Andrew Meadowcroft: So much to focus on
The gods have not been smiling on our pubs since I last wrote. The Budget did the industry no favours, the weather across the UK over the Easter period felt more like Siberia and the general mood, reflected in trading updates, remains cautious. I also doubt if we have seen the end of the current shake-out, with Laurel Pub Company being the latest name to hit the industry headlines.
It is clear that the high street and late-night operators are suffering first and foremost thanks to their averagely higher fixed costs, which are pushed up even further by increased rental costs. Combine this with the impact of input price increases and duty rises which are still to be fully felt, and operators have got their work cut out over the coming months.
Certainly comparisons with last April are likely to be poor due to the unfavourable conditions over Easter, and the sector is becoming resigned to a drop in trade of at least two per cent this year. However, pub groups have pointed to the long-term scenario of demographics and eating out trends working in their favour and this is where there may be some room for optimism.
For those companies which continue to operate as they always have, life is likely to be tough but for those prepared to step into the shoes of the consumer and consider how the experience can be improved, the opportunity remains. Worth £60bn per annum, the UK leisure industry is huge and pubs, which are an intrinsic part of that, are fighting like many others for a large share.
Like many of you, I was at The Publican Awards ceremony last month and it is there you can start to appreciate the sheer breadth of diversity within the industry but the common theme among all the finalists was their focus on differentiation and adding value.
It was particularly pleasing to applaud the winners outside of the household names, and one of those is the Highwayman in Kirkby Lonsdale, (Marketing Pub of the Year), which I happen to know.
It is the second pub to open under The Ribble Valley Inns (RVI) name at a time when many would question any investment in this industry.
Talking to RVI's Craig Bancroft, he sees a pub business as being no different to any other consumer-facing business. The consumer is becoming ever more discerning in how he or she spends their shrinking disposable income.
The quality of the product is important and so is value for money - which must not be confused with cheapness. And above all, service has never been more vital. It is no coincidence that there is a strong correlation between good service, repeat customers and recommendations.
The Highwayman also focuses on the importance of marketing the business well, including the development of a good website, and this is an area where other licensees could follow.
Flexibility is another. Pubs firmly focused on beer sales, which industry-wide data suggests is in sharp decline, will find 2008 harder than those who moved to food sales to counter the downturn.
Some call it entrepreneurial spirit, others just good old-fashioned business sense, but certainly the ability to continually take a critical look at your business and challenge what could be done better cannot be a bad thing. And just doing the small things well need not require a huge cash outlay and can help support revenue streams.
The next months may be tough but there are long-term growth opportunities. We continue to look out for organisations applying best practice from other consumer-facing businesses and those successfully differentiating themselves.
I leave you this week with the words of Teddy Roosevelt: "Far and away the best prize that life offers is the chance to work hard at work worth doing."
Andrew Meadowcroft is head of licensed trade, Barclays Commercial Bank
