As the economy improves and consumer confidence and spending grows, it’s apparent the majority of pubs are seeing the benefit of that.
Some 52% of respondents to a PMA online survey reported sales being either ‘up a bit’ or ‘up substantially’ in the past year, and that has converted into profit growth for a similar number, with 47% saying profits have increased year on year.
About half (52%) of licensees think sales will rise in the coming year, with this optimism meaning the majority are willing to splash the cash on their pubs. Seven in 10 planning to invest estimate they will spend up to £10,000 on their pub in the coming year, with one in 10 predicting a spend between £20,000 and £50,000.
As to where the money will be spent, one in five will look to spruce up outside space, with a similar number investing in a kitchen revamp. Most will spend on improving the general fabric of their pub, including dining areas and toilets.
In terms of the factors driving turnover increase, beer, food and events are of increasing importance. There is a marked rise in the number of licensees reporting ‘hosting events’ as a key sales driver, emphasising the importance of pubs offering different and innovative experiences in order to draw in and keep customers.
A quarter of respondents said it has had the biggest impact in boosting trade (up from 15% the previous year). This was followed by improvements to the food offer and general investment in the pub. The weather had much less of an impact in driving sales than the previous year.
However, the recovery continues to be rocky for some, with a quarter (27%) saying their pub’s profitability has fallen. A variety of reasons were cited, including the tie, supermarket pricing and competition for customer spend from other pubs and leisure operators.
The survey asked licensees about business costs and where they had seen the biggest increases in the past year. A third list utilities as the main cost burden, however, this is down 10 percentage points from last year.
The biggest year-on-year increases have been in drinks prices, with the share of respondents mentioning them up from 21% to 32%. Wages and rent were also up.
Looking to the future, the majority see a sustainable lifestyle for themselves in the trade, with two thirds intending to stay in the business for five or more years, and six in 10 (62%) either definitely or possibly keen to take on another pub.
Finally, the survey asked licensees to rate how concerned they were about various issues affecting their business in the future. ‘Increases to running costs’ was rated as the top concern, followed by rising beer prices and a drop off in trade.
The online survey was completed by a self-selecting group of 220 licensees. The survey forms part of M&C Allegra Foodservice’s UK Pub Market Report 2015.