Last year was nothing if not interesting. The twists and turns of Brexit negotiations unsettled consumers and businesses alike, while industry reports revealed pub sector growth had suffered, confirming it was a tough 12 months for many licensees.
But 2018 is another year. So are licensees more optimist for the new year ahead and what challenges are they expecting to tackle, including the ongoing impact of Brexit discussions with the EU?
The Morning Advertiser’s (MA) snapshot reader survey confirmed what many pubs feared, with 26% saying they would be forced to increase their prices to cover rises in business rates and inflation. A fifth of survey respondents said they expected to see a decline in beer sales and other drinks as people tighten their belts.
However, there was a degree of optimism as well. Only 6% thought they would struggle with staff shortages and a hardy 19% felt their business was strong enough to ‘weather the storm’, while a confident 14% predicted growth in the next 12 months.
To gain in-depth insight into how pubs are feeling, MA spoke to leading operators to find out their predictions for pubs in 2018.
Attracting healthy diners
Glen Duckett, GBPA Pub of the Year winner 2017 and licensee of the Eagle & Child, Ramsbottom, Lancashire.
Veganism will continue to grow over the next year, while publicans try deal with Brexit continuing to loom in the background.
Vegan options seem to be the new thing everywhere now. I was in a burger bar the other day and two people either side of me asked what the vegan options were.
Whether this is vegans or people being really health-conscious, I just don’t know. There is a massive obesity problem in the country but there are also a lot of very health-conscious 20-somethings. They will have a beer but also
Attracting that health-conscious market, and getting them into the pub, is going to be a big thing in 2018.
I also think there’s big uncertainty about Brexit which is hanging over everyone. But I think this brings opportunities.
It’s about how, as a nation, we can use what we already have of our own. Yes, try and keep selling [products] abroad and keep things going, but make sure we also use them in our own market.
I think the gin market will do really well next year, plus the English sparkling wine market is really good for us.
Return of great British pub
Heath Ball, licensee of the Red Lion & Sun in Highgate, north London and the Wenlock Arms in Shoreditch, east London.
I predict next year will be a time for great growth in the hospitality sector especially with the Government dropping VAT in the sector to 5%, which will stimulate employment followed by scrapping the current system for business rates to a fairer system.
We will finally see the return of the great British pub. Alternatively, we could all be screwed.
Everyone is bored with burgers. [But] every time we go into a recession, cheap fast food becomes the norm. When people have got money, they are healthy.
Operators who ignore vegan food are missing out, especially in London, but they need to remember that [many] consumers who eat vegan food are making lifestyle choices rather than having allergies.
For drinks, consumers will feel less intimidated by wine, pubs will have to up their game on their wine list as drinkers demand more interesting grapes.
Better off than restaurants
Charlie McVeigh, Draft House pub chain.
The pub business is in danger of being infected by all the doom and gloom around the restaurant sector, but I do think they are very different.
I don’t think there is anything like the headwinds facing the pub business that restaurants are facing.
We don’t have Deliveroo (yet), they haven’t worked out how to bring a pub into someone’s front room yet.
We don’t have the same degree of exposure to food in Draft House’s case, so the food price inflation has not been as devastating to us as it probably has been to our restaurant competitors.
We are by no means immune, however, and there are a number of challenges around minimum wage, pension costs and other things affecting the sector.
But to a certain extent pubs are in a better place. I believe it will be a good year for people in the wet-led pub business.
Strong Appeal of the local
Michelle Everitt, licensee of the Fawcett Inn and the Yorkshire Grey, Portsmouth.
I’m keeping positive because our sales have increased over the year – every quarter we’re up still. I think that’s because people are starting to crave their local pub and the sociability of it because you don’t get that in the chains. You get the cheap drinks in the chains but a lot of us can’t offer reduced-price drinks because we haven’t got the backing of a big company – not breweries, but big pubcos.
People are tending to go back into their locals now, so I’m hoping next year you get that extra push again.
We work hard to try to get people back into local pubs and for them to feel the community spirit and that they’re not alone at the end of the day. In the chain pubs, they don’t have anyone to talk to, it’s just alcohol.
We offer more than that and we’re trying to keep positive, but the prices in the supermarkets and concerns about the potential for rises in beer prices and rates could finish the local pub industry.
Economy key to custom
John Ellis, licensee of the Crown Inn, Oakengates, Shropshire.
I think the jury is still out, 2018 largely depends on how the economy fares. The economy is likely to be influenced by the Brexit (horrible word!) negotiations. People are not so keen to spend unless it is for a special event and, with political uncertainty, I suspect January and February will remain challenging for many, particularly those who do nothing special to get customers in.
As there will be no risk of a duty alteration in April, I notice more breweries than usual are bringing notice of price rises forward to January. On the other hand, I hope plenty of breweries will be making offers to enable them to shift stock.
It will remain difficult (outside the big metropolitan bubbles) for pubs to increase prices and, therefore, some breweries will fall out of favour if they just keep increasing prices that cannot be passed on. In the same way the existing number of pubs is unsustainable in the long term, the same is true for the number of breweries, both small and large.
Staycations are booming
Claire Alexander, licensee of the Ebrington Arms, Chipping Campden, Gloucestershire.
The growing staycation trend is very positive. Because of the weak pound, people are staying at home and doing more trips in the UK – which means sales go up. We’ve got some really nice rooms and we’re in the Cotswolds, so that’s really positive.
The costs of goods, services and suppliers are all going up and we have to remain competitive so we haven’t been able to put up our prices in line with those and ongoing inflation. That’s been the same for years now, it’s an ongoing issue for everyone in our trade.
Brexit is a bit of a nightmare – there are a lot of staff who are worried about their future in this country. We lost a key manager this year because he wanted to start a family. He’s from Hungary and he just didn’t feel confident in this country.
In the Cotswolds, we do employ a lot of local people but I think Brexit should have been sorted out months ago so people knew where they stood.
Challenge your suppliers
Tim Bird, co-founder of Cheshire Cat Pubs & Bars.
This year will separate the men from the boys. It will be a more challenging year but one where the consistent businesses with great people, great food and drink, and a burning desire to succeed will come to the fore, as the guest becomes far more picky as to where their money will be spent.
No doubt in January, February and March, the larger brewers will put their usual cost price increase in. This would be a grave error because margins are already being stretched by increased costs elsewhere.
Increased costs of food and drinks items will continue to strangle margins and this is a great opportunity for businesses supplying the industry to tender for new business to take a share from the same old suspects supplying our industry. Everyone in small businesses, like ours, should look at all their larger suppliers and challenge them on price and go out to tender to achieve better deals if they have to.
The World Cup will bring great anticipation again, let’s hope, for once, England actually rise to the occasion. Irrespective of this, it will be a good time for pubs with TVs but will be a threat to businesses, such as ours, not suitable for showing sport.
Lee Price, former BII Licensee of the Year, and licensee of the Royal Pier Aberystwyth, west Wales.
Pubs are expecting no let-up in the battle against the many challenges that continue to threaten their presence.
If the endless warnings of tougher UK trading conditions are anything to go by, it will mean that only the lucky few and those which are most responsive to changes in both the economic landscape and consumer expectation will be fit enough to survive.