Business roundtable: where next for the pub industry?

With the boundaries blurring between pubs and restaurants Caterer and Hotelkeeper, in association with Heinz Foodservice, hosted a roundtable of leading pub players to discuss the future for the sector. James Stagg reports

How was 2012 for trading? Did the Olympics and the Queen's Diamond Jubilee have a positive effect?
Anthony Pender It was a mixed bag. For our central London site the Olympics were dead. We were down 60%. But if you look at the country pubs the Olympics had little effect. However, key sports events tended to have a massive effect. It depends greatly on location. Like for likes will become much harder to tell as the market diversifies. Weather, events and location have a massive impact.
Chris Gardiner What we've seen countrywide is that managed operators have done quite well but the tenanted operators have struggled. So the lower quality pubs who don't have a good food offer are still struggling.
Richard Cox I think in a tough market it's the better amenity, better service, better quality operators that are doing well. Whether that's independents or those in a branded business, the ones with the best sites are doing well.
Things have improved slightly but it's still tough. The Olympics weren't quite as black and white as expected, with the City really bad and the West End really good. It was probably something more in the middle. But the Jubilee was positive for London.
Christine Crofts We found that the Jubilee and the Euros were good for business; the Olympics not so much. Overall it was a positive year but the British events helped. Whether that makes any difference going forward I don't know as there aren't so many key events.
Oisin Rogers From our point of view there is underlying growth in quality businesses that offer good food and service but there was no icing on the cake for us last year due to the poor weather.

Is there anything you can do to maintain business when the weather is bad?
AP Your core business is still there. You will still do the covers inside and turn them three times on a Sunday. But everything outside is lost. You end up wiping out the alfresco dining for two months when normally you should have it. It is painful.
OR We look at heating and covering but when it comes down to it, if the sun isn't out people haven't the will to eat outside.
AP Especially with destination venues, the pub forms part of a day that might include a walk or family visit; people just won't go out.
CG What we're seeing is that consumers will choose to do something else instead. They may go shopping or to the cinema at a retail park, so may go to venues there.
Peter Backman In terms of weather we seem to now have climate change in a way that we haven't seen before. It is bringing more extreme weather: hot, cold, wet, dry, windy. Businesses will have to cope with that as things get more extreme.
RC It's about flexibility; having the flexibility to trade inside and out. Are we going to have a 1976 summer where it's 80 degrees for six months? Dream on, I think. It's going to be rainy one weekend and sunny the next so you need the flexibility as an operator.
AP We have increased covers inside when we know the weather isn't going to be great.

Does that mean having an efficient supply chain that can react to changes in the menu caused by the weather?
Mark Thornhill We've targeted quality, provenance and service so we're able to react daily. We source from farmers where we can and do our menu daily, depending on what we're holding.
AP Part of it is flexibility. We upskill our chefs to decide what to specify and prepare, though that adds complexity to our business and needs to be closely managed.
RC The industry relies on the local operator to react to what's happening. We rely on our chefs to plan what to prep and if they don't prep the right produce we're in trouble.
OR You need a supply chain that will react. You might have to change an order at the last minute and you need suppliers that will work with you.

Did the focus on Britain in 2012 influence the menu?
MT We move with the seasons. Burgers are great in the summer and a staple of the pub menu, alongside fish and chips, but if you can offer provenance too and say where the beef or fish come from, people react to it.
AP Pubs have always been very British. The spotlight has just swung onto pubs. We've always had the great British fish and chips but now we've made more of a feature of it with events like the Jubilee. I've had bunting in my pub for five years!

Have expectations of pub food changed?
RC The expectation of food quality is increasing all the time. You have to keep up with that. It's really important that the quality of food and service matches a lot of the restaurant businesses that are now out there.
Everybody is an expert these days and people have a real understanding of what they expect. People want proper value.
CC They don't want a meal they can have at home. It has to be something different. It could be a burger, but it has to be a beautiful burger.
AP Your standard chips bear that out because nobody fat-fries at home. They are scared of doing it at home.
These days people pay up to £6 for a pie in a supermarket and pubs are charging £10, which includes VAT. People are prepared to pay for a good product.
CG We've continued to see the retail offer hitting businesses with their two for £10 offer. It influences what customers might do in the evening.

Are you conscious of putting healthier choices on your menus?
OR The feedback I'm getting is that people say it's great to have this hearty stuff, but I'm looking for something low carb. Plus vegetarian is important.
RC The healthy definition is very important; is it about something that's fewer than 500 calories or is it actually more about the provenance of food you're buying? People link quality with provenance.
The key is that people have a close emotional link with their favourite pub and they trust that pub in terms of the quality of ingredients.
People will still have fish and chips but it's more about where the fish has come from.
AP Customers will go for a salad so they can have a dessert afterwards.
OR There's a large number of people with allergies and requests that we have to cater for. If you have a table of six and one is a coeliac or has allergies, if they're not happy, the table isn't happy.
PB Or they won't even come in so you lose the custom altogether.

Is there a price point that pub guests won't go beyond?
OR We have found that people are much happier to go over £15 if we're able to give the story of what's on the plate. Our core menu describes everything but we've moved away from that with our specials. Now we just say ‘duck' and the member of staff [serving the guests] must explain where it comes from and how it's prepared.
CC Specials give you the opportunity to stretch the price slightly.
CG The consumer has a strong value equation in their head and they will be asking themselves what the value of the food is on the plate and whether it's worth the money, along with things like the ambience and service quality.
RC There are no longer price ceilings. It's about range. Consumers want the opportunity to pay different levels. They might have a £9 burger one day but a £27 steak the next. It's not about having to go somewhere else.

Is there a challenge associated with people reporting on meals in real time through social media?
AP If you look at Facebook people get involved with following a pub or site and they feel part of the story and are positive. Twitter is more of a middle ground where they might report that they didn't have a great experience. But that gives the operators the chance to react straight away and address the situation.
CC It's very British to not give feedback in person and then take to Twitter, Facebook or TripAdvisor. You just have to be there, monitoring or reacting.
AP It's all about the table check and how the question is posed. You need to engage with the guest and ask whether the steak is to their liking.
RC You need people who can read the situation. You know that if there's a plate half-eaten there might be something wrong. It's having the confidence to positively deal with that. If you can deal with it on site that's the best thing possible; if it gets to Facebook or Twitter it's all about speed of response. People understand that every now and again things go wrong. You're judged on how you deal with it.
PB I was speaking to a restaurateur who categorises people who come through the door as relaxed or frantic, and treats them accordingly; you want to try and turn a frantic person into a relaxed one.
OR We're not just selling food and drink; we're selling a story and a memory. We must make sure when people leave they're happy. Delivering that to every table and every customer is the challenge. Do that and you get growth.

How close are pubs getting to restaurants? What is driving the market?
AP We have a standing area but we don't have a defined dining area. One thing a pub can do well is cask ale. It drives people in for a drink and they may stay for a meal. Never discount footfall.
CC Those drinkers can be your bread and butter the rest of the time so you can never discount the drink trade.
PB It's all in the hands of a consumer. As soon as you stop having a bar you're a restaurant.
AP I'm whatever the punter wants it to be as long as they're coming through the door.
PB There is also a whole change in the restaurant sector too, where the dining experience has become better and quality is improving. There's also the clear emergence of a £15-20 price point in branded managed chains. These are tending to drive out the independents.
The pub sector with aggressive managed players is now competing with the restaurant sector with aggressive managed players. There is room for all of them due to poorly performing independents.
AP We can't look at it as the pub sector any more. We are all competing to provide an experience against restaurants, big events and retail.
RC Whatever you do you have to offer an experience. Drink and food are part of it but they are really lubricants for the social occasion.
In a pub nobody asks you for the table back. One of the big changes is that people are varying between more establishments, so operators need to be good. If you're a pub the more specialised you are the more you push people away. You need the draw the line carefully.

The attendees

Peter Backman
Managing director Horizons

Richard Cox
Brand operations director
Mitchells & Butlers

Christine Crofts
Head of sales and marketing
Charles Wells

Chris Gardiner
National account controller for pubs and casual dining
Heinz Foodservice

Anthony Pender
Director
Yummy Pub Co

Oisin Rogers
General manager
The Ship, Wandsworth & the Thatched House, Hammersmith

Mark Thornhill
General manager
The Cricketers, Hartley Wintney