Charity: Value food offers fuel growth

The food revolution that has transformed the fortune of many a pub in the past decade carries on unstoppably, even in this dreadful first year of the smoking ban. It's just as well given other trends.

Jon Moulton, of private equity firm Alchemy Partners, told me that beer volumes are down by a full 3% to 4% more than he thought likely a year ago.

Mitchells & Butlers (M&B) chief executive Tim Clarke has claimed the volume losses have occurred because the industry has passed a "tipping point" of relative value versus the off-trade.

And passing that tipping point has resulted in a violent upward lurch in the trajectory towards the off-trade.

Clarke, who was obviously also making a case for M&B's market position, even claimed his company has seen dramatic market share growth since the Budget because of increasing price differentials with the tenanted trade.

What seems to be clear is that M&B's three value segments (see chart above), two of which — Cornerstone and Pub & Carvery — are newish additions, are benefiting from consumers looking for greater eating-out value in uncertain times.

The three segments are M&B's most powerful engine of growth. Pub & Carvery is now the fastest growing brand in the portfolio.

By my calculation, they've been opening at the rate of more than one a week since December last year.

The immediate target is to get to 100 by the end of its financial year. Even chief executive Tim Clarke tells me he's had "problems keeping count".

Sizzling​

Meanwhile, Sizzling Pub Company has grown to 191 sites and sees sales uplifts on conversion of £5,300 a week, with around 1,000 meals a week served. Cornerstone, its community-pub format, has expanded to 20 sites and enjoys average sales uplifts of £4,200 on conversion, with an average of 700 meals a week served.

The chart above provides one other piece of reassurance for the industry. Nearly all major brands sit below the £10 price point for a main course — pretty well positioned in cost-conscious times.

The only figure that looks misleading in the chart is Spirit's Two for One brand because, one assumes, the price point gets divided by two when two diners order meals at the same time.

At the bottom end, it might well be that the industry is snatching customers from McDonald's who might prefer a healthy Pub & Carvery roast dinner at £3.50 or a traditional pub meal.

It's interesting, incidentally, that Menurama, which compiled the chart, chose Peach Pub Company's Rose & Crown in Warwick as its price benchmark for premium dining.