Certainly there’s no sign that people are spending less overall in the hospitality sector as a result of living in supposedly austere times. Office of National Statistics figures mapped by the Trajectory forecasting agency showed that consumer spending on recreation and culture grew by 17% between 2007 and 2014, against growth of just 2% in spending overall. People are spending, but clearly, with a big increase like that, it seems unlikely they are doing so on the halves of bitter and soggy pork pies of yesteryear.
The ‘have a nice day’ service ethic, online review power, TV show food porn, coffee shop culture, ‘Instagramming’ of food and drink and a multitude of other social shifts have all made consumers more choosy about where and how they part with their hard-earned cash. Pubs and the rival hospitality outlets they compete against are increasingly forced to raise their game as a result to offer consumers a premium experience. But what exactly do we mean by premium? Some aspects are easy to pin down: better-looking and better-tasting food that justifies higher menu prices is one; quality drinks served well is another.
Others are more abstract and intangible but nonetheless important, including good service and the all-round ethos of the venue, which can permeate everything from the signage, through interior design, branding, recruitment, training and modes of engagement with customers, right through to service recovery when things go wrong.
CGA Strategy says two-thirds of consumers are prepared to pay more for “a premium product” that covers much more than just the drinks. Account manager Charles Duckworth says: “In this time of belt-tightening, we’ve seen volume sales fall year on year in the on-trade, but overall spend is on the rise as consumers are increasingly willing to spend more on higher quality drinks and experiences.
“Savvy operators are now recognising the importance of delivering premium experiences, with 90% now saying that quality of visit is the major decision driver when consumers choose where to go out.”
Personal experience
Kate Nicholls, chief executive of the Association of Licensed Multiple Retailers (ALMR), adds: “A personalised experience plays an important role in the pub industry, just as it does in any customer-facing sector. Customers are looking for service that goes above and beyond the usual. This certainly should not be seen by retailers as a burden, but as a chance to stand out from the competition.”
In the relatively high-cost environment of fine dining, this is relatively easy to deliver. Heston Blumenthal’s Fat Duck, with more chefs than covers, can justify several hundred pounds per head prices. But even a top gastropub must keep costs and prices realistic and accessible, which means a smaller team has to be more than the sum of its parts.
So premium doesn’t just mean hiking up the prices – and certainly not to the point where the customer feels they’re being taken for a ride.
“Premium does not necessarily mean expensive,” says Nicholls. “Although we are still to some degree feeling the effects of economic downturn and austerity, premium offers are not out of budget for many customers looking for exciting food and drink offers, and retailers recognise this opportunity.”
Indeed, for Chris Hill, managing director of award-winning pubco New World Trading Company, premium isn’t about prices or extra margin at all, just about ensuring that consumers pick its pubs rather than those of the direct competition.
Its outlets have an aesthetic and service ethos that sets them above the mainstream but aren’t pitched solely at those with deep pockets.
“The benchmark in eating and drinking out has changed dramatically over the past 10 years,” says Hill. “We’ve approached the whole business with a high-end restaurant level of training and standards for staff to follow, but with the aim of providing places where you can still get a main course for under £10.
“The menu may not be that different to a lot of other places but the small things can make all the difference, like the care and attention to design, maintenance and service. People are going to judge you on those things. It’s about the overall product.”
And, adds Hill, that’s not just about the building, but the people who work within it.
“You can have the most beautiful space in the world but there’s no point if you don’t invest in staff and training. We don’t necessarily look for people that have pub experience but staff who are going to smile and who you feel care about the company, the customers and their colleagues.”
Engaging staff
Many others in the industry recognise the importance of such matters in contributing to a premium package.
A CGA Business Leaders survey conducted this year revealed that 75% of operators intend to increase investment in staff training in the next year, and half are earmarking money for refurbishment.
Nicholls says the increasing focus on service and goes for large as well as small pub companies.
“We have seen ALMR members such as TGI Friday’s place a real emphasis on staff training, which forms part of a wider package provided by the company,” she says.
“If staff members feel engaged, this will transmit to the customers resulting in a finished product that is greater than the sum of its parts.”
Along with the changing service culture of pubs, there’s also been shift in approach to what pubs are actually for.
For anyone over the age of, say, 45 this used to be an easy answer: they were places to drink in. But this is becoming less relevant to younger generations.
The ALMR’s recent Future Shock report showed that pre-family under-25s go out to drink once a week, but eat out an average of five to six times a month. One in seven haven’t gone out for a drink in the past six months.
Key Points
■ ‘Premium’ doesn’t have to mean expensive; just charging a reasonable extra amount for better food, drink and service
■ Think about your pub not just as a place to drink, but somewhere with a broad appeal across a range of occasions with products and service to match
■ Attention to detail and the personal touch can make all the difference to the customer experience
■ Take an holistic approach: the idea of adding something extra special should run through everything; food and drink, design and branding, table service and guest experience
“These young people haven’t grown up in the pub like previous generations,” says Tom Johnson, director at Trajectory. “It’s not their default.”
It seems clear that the long-term shift from wet to food-led businesses will continue, but pubs also need to be looking to compete in other areas, says Johnson, such as afternoon tea, coffee and Wi-Fi for business people and family dining, all while recognising that there are still plenty of people who do want a high-tempo, alcohol-led pub experience.
“Pub companies that have got a broad portfolio of brands may be well set to meet all these needs but for operators with a single outlet, it’s a real challenge,” he says.
Extending concepts and trading hours bring extra costs, but there are also issues around what Johnson calls pubs’ “innate link with alcohol”. It’s easy, for example, for someone to persuade their boss they’re being productive in a coffee shop, but less convincing if they say they’re in a pub.
Johnson says: “Some concepts are trying to make the pub an acceptable place to hold a business meeting, but that needs to be communicated to the public.”
Whatever the occasion may be, perhaps premium should mean making a customer’s visit more than purely functional, something they’ll really value that will generate word-of-mouth recommendation.
As Hill says: “Premium doesn’t just have to be about selling premium alcohol at premium prices. For us, it’s about premium service and that’s what means you’ll be in it for the long haul.”
