currently very much focused on the 20 to 24-year-old market, if they are to survive. Other options could include importing new ideas from overseas to refresh the concept or look more at all-in-one entertainment sites, for instance Regent Inns' decision to co-brand its Bar Risa and Jongleurs sites

It is also likely that operators will increasingly look to make their themes more discreet and less intrusive, it argues.

Themed pubs will need to work harder at selling themselves, agrees KPMG's Coughtrey. "They will have to make it clear what it is they are offering. People have got to know what they are going to get," he says.

But Davis Coffer Lyons' Watson is more upbeat, arguing the worst may now be over.

The arrival of entrepreneurs such as Laurel Pubs owner Robert Tchenguiz in the sector, even though his main focus is high-street pubs such as Hogs Head, Yates, Slug & Lettuce and the Litten Tree, has put a buzz back into the market, he suggests.

"There was a massive amount of investment in high-street pubs in the 1980s and demand was unable to keep up. But things are starting to come round again," he says.

Forecast for themed pubs and bars market, 2003-07:

TurnoverOutletsShare of total pub market
2003£350m4251.4%
2004£341m4001.3%
2005£329m3811.2%
2006£321m3651.2%
2007£317m3501.1%
*Source: Mintel Themed Pubs and Bars, April 2003*
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