The end is in sight for pub closures after decades of decline with outlet decline set to level out in 2022 and net physical expansion on the cards for 2023, according to the latest MCA UK Pub Market Report.
Tenanted conversion and disposal programmes are expected to have been phased out by this time, and managed and independent pubs will continue their positive performance.
Turnover growth, however, will remain hard fought for, rising by little more than prevailing annual inflation rates, said the report, which was unveiled at yesterday’s MCA Pub Conference 2019.
This year the UK pub market is forecast to grow 1.9% to 23bn, and while growth has slowed slightly from the tough comparatives of 2018, the sector continues to outperform the overall eating out market.
The report paints a picture of a sector in which the overall standard is higher than five years ago with pubs growing sales through food and drink premiumisation, experience-led entertainment and additional revenue streams such as accommodation.
It predicts that the compound annual growth rate for the sector will be 2.4% between 2019 and 2022. This increase is set to be driven by managed, branded & franchised pubs, which are forecast to contribute 49% of pub market revenue in 2019.
The research found the average menu size is 77 items, up 10.2% year on year. Dishes tagged as vegan, vegetarian and low calorie are continuing to increase as pubs engage with health and sustainability trends and adapt to attract a more diverse demographic.
Spring/Summer 2019 price inflation across menus has exceeded the previous year’s at 2.9%.
Despite CPI inflation falling year-on-year, pressure from increasing consumer expectations and ongoing rising costs has necessitated price rises across pubs to protect margins, the report says.
Pubs remain the most popular venue at lunch and dinner with one six lunches and three in ten dinners consumed in pubs.
But pubs must develop opportunities at breakfast and other day parts, with more targeted product offers, appealing to local communities and utilising large spaces to increase dwell time throughout the day to sustain its hold on the eating-out market, the report said.
Gareth Nash, insight director at MCA Insight, said: “The UK Pub sector has continued on from a strong 2018, as it outperforms the overall eating-out market for a second successive year.”
Outlet decline had slowed and those with a higher calibre of staff and training, better quality and range of differentiated food and drink and more attractive surroundings were well placed to tap into the growth forecast over the next three years.
“Responsible for nearly half of the turnover, from under a quarter of overall outlets, managed, branded & franchised pubs are set to be a key growth driver for the channel. This is driven by premiumisation, wet-led resurgence in all-day and night time venues and growth in accommodation providing additional revenue streams,” Nash said.
To find out more about the report click here.