Tenanted pub sector blocked from food

A pub-sector analyst has argued that saturation of the eating-out market will block the expansion of tenanted pubs into this part of the market....

A pub-sector analyst has argued that saturation of the eating-out market will block the expansion of tenanted pubs into this part of the market.

Peter Backman, managing director of Horizons, said that, "there just isn't enough business out there" for the entire tenanted sector.

Backman said: "The most successful managed pubs that have followed the food strategy find that food accounts for up to about 40% of their sales.

"In order for tenanted pubs to reach this modest target, they would have to lift their current £1.8bn of food sales, measured by Horizons, to something approaching £7bn a year.

"In other words, tenanted pubs would have to increase their share of the eating-out market from 10% by value to almost 40%. Another way to look at it is that they would have to create 30 chains the size of the UK's largest quoted restaurant company, The Restaurant Group.

"A food-centred strategy for pubs with falling beer sales can work for those individual pubs being run by people with restaurant experience and food knowledge, but not for the sector as a whole, as the consumer demand just isn't there.

"The solution is more radical than turning pubs into food-led businesses, sadly it's about taking the surfeit of supply out of the market altogether."

Horizons has previously reported that food sales at tenanted pubs have decreased by 9.9% in the past two years. The company reports that managed pubs' food sales have been stable over the past two years.

A group that Horizons calls pub restaurants — food sales of 50% or more — have seen food sales increase by 20.7% in the past two years.