Pubs' casual dining growth bubble could be burst by Burger King's beer

Mitchells and Butlers’ Harvester brand, Whitbread’s Beefeater offer and JD Wetherspoon own a considerable chunk of the casual-dining market (see graph right), Backman told Casual Dining show delegates at the British Design Centre Yesterday (24 February).

The sector had rocketed in recent years, but operators were warned not to rest on their laurels, as the competition was continually hotting up as more companies were entering the market or attempting to grow their offer within it.

“Burger King bringing alcohol in … if you can have a burger and a beer there, then where are you going to go [the pub for a Byron Burger]?” he enquired.

‘Large and growing sector’​

“It’s a large and growing [sector] and a lot of other people want to get into it. Mitchells and Butlers have said [in the past] that it’s an increasingly competitive market.”

Yet, there were a lot of positives, including a 3% rise in compound annual growth rate (CAGR) since 2002, market share up 10.8% to 17.5% for the same period and a speed-up of CAGR of 11% since 2010, said Backman.

Much of the growth was as a result of operators being able to pump a lot of capital into growing their brands, which boosted their like-for-like sales.

For example, Wetherspoon recently announced it would continue to open new pubs​ and three new hotels over the next few months.

“The sector is growing for a number of reasons and overall it’s bullish,” said Backman. “Another reason for growth is because, to a large degree, they are doing things well.

“In addition to the food that they have on offer, there’s the fact that operators are meeting their customer demands in many different ways.

‘Opening almost 24/7’​

“They are opening [almost] 24/7 and making trade interesting for the consumer from serving breakfast, lunch and dinner and everything in between – service is also very good.”

Consumers were also continually excited by what operators were doing within the sector, which kept them coming back for more, he added.

Pubs’ success in casual dining had been as a result of the pub trade’s ability to diversify, said Association of Licensed Multiple Retailers chief executive Kate Nicholls.

“They have changed over the past 10 years and are now a casual-dining industry,” she said. “We are not going out to drink, but are drinking while we’re out [eating].”