A three course meal at a pub now costs – on average – just £1.99 less than a three course meal at a restaurant (£18.67 vs £20.66), according to Horizons’ latest Menurama survey. This differential has fallen significantly in the past year from £4.27 thanks to a combination of pub food prices increasing by 7.4% and restaurant food process falling by 4.6% during the period.
The phenomenon is consistent across all three courses, with prices for starters, mains and desserts up in pubs and down in restaurants. And it appears to be a sustaining trend. Horizons report that this is the fourth consecutive year of menu price increases in pubs, and the second year of price decreases in restaurants – perhaps driven by differing levels of confidence in passing on food inflation in the respective trades.
So will the lines on the graph actually cross, or will restaurants always command a price premium over pubs?
As a generalisation, it’s true to say that the quality of food served in pubs is improving at a faster rate than food served in restaurants. But then pub food has had more room for improvement and adventure. When we reach the point where pub and restaurant chefs and pub and restaurant kitchens are similarly skilled and equipped, it will really be just the dining environment providing the variable.
And then we’re into the realms of customer expectations – and the application of disconfirmation models of satisfaction.
Mark Derry, the chief executive of Brasserie Bar Co, told delegates at our recent PubOpsClub event of a strange phenomenon he has noticed across his business, which comprises both high-end restaurants under the Brasserie Blanc fascia and dining pubs under the White Brasserie brand. He said that both formats serve an identical menu at identical price points and yet one receives regular customer complaints and the other none at all. Can you guess which way round?
Derry says Brasserie Blanc customers will complain about anything and everything, including one customer who moaned that the waiter had over-filled her wine glass. “Do that in a pub and you’d get a hero’s welcome,” he quipped. But he makes a serious point, which is that customers’ expectations of quality of product and service in a pub environment are typically lower than in a restaurant environment. And thus, if a pub’s standards are high, its customers are more likely to have those expectations positively disconfirmed rather than negatively disconfirmed – leading to satisfaction.
Restaurants have to work harder just to meet expectations and truly delight customers for them to leave with similarly high levels of satisfaction - just by dint of the fact they are restaurants, a category of establishment that implies certain qualities.
This might explain the mini-gold-rush that seems to be occurring with restaurant operators seeking pub buildings to house their concepts. Pesto, Mezze and New Moon, among others – including Orchid’s Dragon concept – might all be classified as restaurants if they occupied any other high-street sites, but they have made their homes in pubs, retained the bars and enjoy the best of both worlds (the higher price points of restaurants with the lower expectations of pub customers).
This hybridisation is blurring the pub/restaurant boundary and no doubt making Horizons’ job more difficult when it comes to classification.
The pubcos seem happy to lease their pubs to hybrid operators, no doubt swapping greater beer volume potential for higher and more secure rental income streams. And customers seem to love this new middle ground, which provides a blend of style and informality with no compromise on quality.
Not all pubs can pull off this trick at will, however, and command restaurant price points. Regional, locational and format constraints will always provide a ceiling. Mitchells & Butlers’ Crown Carveries famously experienced a drop-off in trade when hiking the price of its cheapest meal from just £3.89 to £4.19. The price elasticity of demand in this instance could not sustain an increase that did not also provide any meaningful improvement in product, service or environment.
Having immediate and superior comparators doesn’t help either. If a pub has neighbouring restaurants serving better food and delivering a more premium experience, its chances of squeezing more money from its customers are limited. But for a competition-free destination pub providing something new and exciting, the sky’s, if not the limit, certainly something to aim for.
Will 2014 be the year when pub food becomes more expensive than restaurant food? Place your £1.99 spread bets.
