Irrespective of where you stand on the Brexit spectrum there can be little doubt the eating out market is going to get tougher as prices rise relative to supermarket food, just when consumers’ discretionary incomes are going to be squeezed. With the glorious benefit of hindsight, for consumer markets 2016 was probably as good as it gets for a while, with household disposable income growing by about £12 a week, according to the Office of National Statistics. Now, some forecasters suggest discretionary incomes will decline in 2017.

But what about market supply? The latest edition of the CGA Peach/AlixPartners Market Growth Monitor reported broadly flat numbers of food-led licensed premises. However, a stand-out feature was the growth of food-led pubs and bars, particularly branded food pubs. “Systemised” pub food is a child of the 1970s, the dark days of bellbottoms and Benny Hill. Since then it has enjoyed sustained success but faces some significant issues in the future. This article focuses on four of those issues:

Pub dining has a long-standing skew towards the older age groups. This is a link to its origins, when rival branded restaurants were few and far between – if you were 60 in 2016 you attained legal drinking age at the same time McDonald’s opened its first UK store. Pubs still trade strongly to this generation, an age group that has fared comparatively well financially since the downturn. But as every year passes this is yesterday’s consumer, one who didn’t have the hugely diverse formative eating out experiences available today. There is a marked demographic difference between the brands in pub food and casual dining – CGA Peach’s Brand Track data shows that on average across the pub food brands, about 36% of customers are aged 55 and above. However, for casual dining brands that falls to only 26%, and even though population forecasts show growth in the older age groups, the fastest growth is in the very old – and the “younger old” of today are vastly different in their food tastes and experiences than previous generations.

Pub cuisine’s roots lie in its historic core competencies of fried and grilled meat-heavy dishes – blokey food for a blokey environment as it was then – an on-the-plate version of “pile it high, sell it cheap”. That blokey tone wasn’t just a feature of the pubs but it also applied to the headquarters. I recall the disdain vegetarians were held in by some senior pubco colleagues in my youth. We have come a long way when we see Mitchells & Butlers’ All Bar One embracing this year’s “Veganuary” message.

But pub food’s roots are still showing and you’d be tempted to say that being male, meaty and mainstream would be about as off-trend as possible in today’s market – or to borrow an enduring punchline, you wouldn’t start from here. That’s especially true in relation to today’s educated metropolitan consumer, the demographic that largely sets the cultural agenda, with their evident desire to be “healthful” in their food consumption.

The pub dining brands are inherently suburban – and that’s not where the educated metro consumers now choose to live. Nor is it the dynamic hub of today’s eating out market. New openings are focused on the city centres – particularly those with graduate employment – whereas suburban pub numbers are in medium-term decline.

This suburban/metro dimension is not just geographical but almost certainly influences brand imagery too. In an era when social media encourages consumers to need to be noticed and to be interesting, it is telling that CGA Peach’s Brand Track data shows restaurant brands are typically about three times as likely to be associated with the words “exciting” or “cool” than pub dining brands.

The principal challenge to pub dining is probably its food quality. Whichever market research or feedback metric you favour, the evidence repeats itself – food quality is the biggest driver of customer approval and, when it fails, is a key dissatisfaction factor. CGA Peach’s Brand Track data shows that pub dining brands as a genre enjoy a reputation advantage over restaurant brands on value for money, typically by about five percentage points. However, they have also consistently underperformed restaurants for food quality by a similar margin. Not only that, but only about 30% of pub dining brand users tend to give “top-box” ratings for food quality, and these kind of consumer metrics are, as a whole, not improving over time, while the branded market gets ever more crowded. That’s without dwelling on the pernicious issue of inconsistent experiences from visit to visit, which fellow students of customer feedback data will be all too familiar with.

To that last point, I enjoyed a plain-speaking recent quote from Ei Group retail concept director Steve de Polo: “If you aren’t consistently outstanding, you shouldn’t be surprised if customers go somewhere else.” But, of course, they already are. Brand Track data duly shows pub and restaurant brands tend to have as many lapsed customers as current ones. That won’t be all about novelty and promiscuity, it will be partly about reliability.

But the challenge isn’t simply about directly competitive brands, it’s about the pub food sector’s continuing ability to defend its share of out-of-home food occasions. For a persuasive and resonant analogy, look to a recent piece in Business Insider discussing the serious challenges faced by Coke and Pepsi. It talked of how their core consumers haven’t simply given up on sugar, they are taking their “soda occasion” to Starbucks instead.

A competitively superior value position will, of course, play well for pub dining in the tighter market ahead in 2017. But to be as successful in the future as it has been in the past in dominating the inexpensive social eating occasion, pub food needs to compete more strongly (and consistently) on quality and to avoid ageing with its core customers. A mature market needn’t grow old.

Sitting down to read the Sunday papers hasn’t been the cheeriest of occupations during the past year. In fact, it’s fair to say that as the year wore on I approached Sundays with a fair degree of trepidation as the celebrity death toll rose and the political debate took another bizarre turn. I began to wonder which Gulliver’s Travels world I would wake up to. So it was quite refreshing to turn from one paper to another at the beginning of January to learn scientists from no lesser institution than Oxford University were insisting we all needed an urgent trip to the pub for our social and mental well-being. “Dry January” had to be abandoned, they said – and who am I to argue?

The new research from Oxford’s psychology department found that having a drink in a pub improved social cohesion and improved well-being. In short, it is good for our health to socialise with friends. But the research also found the frequency of consumption and the location it took place in were as, if not more, important to well-being. People who had a local they frequented regularly were more likely to feel content and connected, more engaged socially and more likely to trust other people in their community. And given our tumultuous year, we could all do with a bit more of that. Socialising in the pub – our long established social network – is the thing that makes all the difference. Professor Robert Dunbar, who carried out the research, said it “can directly affect people’s social network size and how satisfied they feel with life... the single most important buffer against physical and mental illness”.

Turning to another paper I found a separate story about government support for social networks and measures to improve connectivity. We should provide business rates relief for businesses investing in bringing people together, said the minister. Had politicians seen the light and linked the research on well-being with the regulatory cost pressures our pubs and restaurants are facing this year? The answer, of course, is sadly not. 

The government’s headline on business rate cuts was a £60m boost for broadband and 5G mobile telephony. Firms investing in digital connectivity will get 100% relief against their investment. Those investing in bricks and mortar and human interaction get nothing – Oxford University Research notwithstanding. It was the same again when the long-awaited Industrial Strategy was published. Here again the government looked at what it would do to promote technology, encourage investment in artificial intelligence, robotics and other hi-tech sectors to “rebalance” and “future proof” the economy. It seeks to champion and support strategic growth champions, while failing to recognise the ones under its very nose.

More than half of all jobs created since the financial crash have been in the broader hospitality and tourism sector. We are now the fourth-largest employer in the UK and have grown by more than 13% during the past decade. Over the next five years, we are forecast to deliver the same level of growth, jobs and investment – same again, but in half the time.  But that potential – and the 220,000 extra jobs we could create – is at risk thanks to the wall of unforeseen regulatory costs heading towards us. Operating costs are at their highest level in a decade – almost half average turnover – and the amount paid out in taxes has also crept upwards to more than a third of turnover. Something has to give for the sake of the nation’s health and mental well-being, say the Oxford University researchers. 

Top of the list is business rates. A fixed cost and a key determinant of outlet viability. We are the second-highest taxed property market in Europe and pubs and restaurants are disproportionately hit – paying more than 15p a pint in rates while supermarkets pay only 5p. Under the new revaluations, pubs and restaurants are also seeing large increases to subsidise business rate cuts being offered to other sectors. We estimate we are paying £500m more than our fair share as a result.

Rising property costs are a continuing and increasing burden on pubs, bars and restaurants and arguably the main threat the sector faces. Despite continual pressure from the Association of Licensed Multiple Retailers (ALMR) and some significant victories in recent months, a wholesale rethink of business rates for licensed hospitality has still not materialised. The switch from a spring budget to an autumn one will give us two opportunities to push for reform this year and it is to be hoped the government is prepared to act on the concerns of businesses.

In its budget submission, and in its conversation with the government, the ALMR has argued for a more responsive and equitable business rates system for pubs, particularly in the way pubs are valued. The current system of “fair maintainable trade” is imprecise and unfair and has the unintended effect of penalising successful pubs. This undermines growth, hamstrings investment and can ultimately see pubs becoming unprofitable. 

Pubs saw an average increase in their rateable value of 15%, with 23% for restaurants. Even with the government’s transitional reliefs, the sector is set to shoulder an extra £300m to £500m in rates bills. Even with the increase in small business rates relief and the extension of the small business multiplier, almost half of all properties (47%) are seeing an increase. The revaluation also means fewer premises than ever are classified as small and there are 51% more premises classified as “large businesses” and seeing up to a 45% increase in bills in the first year – it is this that makes the new regime so unsustainable. 

This is not just a London-based phenomenon either – pubs across the rest of the country face an increase, with a community pub in Stoke looking at a 334% increase in its bill and a country pub in the Home Counties seeing a 400% rise. Clearly the government needs to give some ground to prevent otherwise profitable venues going out of business.

As we approach the budget statement, the ALMR will continue to push for much-needed reform and a chance for pubs to relieve themselves of the onerous burden of unfair rates. We will be looking for a more nuanced approach to rateable value and a move away from Fair Maintainable Trade to stop the penalising of successful pubs. We want a fair and responsive appeals system that eliminates hypothetical judgements and ensures fairness for pubs and substantially increased transitional thresholds to redefine large pubs and allow businesses time to absorb costs.

The Scottish government has just voted on the first stage of its budget, with the spectre of increased business rates looming over proceedings. Scottish MPs are starting to realise exorbitant business rates are a brake on growth and, ultimately, do more harm than good. The leader of the Scottish Conservatives highlighted a complaint from the SNP in the debate about the increased cost of room hire, food and drink at their local pub as a result of increased bills. “Cost pressures and regulation can break down social networks too,” she said. 

The message is clear – if the government is serious about backing strategic growth champions and funding investment in social cohesion and social networks, it needs to back the pub and hospitality sector. It is not just good for UK plc, it is good for our health. With sustained industry pressure we can ensure Westminster gets this message too and, with some persistence and a little luck, we can begin to see a new approach to an issue that has undermined licensed hospitality for too long. 

“A Double Diamond works wonders, works wonders” was the catchy jingle in an advertisement for a beer that rose to prominence in the 1970s. All I can remember of this brew was it could be found in some Indian restaurants among other places, which was probably because it was cheap. It was a poor-quality keg beer but the Indian restaurateurs were not that bothered as they just wanted a cold fizzy liquid for their customers to wash down their korma, madras and vindaloo. 

Things have hardly moved on because today the vast majority of Indian restaurants still offer a poor choice. There is typically little more than the ubiquitous offerings of Kingfisher and Cobra to choose from. Much has been written about Indian cuisine recently as the bog-standard curry houses find themselves fighting for survival under the combined pressures of changing tastes and chef recruitment difficulties. They have not exactly helped themselves with their poor drinks options either.

Against this backdrop it is mightily refreshing to see the emergence of a group of Indian restaurants that as well as upping the game on their food are also putting beer at the heart of their propositions. Chef Sriran Aylur gained a Michelin star for his cooking at London’s smart Quilon restaurant, where he devised his dishes to be matched with a range of quality beers sourced from around the world. He was a pioneer in recognising that the myriad spicing integral to Indian cuisine can be perfectly complemented by the massive range of flavours found in beers.

This thinking has now spread into more casual Indian dining establishments such as Bundobust. This small restaurant opened in Leeds in 2014 and recently spawned a second unit in central Manchester. Co-founder Mayur Patel came up with the idea of marrying south Indian street snacks with craft beer after successfully running a one-off curry and beer-matching event. The triumph of Leeds resulted in the recent opening of the second unit, which is more than twice the size of the original. Dishes such as Vada Prav and okra fries catch the eye but it is the 14 keg beers – plus two cask lines dedicated to Manchester breweries – that really differentiates the offering from the competition.

There is no doubt that on the periphery Indian food is drifting away from its established base of standard sauce-laden dishes, which are all derived from the same pot, and is becoming much more defined by region and with cleaner spicing. Beer, meanwhile, has also been moving down a similar road towards being a much more multi-faceted product with breweries having clear individuality in the market. By bringing these two developments together, Patel has created a marriage made in hoppy spicy heaven.

It is this same love of Indian cuisine combined with beer that led to the opening last year of Booma in Brixton by Martin Harley, founder of London Village Inns. In what is a radical diversion from his day-to-day business of running seven pubs, he has brought his beer knowledge to bear and has matched some of the world’s best beers with small plates of Indian food. The ten beer taps and a range of bottles enable each dish on the menu to come with a recommended beer. The beer-pairing menu is typical of how approachable Harley is trying to make the offering at Booma. It comprises four small plates and papadoms matched with five third-pints of beer for £20. He knows he has moved outside his comfort zone but is convinced the match is a winner.

The owners of Indian Brewery Company in Birmingham hold similar convictions. The brewer has been selling its beers to companies such as JD Wetherspoon since 2015 but has just opened its own outlet selling its own beers, which include Birmingham Lager and Indian Summer, alongside a range of Indian street food dishes. It is great to see this new type of establishment starting to make its mark on the beer and food scene. It highlights how we are now beginning to recognise the complementary aspects of beer and certain cuisines, which absolutely work wonders in a way Double Diamond paired with a madras curry simply never could.