Trade must run hard to stay still
A new battlefront opened up at the weekend.
High-street retailer Marks & Spencer began to target bargain-hungry customers.
The company, aware that we're all looking to save a few bob, launched a dine-in offer of a meal for two and a bottle of wine for £10 across its UK stores.
The significance here is that Marks & Spencer has set its sights on an area of the market where the pub industry has continued to see significant success in the past year — the value-meal segment.
City analysts have already noticed that JD Wetherspoon (JDW) has been benefiting from the "Aldi effect" — customers looking for increased value to compensate for all the areas where they are seeing rising prices.
Mitchells & Butlers (M&B) also reports customers flocking to its bargain segments. So far, the large managed companies have been able to use their scale to keep price rises to a minimum — although Wetherspoon was forced into an across-the-board 10p increase in all menu items earlier this year. Interestingly, M&B thinks it's been winning customers from the major supermarkets because these stores have been passing on the dramatic increases in the price of fresh food.
My guess is that the style of the new Marks & Spencer offer — a deliberate echoing of the kind of marketing that's been so successful for pubs — will be much-repeated in the coming months. In other words, competition is set to intensify further.
This challenge arrives just as food inflation reaches new peaks. Market research company Horizon reports that food costs rose by 9.3% in June, an increase of a full two percentage points over the previous month. Some of the steepest increases are being seen on staples — eggs (up 37% over the past year), butter (32%), and oils and fats (24%).
Licensees who have been prospering in the smoke-ban era by offering a quality food offer will need to be ever more canny. They will need to keep an eagle eye on market prices and move quickly to change menu items where it's proving impossible to maintain a decent margin.
JDW founder Tim Martin provides this summary of the current outlook: "The whole industry is going to have to run hard to stay still in the coming 12 months."
Dance-trance music
Visiting Edinburgh at the weekend, a group of us called at a lovely pub on the Royal Mile run by a well-known managed company. It was playing a kind of ear-popping, brain-bleed, dance trance music. It certainly chopped our dwell time right down.
It's a shame because the clientele was wall-to-wall tourists and fogies like my group.
Am I alone in coming across too many pubs, often staffed by people in their 20s, playing music for themselves rather than allowing their customers a conversation?
