Out of the wet and into the dry

Peter Martin, founder of marketing consultancy Peach Factory, reveals how tastes in pubs are changing from drink to food

It really isn't all doom and gloom out there — the good news is that people still love the idea of the British public house. At least that is the conclusion of new research from Peach Factory, which in February asked 2,150 adults if they like "traditional" pubs. Two thirds of the poll said they did.

The reality may not always live up to the dream, but the rich seam of public goodwill is clearly something the trade can use to its advantage. Tapping into this good feeling is one thing, but pubs would do well to dig deeper and understand how consumer tastes and trends are changing over time. And Peach Factory's new Eating Out and the Consumer Report 2008 shows just how important food has become.

According to the report, 65% of the population will have eaten in a pub at least once in the past six months, with 28% going two or more times a month — the same frequency as people go out for fast food.

Pub restaurants are up there with casual dining restaurants as the nation's most popular eating-out venue, while pub bar meals have the biggest growth in the eating-out sector in the past year. JD Wetherspoon, by one measure, can also claim to be the nation's second most popular place to eat out after McDonald's.

The biggest change in the past 12 months across the whole of the UK eating-out market has been the growth in popularity of pub bar meals. In all, 56% of adults will have eaten a bar meal in the past six months, with 23% making the choice at least once a month. Last year, the once-a-month figure was down at 15%. If nothing else, it is real evidence that the investment pubs have put into food in the run-up to the smoking ban, and subsequently, is working.

The problem for pubs is not food, but drink — with drinking at home becoming ingrained in everyday life, especially for older age groups, which are less likely to go out to the pub.

The truth is that Britain has undergone an important cultural shift, where eating out rather than drinking out, has become the nation's number one out-of-home activity.

A large-scale survey carried out for gaming machine firm Gamestec before Christmas, showed 57% of adults had been to a restaurant in the previous month, compared to 43% who said they had been to the pub. People also spent more money in restaurants than pubs.

The new Peach Factory report

simply confirms this fundamental change. The issue for the pub sector is whether to see this consumer trend as a problem or an opportunity.

Chains like JD Wetherspoon have long since accepted the new environment and re-engineered their businesses. Judged by where people have eaten out in the past six months, Wetherspoon's is now the second most popular eating-out destination in the country, on a par with KFC and ahead of Subway, Pizza Hut, Burger King and Starbucks. In all, 22% of adults say they have eaten at a Wetherspoon in the past six months.

Wetherspoon's brand name is also recognised by 89% of adults, higher than any other pub or restaurant group. Only Starbucks and the big four fast-food chains have higher visibility. Wetherspoon is not just part of everyday British life — it is part of everyday eating-out life.

A quarter of adults surveyed still go to their local at least twice a month simply for a drink, but the problem is that going out for a drink has become increasingly an evening and weekend event, and more and more a preserve of the young. The survey findings show that, while 56% of under-25s had a drink out in the past month, only 23% of over-55s joined them.

While 37% of adults had been out for an evening drink in the past month, only 13% had a lunchtime drink, and although 30% went out at the weekend just for a drink, only 17% ventured out on a Sunday and 15% in the week.

To say the pub market has a fight on its hands when it comes to alcohol is probably the understatement of the year. But the toughness of the situation is summed up by who is drinking at home. It is not young adults "pre-loading" on the way to the nightclub that's the issue, but older people who don't go out at all.

The Peach Factory research shows that 38% of adults will drink at home two or more times a week, and 10% every day. But the incidence of drinking at home increases with age, with 43% of over-55s drinking in at least weekly, and they are the group least likely to go to the pub to drink.

This is not to say that one of the biggest concerns for restaurant operators is competition coming from the take-home market. The Peach Factory results show that people are as likely to cook for friends at home or to go to friends' houses to socialise as they are to

go out to eat at a pub or restaurant.

A quarter of all adults will do both on a monthly basis. Even more buy takeaways and heat up a ready meal as often. However, the survey shows that entertaining at home and eating out are not mutually exclusive. The same people do both.

Regular eaters-out are more likely to socialise with friends and cook at home and just as likely to buy takeaways. In total, 65% of regular restaurant users entertain at home and 74% of those that entertain at home eat at restaurants. Younger consumers are also more likely to both eat out and entertain at home.

The news for food-led operators is that there is a straightforward competition for their customers' time and occasion.

Other difficulties for the pub industry are that people have not started visiting pubs more since

the smoking ban (20% have, against 31% that haven't), and while 20% think pubs are great value for money, 38% don't.

However, as already said, the British public still likes the pub — 65% agreeing with the statement. But what sort of pub? When asked if they preferred pubs with good food and wine to "boozers", 48% agreed against 19% that disagreed.

That seems to sum up the whole issue for the pub sector. Consumer tastes and priorities have changed and pubs need to react, if they haven't already.

What the pub sector does have in its favour is a residual, and real, public affection for the idea of the traditional pub, its warmth and welcome and good hospitality. The big challenge is how to leverage that against the realities of modern consumer expectations, and that includes being in the eating-out business.

Many operators, of course, already understand all that — look at the transformations our two leading managed pub groups, Mitchells & Butlers (M&B) and Wetherspoons, have gone through in the past five years or so.

M&B sells more food than beer and Wetherspoon has adopted a slick fast-food approach to meals where an order is delivered to table in a little over 10 minutes. Saturday lunchtime is said to be Wetherspoon's busiest trading period, which is as much about catering for shoppers as those out for a convivial pint.

The likes of Barracuda, Hall & Woodhouse, Peach Pub Co and Geronimo are also models to study, as are the many individual licensees who have been picking up prizes at the industry's awards nights.

The other encouraging news for those seeing themselves in the eating-out arena is that despite the current economic pressures consumer confidence for eating out-of-home appears fairly resilient.

Most people (59%) in the survey said they expected their eating-out expenditure to remain much the same this year as last. Under a quarter (22%) expected to spend less, against 18% who expected to increase their spending in the coming year. Only 8% expected to cut back "significantly".

What the Peach Factory research shows is that eating-out is now an everyday part of British life, and one that the public will not want to surrender, even when finances get tough. More importantly, pubs are not just part of the eating-out market, but at the heart of it.

The pros and cons of dining out

Being in the eating-out business is not all plain sailing. Consumers are a demanding bunch, as Peach Factory's Eating Out and the Consumer Report 2008 confirms.

n T