Managed operator Mitchells & Butlers expects its food sales to overtake beer within the next year. The PMA Team looks at how the company is getting a larger share of the food market
Who wants to spend three hours preparing a Sunday roast anymore? If my visit to Mitchells & Butlers' (M&B) Pub & Carvery in Shoreham, near Brighton, is anything to go by, the answer is: not many of us. There was a clutch of customers, mostly male, enjoying a few beers at the bar. But there was a much larger throng of customers, mostly in family groups, enjoying a hearty Sunday roast. A chef was carving portions of meat for customers, who helped themselves to limitless portions of vegetables, all for £6.95. Even at the non-peak time of 2.20pm customers were being warned of a 40-minute wait to be served. Sunday is at the arrowhead of Britain's eating-out revolution, the day when many hungry and time-poor Brits would prefer to let the pub take the strain. Such is demand that M&B can afford to charge a whole £2 per head more at this Shoreham pub on the sabbath.
At Toby Carvery, covers are turned an average of just over five times each on a Sunday compared to just over twice a day in the week. The self-service carvery like the salad cart is a key tool in ensuring guests are served quickly on this key trading day. Customers like helping themselves and the pub is getting a little bit of free labour each time they do so.
For M&B, the trend towards eating out has helped transform business in under a decade. Beer sales accounted for 70% of sales revenues 10 years ago. This year food sales, riding at 31% of revenues, are set to overtake those of beer, currently at 33%. M&B, in the two years since demerger from Six Continents, has earned a reputation for being at the vanguard of pub industry efforts to capture its fair share of Britain's eating-out pound.
For Tony Hughes, head of M&B's restaurant division, getting the food offer right is the only guarantee of survival for the pub industry in a recognisable form. 'Integrated eating and drinking is the only viable future for our industry. The informal pub restaurant has replaced the pure pub and pure restaurant as the key leisure activity for the British population, he says.
M&B, now serving 75m pub meals a year, sets out its food strategy on its website. It makes clear that success food sales rose by 10% in its most recent like-for-likes has been based on a clear-minded and robust approach to each component of the supply and sale chain.
At Toby Carvery, M&B's oldest food brand with a history stretching back to 1971, the drive to offer value has helped average covers climb from 600 per week in 1996 to more than 2,000 now. (Vintage Inns, founded in 1991, is serving an average of 1,500 covers per week while Harvester sales stand at 1,800 per week). There has been considerable work on ramping up cover turn by training staff and improving bar and kitchen layout to maximise productivity and ensure customers are served quickly. M&B operates a strict no booking policy, not least because the alternative would be a step towards the stuffiness of the restaurant experience.
The informality of the pub is seen as a valuable aid it helps drive footfall and increases cover turn. M&B bosses regard the bar itself as an 'important signal of informality and accessibility. Low-cost main menu items are the key to unlocking the spend on high margin products such as drinks, starters, desserts and coffee.
The vast majority of M&B's core food brands Toby, Harvester, Ember and Sizzling Pub Company operate in the mainstream. Management talk about taking 'plaudits at the niche end but making money in the mass market. The most popular dishes encompass a surprisingly narrow range: mixed grills, scampi, steaks, burgers, chicken and ribs. These core meals feature in the top five most popular list at Ember, Sizzling, Browns, Vintage Inns and Harvester. (Steak is the most popular dish at four of the five brands).
'Key to success is the execution of limited core products, M&B admits. 'Trade dress and specifications may vary but popular items are similar. Traditional British protein-based meals dominate menus 90% of the sales of Vintage Inns mains are either meat or fish with vegetables.
However, there is gradual growth of lighter protein meals on the mainstream menus. Pizza has been introduced at Harvester, pasta at Vintage Inns and salads at Toby Carvery. M&B's upmarket Project Orange gastro pubs represent one end of the spectrum in sales terms meat and fish dishes represent 47% of total food volume, with pasta the second most popular on 23% of total sales. M&B detects a profit opportunity in the rising demand, led by female customers, for lighter dishes. They contain less protein and therefore offer the prospect of higher gross profit.
The company is also alive to the increased British preparedness to opt for meals with stronger flavours, fuelled by increased overseas travel. 'High flavour dishes are enjoying increasing sales success. Vintage Inns menus feature a Cajun salmon salad while Toby Carvery offers spicy lamb kebab and chicken tikka bites.
If Sundays look after themselves in demand terms, M&B is making great efforts to tempt customers to eat at 'shoulder trading times. It has identified a demand for grazing and lighter bites, especially during daytime trading.
Its All Bar One brand boasts a sharing bites selection available all day while Toby Carvery offers a carvery sandwich with salad.
Weekend evenings often see groups of customers who are celebrating something. It's a chance to sell menu items that chime with the celebratory mood and are priced accordingly. Vintage Inns offers a fillet of beef medallion while Harvester has a plantation platter on the menu. Increasing public awareness of the health issues surrounding food is influencing a number of initiatives.
M&B has been working with suppliers to reduce salt and fat content. For Harvester, the help- yourself fresh salad card is used as a positive differentiator in marketing terms customers are told it has 'the healthiest food you can enjoy. Fresh fruit juices cranberry, orange and apple are selling 40,000 servings a week across the pub restaurant division. Like a large supermarket chain, M&B has set out to offer 'every day best value to drive volume. Menu emphasis is on meals below £10. The average main course at Sizzling Pub Company is a bottom-marking fiver. The average spend per head on food across M&B is £6.50.
The drive towards every day best value has meant working closely with suppliers. Six key suppliers now account for 50% of total spend but there has been a 30% reduction in the number since 1998. For a few important products M&B is as powerful a customer as the major supermarkets. It buys more than 2,000 tons of turkey tops each year hundreds more than Sainsbury's.
For turkey tops and ribs of beef and fresh chicken, it means the company is able to go directly to producers for a better deal. It has direct relationships in Argentina for the supply of beef and dedicated farmers and growers in The Netherlands, Spain and Britain.
All in all, average cost of a 'consistent basket of food goods has reduced by 12% since 1999. It has allowed M&B to increase gross profit on food by 5%. For M&B customers it has meant increasingly good value. For managed chains, of course, great food plans can be undone by poor service and bad cooking.
I visited a Sizzling Pub Company venue in Hangleton, West Sussex a few weeks ago. My sizzling platter steak was downright leathery thanks to being over-cooked I'd asked for it to be done rare. But its replacement was perfect and when you're paying little more than a fiver...
Highest volume dish categories by brand
EmberSizzlingBrownsVintage InnsHarvester
1Mixed grillSteak SteakSteakSteak
2ScampiMixed grillChickenChickenChicken & ribs
3SteakBurgerSteakChickenMixed grill
4BurgerChickenBurgerScampiSteak
5Steak pieChickenSteak pieGammonSteak