Pubs must innovate to beat ban, say analysts
Pubs must innovate their offer to mitigate against the short-term loss of earnings expected after smoking is banned.
They should also develop an "action plan" to reduce costs to help them through the expected down-turn, according to a new briefing paper from consultants PricewaterhouseCoopers.
Adjusting to the new smoke-free reality will require a detailed focus on innovation with regard to substituting lost revenues with new products and services PricewaterhouseCoopers' report.
The report, called Preparing for the impact of the smoking ban, examines the impact of smoking bans on different leisure industries.
It says wet-led pubs are among the hardest hit, with short-term revenue declines of 10%.
In contrast, food-led pubs often see no impact or experience a trade lift.
The report also pointed to a 10% decline in gaming machine revenue after bans.
It says for traditional wet-led pubs, "smoking is for many inextricably tied up with the experience, and those businesses will likely feel a more significant impact".
Businesses should think in terms of a recovery period of 12 to 36 months and should manage costs in that time to compensate for lost revenue, the report says.
"Adjusting to the new smoke-free reality will require a detailed focus on innovation with regard to substituting lost revenues with new products and services," it adds.
"Many pub groups, for example, have already started to develop more family-friendly and food-based offerings that are designed to appeal to a new group of consumers that may have previously been deterred from visiting a pub.
"For a business facing a potentially significant decline in revenue, developing a clear plan of action to reduce costs is paramount to avoiding an equally significant profit decline."
