Subjects: Celebrating the pub, growth in foodservice, industry benchmarking and whether Paul Gascoigne’s plight proves alcoholism is a disease
Authors: Francis Patton, Anya Marco, Kate Nicholls and Paul Chase
The importance of championing the pub by Francis Patton
So I’ll go out on a limb here – you’re reading this piece as part of the Propel newsletter and you, therefore, work in or have in an interest in the pub trade. You like pubs, right? Well, I have spent my whole working life in the pub trade and most of my non-working time in pubs. I love pubs – I love socialising in pubs, working in pubs and sitting and thinking in pubs.
Over the years I have been to weddings, funerals, birthdays, business meetings, christenings, quiz nights, stag nights, played for darts teams, pool teams, football teams, rugby teams, watched my team win and lose and raised money for various deserving causes. To say the pub has been and continues to be central to everything I do seems like an understatement and I believe there are millions like me – like us – across the nation, too.
I have made literally hundreds of friends at the pub and my pub “social network” outnumbers my digital one by at least ten to one, notwithstanding the limited technological capability of some of my friends, of course! As far as I am concerned the pub is the original social network where we meet, talk to people, develop our social skills and learn to engage with other individuals of all kinds.
The pub has been placed in our care and it is up to every one of us to help to preserve it and to ensure that it is as relevant to the next generations as it was to ours and our parents. So I ask the question: What have we, as an industry, done for this fantastic institution? What would our school report say?
Well I think it might read like my own school report – “could try harder”! Or it might read like my rugby coaches feedback after our first game: “All I could see was 15 individuals running round a pitch with no plan (yes I played real rugby), where was the teamwork, where was the understanding of the opposition?”
As an industry we can be very inward-looking. We lament the decline of the pub and pub closures yet all our energy seems to be focused on blaming others – predominantly the government. And even in this endeavour we lack a united approach. Where we have looked to communicate with the consumer it has been on a pub-by-pub or company-by-company basis. We have never made a concerted attempt to talk to consumers with a single voice and to celebrate what a fantastic institution the pubs is, to shout about what we bring to local communities in terms of social cohesion, for example, or to highlight the positive economic impact of pubs, to engage in what is important for our customers.
We have never done this, until perhaps very recently with campaigns like Pubaid and Let there be Beer, suggesting a more united approach in celebrating the positive elements of what we do. To extend my earlier sporting metaphor, perhaps we are seeing the beginnings of some teamwork that is positive and proactive in getting us all running in the right direction and putting together some plays that will challenge the opposition.
There is another campaign that also highlights this developing spirit of teamwork – It’s Better Down the Pub. As an industry we appear to have got behind this campaign but what exactly are we trying to do? Well, that’s quite simple – we are trying to engage with our consumers, we are trying to get our customers to tell us why the pub is such a fantastic place, why it plays such a central role in so many people’s lives.
So what do we mean by It’s Better Down the Pub? Well, that’s personal to each and every person, to their personal circumstances – they will each decide, like I have, what is better down the pub.
The campaign has been up and running now for 12 weeks and has garnered support from around the industry in terms of pub companies, national brewers, regional brewers, family brewers, suppliers, trade journalists/newspapers and trade bodies. We now have over 34 companies involved in a variety of ways from financial support to communication direct with consumers.
The website, Twitter feed and Facebook page are up and running. We are about to get POS into over 7,000 pubs and we are in the new Good Beer Guide, at the Great British Beer Festival, are advertising on hoardings at some live cricket and rugby games – it’s all positive stuff in getting our message about pubs out there.
So why do I feel that we are only still only scratching the surface? Everywhere I have gone I have received nothing but support from the people I have talked to, from those that I have asked for help. Yet I still think we are only in first gear. If we are to get this to really work we need to engage that original social network – our pub customers, we need to get them excited by this, get them involved, get them celebrating their pub – whatever form it takes. That means all of you getting behind this 100% and putting together a truly united campaign which really targets that key individual – the consumer.
The evolving UK eating out market shows continued growth in 2013 by Anya Marco
We have produced a report, Eating Out in the UK Market 2013, that should provide real comfort to the foodservice sector.
The 326,145 outlet-strong UK foodservice and hospitality market shows 1.8% sales growth and 0.9% expansion growth for 2013, outperforming the UK high street retail sales growth forecast of only 0.3%. Growth is led by robust trading performances by coffee shops, sandwich chains, and the branded restaurant sector (including branded fast food, branded pubs and casual dining restaurants). Eating out has become the new normal, with 19 million UK adults visiting eating out establishments at least once a week – this has risen from 17 million since 2012. However, there is a slight decline in the frequency of visits on a monthly basis where 2012 results showed us that one in eight meals were eaten out, compared to 2013 where one in 8.5 meals are eaten out. Volatile weather conditions at the start of 2013 have impacted visit frequency. Lunch is consumed on average 4.2 times per month out of home, declining by 6.6% on last year. Average monthly dinner out-of-home declined to 2.5 meals per month in 2013 compared with 2.7 in 2012. One important growth area, however, is out-of-home breakfast, which is a rising trend, increasing slightly in the first half of 2013 compared with 2012, to 1.8 meals per month per person, from 1.7.
Average spend on breakfast has increased to £4.77, from £4.66 in 2012. Lunch spend has increased to £7.39 in 2013, compared with £7.22 in 2012. However, average spend at dinner declined to £17.89 per person, from £18.11 in 2012. This reinforces the point that economic pressures are still influencing consumer behaviour. Consumer confidence has stabilised in the past year though, with fewer consumers feeling negative about their future income levels, 39% in 2013 compared with 45% in 2012.
But, consumers are defensive about spending, albeit less so than last year – 53% say they spend cautiously when eating out, compared with 62% in 2012. The report also identifies that 56% of consumers tend to look for a meal deal in order to get good value when eating out, but that one in three consumers ensure they have enough money every month to eat out, reinforcing the fact that eating out is the new normal. We estimate significant £10.3 billion growth over the next five years for the UK foodservice and hospitality market, reaching a total turnover of over £90 billion by 2018, representing compound annual growth of 2.4%. This is assisted by growth in outlets over the next five years, with compound annual growth rates of 0.7%, reaching in excess of 337,000 outlets by 2018. Branded and managed pubs are the winners over the next five years, taking a further 2.1 percentage points of share in turnover. This is a remarkable turnaround that shows that consumers still love and appreciate the qualities of the British pub, albeit those that provide a great value, quality food offer. Coffee shops and sandwich bars will increase share of turnover by 1.6 percentage points, driven by physical expansion, together with an increasing market share of outlets by 1.1 percentage points over the next five years. Independent restaurants will be hardest hit by the growth of branded concepts, and risk losing significant share of the market. We are forecasting a decrease of 3.4 percentage points of turnover and one percentage point in outlets over the next five years. All day eating, the importance of adding value beyond price, and the rise of the era of the individual are key future trends that will impact the foodservice industry. Operators that embrace these key major trends and food trends are well positioned for success.
Anya Marco is Allegra Strategies Director of Insight. For more information on the Allegra report please contact: Simon Stenning Foodservice Strategy Director Allegra Strategies +44 (0) 20 7691 8800 or sstenning@allegra.co.uk
The pub market is stabilising by Kate Nicholls
The results of the Association of Licensed Multiple Retailers’ 7th Benchmarking Survey show evidence of market stabilisation and a return to positive growth – investment in property and people is up for the second year in a row and the sector returned to positive levels of growth across the board for the first time since the recession. Across all the KPIs measured by the Annual Report into business performance and operating costs, the news is positive.
The headline results from this survey show the first signs of robust growth and confidence, building on last year’s tentative green shoots. Then, cost control came at a price, with staffing and margins taking a hit – a trend that followed across high street retail businesses and the economy more generally and highlighting how good a barometer licensed retail really is.
This year, the results are more uniform across all trading styles and reveal:
A more confident sector: Payroll costs have increased, showing employment and job creation is back on track after a double dip in 2009 and 2011. The fact that this increased spend is being directed at site management shows that this is really about investment in people, training and skills to grow and develop the business, rather than being fuelled by legislative costs. This positive trend is reinforced by a doubling of capex to over 5% of turnover in the past year – investment has almost returned to pre-recession levels, having dropped to just 2% of turnover in 2010.
A more robust sector: The trend in like-for-likes continues to improve, demonstrating that eating and drinking out is a key driver of economic recovery. In the year to September 2011, the sector as a whole recorded like-for-likes of +5.8%, the largest reported growth since the survey began and the first year in which all trading styles reported positive growth. For the fourth year in a row, food-led operators and small multiples with estates of fewer than ten sites significantly outperformed the market – recording average like for likes of +7.5%. With CPI during the period running at 2.2 and with gross margins stabilising and even recovering last year’s -6% dip, this shows the sector as a whole well-placed for real growth.
A wet-led recovery: One swallow doesn’t make a summer and equally one set of figures alone is not always a reliable indicator of health, but for the first time there is reason to be cautiously optimistic about the wet-led segment of the market. Community locals and town centre bars have seen their costs stable for the fourth year in a row, their gross margins significantly improve and their like-for-likes return to positive growth. Together with nightclubs, they are recording the highest levels of capex – the investment in their businesses and premises is up between 200-250% over the past two years.
There is also evidence of further differentiation in the operating model between food-led businesses and the rest of the sector in terms of operating costs, margins and cost structure as well as responsiveness to external factors. The days of thinking that these were just pubs who did more food have gone – the detailed results show that these are now different beasts altogether.
But the results do also show a sector that is volatile and highly responsive to any changes in the external environment. Wet and dry margins may have improved, but the room for manoeuvre and profitability at an overall outlet level is getting squeezed, particularly given operator and consumer sensitivity to price increases.
The average cost of running the average pub has increased for the first time in three years. Whilst still some way off their peak of 51% in 2009, common site operating costs now account for 48% of turnover – that is an increase of 3% after a period of stability when costs averaged 46.5% of turnover. These figures vary according to trading style – with community locals averaging 42% of turnover and clubs 65% – turnover mix, tenure and size of company.
Whilst there have been increases in payroll and entertainment costs – as operators look to reinvest in their offer and trade their way out of recession into growth – the biggest spike in costs which has fuelled this increase are those operating costs directly attributable to legislation. These increased by over 7% last year.
Such unsustainable cost increases put pressure on margins and profitability, hampering operators’ ability to sustain this level of investment in people, property and businesses and most importantly generating jobs and growth in local communities.
This is a key message for us to communicate not only to government but also leading suppliers – and we will be making it loud and clear.
Kate Nicholls is strategic affairs director of the Association of Licensed Multiple Retailers
Does the plight of Paul Gascoigne prove alcoholism is a disease by Paul Chase
I was prompted to reconsider this question in the wake of Paul Gascoigne’s conviction for a drunken assault at a railway station. Like many people I’m saddened to see what has happened to Gazza, and to witness his seemingly endless struggle with alcoholism. So is Gazza, and others in a similar plight, in the grip of a disease called alcoholism, and if so, is it caused by alcohol?
The disease theory of alcoholism was first given scientific credibility by the research of Elvin Morton Jellinek in the early 1940s. Interestingly, ‘alcoholism’ was initially defined by Jellinek as chronic drunkenness that caused alcohol-related diseases, such as liver cirrhosis. If you were just an habitual drunk, but didn’t have an alcohol-related medical condition, then you weren’t defined as an ‘alcoholic’. This was later changed to recognise two types of alcoholism – ‘with complications’ – which meant alcohol-related medical conditions, and ‘without complications’ – no associated medical conditions. Eventually this distinction was dropped and an addictive involvement with alcohol as such, became recognised as a disease. This definitional change led to a large inflation in the number of people counted as alcoholics – which was grist to the mill for those ideologically opposed to alcohol.
I’ll make my own view clear: I subscribe to the school of thought that holds that alcoholism isn’t a disease, and isn’t caused by alcohol. I admit that this might seem a somewhat counter-intuitive opinion, but bear with me! Firstly, what do we mean by a disease? The conventional definition is based on the germ theory of disease. This holds that diseases are caused by germs that enter the body and make you ill – cholera, polio, measles, mumps and rubella are examples of diseases that are caused by bacterial or viral infections, and scientific medicine can treat them or cure them with medication, or prevent them with vaccination. To label alcoholism a disease on this basis would clearly stretch this conventional definition to breaking point.
And so the theory of ‘addictive substances’ was invented. This holds that alcohol, and other intoxicating substances, possess intrinsic properties which lead to a kind of chemical enslavement from which the individual is powerless to escape – or if he does, only with great difficulty and thereafter he will always be ‘vulnerable’ and ‘at risk’; the recovering alcoholic who is never truly cured, but must accept lifelong abstinence as the only alternative to a return to the slippery slope of alcoholism. But this proposition owes more to magic than science. No one has identified what the intrinsically addictive properties of ethyl alcohol might be, nor how this biologically-driven chemical enslavement actually operates.
If alcoholism is a disease, no one actually knows how it is caused and no one has found a cure. I want to suggest that alcoholism is an existential problem, not a medical one. I think we need to resist the modern trend to medicalise personal unhappiness. I don’t know Gazza, but I would speculate that when he retired from football he suffered a loss of identity. Who was he now? His sense of purpose gone and lacking in inner resources he fell in with a bunch of toxic mates and started drinking; his marriage broke down and he became an unhappy and deeply troubled person, and he did all this in the public eye. Alcohol abuse was his way of numbing the emotional pain. I don’t think that it is helpful, either to our understanding, or to his welfare, to characterise this as a disease.
Addictive involvements with alcohol, or other substances, can be understood as a maladaptive response to personal problems that overwhelm an individual’s ability to cope. Alcoholism is an existential problem in the sense that it reflects the total experience of a person’s existence, and his or her ability to deal with the travails of life. People in Gazza’s position won’t overcome alcoholism by abstaining from alcohol, because alcohol isn’t the root of their problem. They won’t overcome it either by drying out in an expensive clinic, or by taking Selincro, or some other “treatment” that offers a false prospectus of recovery squished into a small pill.
Alcoholism is caused by personal unhappiness, not alcohol. And only by reaching a better realisation of themselves can alcoholics recover. I don’t know whether Gazza will be able to do this, but I hope so, and wish him well.
Paul Chase is a director of CPL Training and a leading commentator on-trade alcohol policy