Warning: smoking will kill your trade

by Mark Stretton, editor

The Government's predictable fudge on smoking (yes, sorry, another piece on the subject, to be filed under "boring but important") has wafted a haze of temporary confusion across the sightlines of the industry: should we drop food? What is food? Can't we just have one room for smoking? It would seem that if one thing is certain it is that everything remains uncertain.

It is worth recalling that what the Government is proposing has only been laid down in a white paper, which means, as the recent Gambling Bill demonstrates, it is not really worth the white paper it is written on. For gambling all it took was one last-minute campaign by the Daily Mail ­ that institution of everything that is right and proper ­ and it was radically altered.

Also, the proposals are four years away yet, so there is time for things to change ­ unlike certain other things this will not be fast-tracked by the Government in 17 days. It may well be that Labour has a swift change of heart once it wins a third term.

But despite the uncertainty of what food is and what pubs will therefore be exempt from a ban, one thing is inevitable ­ smoking will be banned in all public places, including pubs, eventually, whether in four years or eight.

Some pubs will always be wet-led boozers and licensees will undoubtedly find innovative ways round a smoking ban. There is the brilliant example of the Paddy the Farmer pub in Cork. Owner Gareth Kendellen saw sales plunge 30% after the Irish ban so he cut a 5sq m hole in his roof, opening it up to the sky. It suddenly became an outside area where customers could smoke, and they came back in droves. "Takings are back to normal although we have to supply umbrellas," he says.

But given the long-term dose of realism that a total ban is coming, it seems extraordinary that licensees and companies are contemplating dropping food in favour of fags.

According to the Office of National Statistics (ONS), the number of adults that smoke in the UK has fallen from 45% in 1974 to 26% today. That number will continue to drop. At the same time alcohol sales are flat, beer volumes are in slowlong-term decline, so essentially people are talking about betting their future success on declining markets.

Conversely, latest ONS figures suggest that household expenditure on food outside of the home has grown dramatically, now accounting for 35%, and will continue to do so. In the US the figure is closer to 60%. As a nation, we now spend more on eating out than on drinking out ­ a big social change.

It is also worth considering how quickly things can change and how markets can develop and evolve. Take the coffee and sandwich bar market. Four years ago coffee was dismissed as a passing fad, yet now it is one of the main growth drivers of the UK eating out market. M&C's latest figures show that Starbucks, with 414 outlets, and Costa Coffee, with 359, are now among the country's top 10 eating-out brands. Coffee bars have undoubtedly changed people's habits.

The industry needs to demonstrate (once again) that it can act with similar ingenuity and innovation to counter supposed obstacles such as legislation. Pubs are seizing the coffee opportunity and the same can be said of food. The lines between restaurants and pubs are completely blurred and research shows that the consumer prefers the pub as the backdrop for informal dining. Companies such as Mitchells & Butlers have latched on to eating out ­ food now accounts for 29% of its sales mix, up from 11% a decade ago. Its Toby Carvery concepts is a machine that serves 2,200 covers a week across 80 outlets.

Smoking is becoming a real fag. Food is the future. As my colleague Peter Martin keeps reminding the pub industry, eating out is the growth sector, but pubs will only fully exploit the opportunity if they take food service more seriously.

I will be amazed if, come 2009, people are still allowed to smoke in pubs. Anyone who puts smoking at the centre of their business may see future profits, and prospects, go up in smoke.

M&C Report provides intelligence and analysis for the licensed retail and leisure market. To subscribe call 01293 846579 or email martininfo.mcreport@william-reed.co.uk