Pub market turnover growth in 2016 is set to defy the slowdown in the wider eating out sector, according to the latest UK Pub Market Report from MCA.

The report shows a resurgent pub sector is set to reach turnover growth of 1% this year, up from 0.1% in 2015. This is in contrast to the total eating out market which is set to reach turnover growth of 2.4% in 2016, slowing from 2.8% last year.

MCA’s research shows the total pub market value in 2016 at £21.55bn, created by 47,548 outlets. Managed, branded and franchised pubs were the most lucrative section of the market – at £9.94bn from 9,408 outlets.

Launched at MCA’s The Pub Conference, the report predicts this trend will continue – with managed and independent pubs driving both outlet and turnover growth – and estimates turnover growth rates increasing to c2% annually over the next three years to £22.8bn. Pub closures are expected to continue but at a slower rate with the sector set to consist of just over 45,000 pubs by 2019.

A poll of consumers found 69% expected their visits to the pub over the next 12-18 months to maintain the same frequency as now, with 19% predicting they would visit less frequently and 12% more. However, there were clear divides across age brackets with the crucial millennial market particularly polarised – with 57% expecting their pub use to remain unchanged, 21% predicting they would visit less frequently and the same percentage estimating they would increase their trips to the pub. Loyalty rewards and live music were considered to be the most important factors in encouraging millennials to visit more frequently.

MCA executive director Simon Stenning said: “The millennial market is a conundrum for pubs and it is clear that there are polarised attitudes towards visiting the pub. We have to be careful about we categorise this age group. 18-34 is a very wide spectrum with a lot of different life stages going on. It’s a segment of the market place that needs to be understood and that we need to tailor the offer to.”

When it comes to the most important factors in encouraging visits to pubs, an improved quality of food offer was the top choice (26% of respondents), followed by loyalty rewards/incentives for repeat visits and price reductions on selected beer products.

The top five factors preventing people from drinking more beer or cider in a pub were topped by the need to drive home (37%); products not being good value for money (35%) and health factors (30%).

The average number of visits to pub restaurants per head per month rose to 1.9 in Q1 2016, the joint-highest on record. However, the rise in visit frequency across the wider market has resulted in the pub sector’s share of the market falling slightly from 7.6% in Q1 2015 to 7.3% in Q1 2016.

A breakdown of the growth shows value pubs growing their share of total pub visits across lunch and dinner as mainstream pubs are squeezed.

The majority of licensees expect their turnover to increase during the next 12 months hinting at growing optimism among operators.

A survey of operators showed rising optimism in the sector, with a quarter of respondents describing sales as being up ‘substantially’ over the past 12 months - up from 16% the year before. More than a third (36%) say sales are up a bit, unchanged from a year ago. A total of 43% describe profitability as being up a bit (36% in 2015) and one in seven claim it is up substantially.

However, increases to business running costs, such as wages and utilities, are a key future concern. Higher beer prices, greater levels of red tape and worries about the general economic climate were also cited as main concerns.

Improved food offers and hosting events were the top drivers of growth according to the operators polled, although by in both cases the percentages were lower than last year.

In terms of factors driving turnover decline, supermarket pricing and the beer tie were top. The former was flat on last year but the beer tie dropped from being the top concern of 28% of licensees in 2015 to 16% this year.

Asked about predictions for turnover growth in the next 12 months, 59% of licensees believe turnover will increase, up from 52% in 2015. A total of 9% predicted their turnover would decrease over the next year – compared to 17% last year and 32% said it would be flat – up one percentage point on 2015.

Stenning said: “The pub market is really doing quite well when it comes to competing against other channels. In terms of visits per head per month it’s nearly as high as fast food and more than chain restaurants. There is a lot of focus on the growth of chain restaurants but they cannot compete with pubs in terms of being available to consumers whenever they want to go out to eat.

“There are lots of opportunities for pubs. If you look at the most important factors in terms of people visiting pubs, number one is the quality of food and number four is the choice of food available. Yet, 66% of the operators we spoke to were wet-led and a third had virtually no food offer in their pub. That could be a concern or an opportunity – depending on how you look at it.”

The report points out there are also opportunities to drive wet-led sales with 70% of customers saying they are interested in different types of beers. While the majority of respondents say they haven’t changed their purchasing habits of craft beer, 15% buy more craft now than they did two to three years ago.

The 200-page Pub Market Report gives a detailed breakdown of the behaviour of pub customers, insight from operators, examines the competitive landscape and behaviour of specific brands and examines the future outlook for the sector.

The report is underpinned by MCA’s EatingOut Panel cohort from 72,000 annual online interviews with the addition of 100 online interviews with senior executives across the pub industry and a poll of 1,000 UK consumers on their pub habits.

For more information on the report, please contact Sophie Barber at