The Pub

Market

Report
2013

Compiled by

Top trends

The winners and the losers

Here we analyse the
trades performance
over the past year as
part of an in-depth
survey looking at profits,
cost pressures and
industry trends

Taking the survey results as a whole, the

pub trade has moved slightly ahead in
the past year with 44% of respondents
declaring turnover is up, against 32%
reporting it down.
But a more realistic picture might
perhaps see things in terms of
winners and losers the 12% for
whom takings are substantially up and
the similar number who say theyre
substantially down.
And like bikes and sharks, businesses
have to keep moving forward. Especially
when margins are squeezed.
To keep customers coming back, many

pubs have had to hold prices down, at

their own cost, and this is reflected in the
stats. While profitability is up for 36%,
40% have taken a hit.
As for the reasons why a pub might
struggle, most are clear: its the
economy, stupid. But it looks like cheap
booze from the supermarket is another
major factor, while the Governments
beer-duty escalator is, surprisingly, only
third on the list.
While only 11% blame the tie, that
doesnt affect around half of survey
respondents at all, so its likely that
lessees and tenants really are feeling the

What category of licensee are you?

Leaseholder
Managed

35.5%

Tenant

Freeholder

36.7%

8.2%

19.1%

A franchise
holder

0.6%

How would you describe your

pubs turnover this year?
Up a bit

32.2%
Flat

24.2%

Down a bit

19.5%
Up
substantially

11.8%
How would you describe profitability this year?
Up a bit

29.5%
Flat

24.1%

Down a bit

23.5%

Down
substantially

16.7%
Up
substantially

6.3%

Down
substantially

12.4%

The Pub

Market

Report
2013

followed by an investment in the pub. Its

a good sign for the future that profits are
being ploughed back into the business.
Beer festivals have played their part,
reflecting the growing interest in cask
ales, but despite the hype last
summers Olympic Games made a
difference for only 8.5% of pubs.
When it comes to marketing, pubs
finally seem to be embracing social
media. Facebook is now a favoured
channel for 64%, slightly ahead of

higher prices they have to pay.

Across the whole survey, the biggest
increase in costs last year, ahead of
rising drink prices, came from utility bills.
It suggests that theres scope for smarter
purchasing.
Its fair bet, though, that most licensees
will agree its the combination of factors
that drags them down.
On the bright side, whats working? For
licensees who have managed to increase
their trade, food has been key, closely

If your turnover has declined in the past 12

months, which ONE factor from the list below
would you say has had the biggest impact?
Beer duty hikes

If your trade has increased in

the past 12 months, which ONE
factor has had the biggest impact
Improved food offer
Pub
39.2%
investment

Supermarket
pricing

12.4%

25.9%

Competition
from other
pubs

3.5%
Better home
entertainment

the pubs own website. And Twitter is

catching up.
Use of the local press still scores well,
as do guides, online and offline, such as
TripAdvisor and the Good Beer Guide,
while one in five pubs makes good use
of direct mail and flyers.
Its nice to see, though, that oldfashioned word-of-mouth still tops the
list and its how you use the channels
in combination that marks out the best
marketing strategies.

33.8%

Beer/cider
festival

Olympics
& sports

12.3%

8.5%

2.5%

Economic
climate

The beer tie

44.3%

11.4%

6.2%

Please choose your top

THREE marketing channels

Where have you seen the biggest

cost increases over the past year?

Pub website

Utilities

34.6%

The
weather

56.3%

Facebook

Drinks
prices

64.1%
Twitter

27.1%

15.9%

Local press

Business
rates
Rent

6.5%

Wages

7.5%

13.1%

25.6%

Food
costs

11.2%

TripAdvisor
Qype

12.9%

1%

Good Pub Guide

13.9%

Direct mail/flyers

19.7%

Word of mouth

76.4%

Food and drink

Theres still life in the boozer

On these pages we
explore the latest
industry trends in food
and drink and their
effect on turnover
in the pub trade

It might surprise those observing the

pub trade from a distance, but its not all
about food. True, solids have become
an increasingly important part of the mix
for most pubs. But going gastro and
making it work requires space and a
hefty investment, both in equipment and
staff. Its not an option for the majority.
Fewer than one in five of the pubs
surveyed are, by the strict definition,
food-led, where food contributes more than
50% to turnover. By a less strict definition
its probable that a whole lot more rely on
their food offer to attract people to the pub.
For 30%, food accounts for between 25%
and 50% of take.
Whats notable, though, is that around
one in five pubs continues to survive with

no food income at all. The traditional

boozer is not dead yet.
Another surprise is the number of pubs
now serving breakfast 15% of the
survey. Much of this will be accounted for
by houses with letting accommodation,
but some are seizing the opportunity to
compete with coffee shops and cafs in
town centres too.
The largest proportion, 48%, restrict
food service to lunchtimes and evenings,
but nearly a fifth serve right through.
Unless or until the pub industry
becomes food-led, it remains beer-led.
More than half say beer accounts for at
least half their turnover. With the UK beer
market overall in long-term decline, pubs
are proving robust outlets for brewers.

What percentage of turnover is

accounted for by beer
Do you serve food at the following times of the day?

60% or more

Lunch and evenings only

42.1%

41.8%

All day
excluding
breakfast

Breakfast and
other periods
during the day

I dont
serve food

20.9%

17%

13.1%

51%-60%
Lunch
only

3.9%

Lunch and
afternoons

8.8%

3.3%
41%-50%

9.7%

The Pub

Market

Report
2013

What percentage of turnover is accounted for by food?

0%
Over the past couple of decades,
Britain has undoubtedly become more
of a wine-drinking nation, though in the
on-trade sales are in decline. Spirits have
increased their share, as have ciders.
And while the soft-drinks offer these days
has to be right, for around three-quarters
of licensees they contribute 10% or less
to turnover.
Against the decline in beer, cask ale,
a product unique to pubs, has been
revitalised thanks to improvements
in quality and a growing interest in
different styles, fuelled by an explosion
in microbreweries.
And with so-called craft keg gaining
a following on the fringes, the future for
beer in pubs looks very encouraging.

20.4%

26%-40%
11%-25%

16.9%

18.2%

1%-10%

13.4%

41%-50%

11.8%

51%-60%

11.2%
61% or
more

8%

What percentage of turnover is accounted for by soft drinks?

6%-10%

45.5%
0%

1.3%
1%-10%

3.8%
0-5%

27.9%

11%-15%

17.2%
11%-25%

12.3%
16%-20%

6.6%

21% or
more

2.8%
26%-40%

22%

10 Staff and tenants

Its a people business

The PMA team
examines staffing levels
in the industry and
focuses on tenants
and their business
relationships

small team. Roughly six in 10 pubs have

10 or fewer staff, a third have five or
under. Only 11% employ more than 20
people, reaching the kind of staffing levels
you need for a large managed house.
Wages are often the biggest cost in a
hospitality business, and its good to
see that two-thirds of licensees value
quality barstaff enough to pay them
at rates above the minimum wage
(6.19 an hour). More than one in 10
pay in excess of 7 an hour, but it seems
as if 7.50 is the ceiling. Very few pay
more than that.
Nearly two-thirds of publicans who
responded to the survey are lessees or
tenants, meaning the relationship with their
landlord, be it pubco or brewer, is vital.
Nearly half of those described
that relationship as good or very
good, but for more than a quarter it

Its a people business, as they often say

about the pub trade. But its not just
those found on the drinking side of the
bar, its the ones serving them that are
so important.
Few licensees can get away with doing
all the work themselves and employment
issues have become a major part of
being a publican.
Still, the survey shows most rely on a

How many people do you employ?

was poor or very poor.

This is one of those questions on which
its hard to generalise, but there is clearly
a substantial minority with a problem.
Another measure is how frequently
lessees and tenants meet their business
development manager. For a third its at
least monthly, but for nearly the same
number, 28%, there is a gap of at least
six months between visits.
Of course, this might suit some
licensees who just want to be left to
get on with it.
Very few look to a union for support,
but more will join a professional
association, and 44% are members of
the BII (British Institute of Innkeeping).
Social responsibility is seen as
something worth banding together for,
and 64% of those surveyed have joined
their local Pubwatch scheme.

What do you pay barstaff per hour on average?

Adult minimum wage
(6.19) 33.8%

2.5%
1-5

6.20-6.50

33.1%

30%
6.51-7

6-10

25.6%

25.6%
7.01-7.50

11-15

6.3%

15.8%
16-20

11.7%
21-25

4.1%
26-30

2.8%
31-35

0.3%
36-40

0.6%
Over 40

3.5%

7.51-8

2.5%

8.01-8.50

0.9%

8.51-9

0.6%

9.01-9.50

0%

9.51-10

0%

over 10

0.3%

The Pub

Sport and accommodation

Market

Report
2013

Is Sky the limit for licensees?

We take a look at the
latest developments
in accommodation
and sport across
the pub trade

develop letting accommodation.

Not only have rooms been added on
upstairs floors and in outbuildings, but
standards have risen as pubs try to
compete with hotels, while continuing to
offer a more personal, informal service
to guests. We have even seen the
emergence of the boutique inn, targeting
the top end of the market.
For most pubs, though, the survey
suggests accommodation is a modest
addition to the business. Of the 22%
that have rooms, 58% have five or fewer,
which probably means they can manage
without hiring extra staff. Another 23%
have between six and 10 rooms.
Only 6.5% boast more than 20 rooms,
putting them firmly in the category of
the pub-hotel.

Sky subscription remains a dilemma

for many.
According to the survey, 22.5% of
pubs have Sky and 30% of them pay
between 500 and 1,000 a month for
the privilege, with another 30% forking
out upwards of 1,000.
Perhaps its not surprising that a
substantial number 13% of this
survey turn to foreign satellite
systems and take the risk of running the
gauntlet through what remains a grey
area of the law. For nine in 10 of these
licensees, the fee comes in at under
500 a month.
A different sort of pub might take
another route to improve its income. In
recent years the old concept of the inn
has been revived as operators seek to

Last years summer of sport provided

a welcome boost for many pub
businesses. Community locals and
high-street pubs alike were able to
enhance the excitement with a sociable
atmosphere and a big screen or two, not
to mention food and drink.
Yet the question of whether the
audience it attracts justifies investing in a

Do you offer accommodation?

Do you have a Sky subscription?

Yes

22.3%
No

No

77.5%
Yes

77.7%

22.5%

If you offer rooms, how

many do you have?

Do you use a foreign satellite system

to screen Premier League football?

1-5

58.4%
Yes

13%
6-10

No

87%

23.4%
More
than 20

11-15

10.4%

16-20

1.3%

6.5%

11

12 The future

Plotting the way ahead

The PMA gauges the
mood among licensees
and examines the
concerns they have
and what plans they
are making for 2013

Business confidence among publicans

might best be described as cautiously
optimistic. Some 47% of the survey
expect trade to be up in 2013, though
only a bit for most. And 33% anticipate
trade will be flat.
Its encouraging, though, that only
19% predict a downturn considering
that the overall answer to the question
what concerns you for the future
appears to be just about
everything.

How do you predict your turnover

will change in the next 12 months?
Up a bit

41.6%
Flat

33.4%

Down a bit

12.5%

Up
substantially

Down
substantially

6.9%

5.6%

Do you intend to invest in

your pub in the coming year?

Despite the uncertainties, many are

confident enough to consider investing
in their pub. Nearly one in six intend to
plough money back into the business,
most of them on a budget of between
1,000 and 10,000. Modest, perhaps,
but enough to give a place a sparkle that
can make a difference.
Its not just a lick of paint and some
new upholstery that pubs will be looking
at either. According to the survey, many
will be upgrading their drinks offer.
Much of the focus will be on
introducing more locally-sourced drinks,
be it cask ale, cider or juices, and on
niche products that can help their pub
stand out. In fact, just the kind of offering
that can turn on the modern consumer.
Four in 10 respondents will also be
revamping and extending their wine list
a reflection, of course, of the rising
standards in pub food, but also that
its a category where theres scope for
improvement and imagination.
The same goes for soft drinks, where
pubs are often criticised for not stocking
an interesting range. Nearly 28% will be
exploring the options.
Others will be tapping into the trend
towards world beers and premium spirits
while cocktail lists are set for a shake-up.
Festivals and other events, such as
tastings and meet the brewer nights,
have been important over the past few

Roughly how much will you invest?

1,0005,000

34.2% 5,000
10,000

28.1%

Maybe

25.8%
Yes

No

14.8%

59.4%
Under
1,000

6.8%

10,000 15,000 20,000

50,000 50,000
15,000 20,000
9.1% 100,000
8%
8%

5.7%

The Pub

13

Market

Report
2013

years in stimulating customers to drink

more cask beer, and 50% of the survey
are planning an activity in the year ahead.
Thanks to such positive approaches
to building business, most licensees
surveyed see their future as long term,
with more than six in 10 saying theyll stay
in the trade for at least another five years.
A third are even planning to take on
another pub, and another third wont rule
it out. So there must still be something
rewarding about running a pub.

From the list below, what

ONE area have you spent
most of the investment
on in the past year?
General
fabric

51.1%
Toilets

11%

What changes do you anticipate making in the next

12 months to your drinking offering?
(respondents chose up to four changes they would like to make)
Adding a range of packaged beers
from around the world 22.4%
Offering an increased premium
spirit selection 22.7%
Organising festivals and events
around cask beer 50%
Creating a greater focus on
cocktails 18.2%
Encompassing more locally-produced drinks
such as ciders, cask, juices etc 37.1%
Adding organic and fair
trade products 7.3%
Differentiating with a speciality and niche range
(going away from high street brands) 31.8%
Offering more variation
on wine lists 39.2%
Giving people a better choice
of soft drinks 27.6%

Kitchen

18.1%
Conservatory

How much of the following are a concern to you for the future?

1.4%

(one being of very little concern to five being of major concern)

Interior
restructuring

Economic
climate 4

18.4%

Would you like to take

on another pub?

Changes to the
beer tie 2.5
Beer-duty
hikes 4.3

Maybe

Yes

32.4%

33.3%
No

34.3%

Supermarket
prices 3.8
Increases to
business running
costs 4.3
Competition from
other pubs 2.7
Drop in trade

Red tape

3.6