Media headlines continue to shout about pub closures, but with more enormous food-led pubs opening it might be more sensible — albeit with a heavy heart — to look at square footage within the industry rather than absolute pub numbers.
As food has become increasingly important, it has driven demand for ever-larger units where the investment in kitchens and skilled chefs stacks up financially.
Meanwhile, at the other end of the pub market, the wet-led boozer is finding a workable footprint in small units, which has resulted in the micro-pub phenomenon.
William Lees-Jones, managing director of JW Lees, says people are “making a huge mistake counting the numbers of pubs” because in the last 20 years the smoking ban has prompted a divergence in the industry, with small wet-led pubs at one end and the bigger brewing groups investing in food-led family outlets.
The places that have had problems and closed are those “in the middle with no point of difference”. He cites Middleton in Rochdale, Greater Manchester, where JW Lees had operated seven pubs before JD Wetherspoon opened a serious-sized pub that sold the equivalent beer volumes of all JW Lees’ units combined.
Although he closed the two weakest pubs — and focused the offer at the other five — he believes there has been an overall net gain in square footage in the town. “In our business we’ve fewer pubs, but they are of a higher quality, bigger, and more mixed. There’s not a single revenue stream anymore,” he suggests. JW Lees now seeks out pubs with an average size of 6,000sq ft compared to its previous 4,000sq ft.
Having this 50% greater square footage translates into much greater profitability when serving food.
“You need the extra sales to enable you to run with a manager, assistant manager and chef,” says Lees-Jones, adding that he can also see the successful model of small bottle shops and tiny pubs that are enjoying a resurgence on the back of the appetite for provenance, and catering for a specific target market of mature beer drinkers.
Martyn Hillier, owner of the Butcher’s Arms, at Herne in Kent, and creator of the term micro-pub, agrees there is a renaissance in the small unit as they are an antidote to many of the failing pubs that years ago had all their separate bars knocked together into one large characterless room.
“We’re very focused, with the only USP of my pub being cask ale. If pubs are too big then there is no banter. My pub is only 14ft by 12ft, but if it was 15 by 20 then I believe it would be too big! When you get bigger then people will look for the corners to sit in,” he suggests.
For his micro-pub business model the small size also stacks up financially, which would not be the case if he operated out of more typical pub-sized premises. “As soon as you go bigger then there is more expense — hitting the VAT threshold and needing more staff. You might as well go really big and get the economies of scale,” says Hillier.
Charlie McVeigh, managing director of Draft House — which operates five outlets in London — recognises this scenario and says he has developed a two-pronged strategy in the capital that centres on wet-led small units in prime locations and also on larger off-prime units with more of a food focus.
Indicative of this are the Charlotte Street Draft House, which has only 650sq ft of trading space and 90% wet sales, and the company’s new City unit on Seething Lane, which trades in a much larger 2,500sq ft of space and where food accounts for 50% of turnover.
McVeigh believes this polarisation in demand for property is not just a phenomenon of Draft House and London — although the capital has a particularly tight market for small central units — but that there is a similar demand scenario being played out in other cities around the UK.
Although Fuller’s is keen to stipulate that it has a strategy that places the quality of the location firmly above size in its criteria for pub selection, Peter Turner, the company’s property director, acknowledges: “If we are dealing with a blank canvas then it will be a food-focused destination pub that we would prefer. If you have the ability to build large then you will do.”
This has been the case with two of its newer units — Cams Mill at Fareham, in Hampshire, that measures 7,500sq ft, and the Parcel Yard at King’s Cross train station in central London that covers a sprawling 11,800sq ft across two floors.
Further evidence of this trend for big food-led outlets is Fuller’s One over the Ait pub in Brentford, west London, which comes in at 7,100sq ft and has been built on the former site of its Waggon & Horses. The old unit traded from a mere 2,250sq ft.
However, Fuller’s has also been actively investing chunky sums in the freeholds of some small centrally-located pubs in London, which show its continued commitment to modestly sized wet-led boozers in prime high-footfall spots.
“We are not just into huge pub sites. It is a case of the farther away from the chimney pots you go then the reliance on food increases and you need more scale to get the kitchen space and the efficiencies,” explains Turner.
Yet again it is food that is driving major infrastructure change in the industry, but it is clear that there remains room for both wet-led and food-focused pubs — although they increasingly inhabit polar opposite ends of the market in terms of site square footage.