Pubs price menus to compete, says Food Report

How much has the recession impacted on the way pubs run their food business?

It's all too easy to point to any change in consumer habits and name the credit crunch as the reason. But eating out is still very much a treat. And with people making cut-backs or finding themselves with less disposable income, treats are one of the first things to go out of the window. So how have licensees reacted to this?

They've lowered their prices of course. Though rising food and energy costs have continued to have an impact, licensees are their dropping prices to get customers in. Over the last few years the price of a main meal had been steadily rising in line with these extra costs. In 2007 the average price was £7.88, and last year it stood at £8.36. That trend has now reversed with prices dipping to an average of £8.09. Not a dramatic fall, but significant none the less.

Indeed more pubs are now offering meals for under £10.00. The number of pubs whose main meals range for £5.00 to £9.99 increased by three per cent to 63 per cent whereas the number that offer meals in the higher bracket of between £10.00 and £14.99 fell from 25 per cent to 19 per cent.

Creativity when it comes to choosing suppliers and clever use of ingredients are helping some licensees to keep their costs down (see box).

So what does that mean for consumer spend? The age-old question of what came first, the chicken or the egg, rears its head again. Spend at dinner time, including food and drinks, has fallen quite significantly, by almost £1.00 from £15.41 from £14.50. To that into context, that amount is below 2007 and 2006 levels at £14.86 and £14.87 respectively.

Although lunch time average spend stayed almost the same with a rise of 1p to £9.51. So people do still want to eat out, but they are making slight cutbacks. Also, the dip in prices can be seen as a reflection of pubs choosing to adopt price-led promotions to compete with the buy-one-get-one-free offers, and eat out for under £10.00 deals so prominent in casual dining outlets such as Pizza Express this year.

If pubs are making cut-backs to claw margins back, these are not being felt in the kitchen with the number employed specifically in pub's food operations remaining the same at four. The total number of staff at the pub has also stayed the same at ten in total, with a split of six part time and four full time staff.

However, worryingly, and perhaps the result of attempts to cost-cut and the increasing availability of high-quality pre-prepared food, the number of pubs that employ a qualified chef has fallen by two per cent to 52 per cent.

Sally Whelan, director at the Mystery Dining Company says: "Remember that a pub can be made or broken on its reputation, particularly one attracting a largely local clientele. If you do need to reduce staff hours then it's important that sales aren't lost as a result. If customers have to wait too long for a drink or to have their order taken then their spend-per-head is likely to be less. Attentive service can grow sales, poor service will do the opposite."

The times when food is available has felt the pinch too. The majority of pubs offer food on lunch and evenings only, at 60 per cent, a figure up two per cent from last year. Correspondingly, those that offer it all day has dropped by two per cent, to 21 per cent of those pubs questioned.

When it comes to where food is served in the pub, things haven't really changed, with the trend for a more casual and informal dining arrangement still prevailing. Seventy four per cent of pubs serve food throughout and 65 per cent take orders for food at the bar. Although those taking orders at the table have increased too from 42 to 48 per cent.

How to keep food costs down: ​

Sam Pedder, head of food at Admiral Taverns says:​

- With rising costs affecting menu prices the best approach landlords can take is to invest more time into the sourcing of products and content of their menus. Review your menu on a weekly basis so you can benefit from supplier offers and minimise the impact of unexpected cost increases.

- It's important to maintain regular contact with suppliers and constantly review prices and profit margins. Discuss alternatives when product costs become prohibitive.

- As an extra measure, review kitchen systems to ensure energy isn't being used unnecessarily.

Matt Tough, sales and marketing director of food buying consultants PSL says: ​

- You can use alternative cuts of meat and seasonal produce to bring down costs, whilst continuing to maintain a quality offering. Review portion sizes as there is no need to serve overly large portions that will not be eaten.

- Make more dishes in-house, rather than buying prepared e.g. lasagne, stews, chilli con carne. This will significantly reduce food costs and preparation can be carried out during quiet service times when staff are underused.

- Clever menu engineering - use core ingredients two or three times throughout the menu e.g. buy a whole chicken and make soup with the carcass, a confit from the legs, sell drumsticks for kids meals and offer hot chicken wings as an appetizer - reducing wastage and creating dishes with a low food cost of sale.