Lumina: Managed and independent pubs to lead market recovery

The UK pubs and bars market is predicted to exceed its 2019 value, and net pub closures to be offset, by 2024. The short-term focus should be on wet-led occasions, while also focusing on food quality and enhancing the digital experience.

These were some of the key headlines from Lumina’s Intelligence latest pubs & bars market report which was launched yesterday in front of attendees at MCA’s Pub Conference in London.

Blonnie Whist, insight director at Lumina, highlighted that the UK pubs & bars market had declined in value by -60.6% in 2020, with 37 sites closing on average per week. By the end of 2021, the market is estimated to value £14.8 billion, 64% of its 2019 value with the managed and independent pub segments expected to see the fastest recovery.

A full year of non-restricted trading is forecast to see the market grow by +52% in 2022, but outlet decline, and supply chain disruption, will be continued drags on recovery. The market is forecast to exceed its 2019 value and to total £23.4bn by 2024.

To mitigate against ongoing supply chain and staffing challenges, and to have greater control over consistency and quality, pub and bar restaurant operators have been maintaining smaller food menus over the last year, with menus -14.5% smaller than pre-pandemic.

“Operators are taking affirmative action to ensure a positive consumer experience. Streamlining menus remains one of the ways they are achieving this,” said Whist.

Menu price inflation on dishes has fallen year-on-year from +4.6% during 2020 to +1.9% in Spring/Summer 2021. The reduced VAT rate of 5% from 20% has allowed operators to manage costs and introduce modest price increases in 2021.

With four in five consumers saying they are satisfied with the value for money they receive from pub and bar venues there is flexibility to increase prices further, with consumer expectations of quality continuing to rise.

A third of consumers would like to continue to use digital ordering and payment methods, with digital menus a key opportunity for pubs to capitalise on upselling opportunities, with one in five browsing the menu for longer when it is digital (18-24s: +71%), and over half of consumers agreeing that they find it easier to browse the menu in an app.

Lumina’s research went on to highlight that two in five occasions in a pub/bar are drink-only, with premium alcoholic propositions including craft beers and cocktails helping to drive spend in the market. Beer attracts a higher spend with consumers often purchasing multiple beers on one occasion. Multibuy bundles can drive spend and help operators capitalise on large group occasions.