Inside Track by Peter Martin
There is a great saying from the legendary business guru Tom Peters that goes something on the lines of "if you don’t like competition, you’ll like irrelevance even less". It’s maxim that might soon find resonance in a large swathe of the traditional British pub business. There is much gloom about at present, particularly among smaller operators. Unsympathetic local authorities set on clamping down on a supposed binge-drinking epidemic, the threat of a ban on smoking, tighter controls on gaming machines and the knowledge that alcohol sales across the industry are flat at best all pile on the pressure. Even where there are obvious opportunities, like developing food sales, there is a sense that the power of the big chains will bulldoze the little guys. This depression among a section of the industry reflects a growing sense that the pub market really is on the verge of a major shift of direction – a change that will bring winners, but also undoubted losers. Smoking will be a major factor in this; the growth in eating out at the expense of drinking out will be another. Government is pushing much of this change, but consumer tastes are working in the same direction. The news this week that the Scottish parliament is set on imposing a ban on smoking in public places will add to the arguments for a similar approach in the rest of Britain. There are strong rumours that the Government in Westminster may seek some form of compromise and only impose a full smoking ban in pub bars that sell hot food or allow in children. That will be of little comfort as food and families have been two of the most potent drivers of sales and profit in the pub sector over the past decade. The truth is that a smoking ban is coming and the pub trade has two or three years, possibly longer, to get used to the fact. Goodbye smoky local. Even if some pubs do continue to have the opportunity to operate with a tightly controlled smoking policy, how attractive is that going to be in the long run, catering for a dwindling minority of smokers? Not the greatest business proposition. While surveys show a fall in pub sales in Ireland post-ban, there are others, such as the one this week from KPMG, that suggest a widespread welcome for no-smoking and a big potential upside for pubs – or a t least those willing to exploit the opportunity. The good news this week for the whole eating and drinking out market came with the latest ONS statistics that showed the UK eating out market grew in value by 84% over the past decade and is now worth £80bn. Eating out, not drinking out, is big and growing, and pubs can cash in on this – as many have been. But there is still a feeling among some that they haven’t the skills or resources to invest to compete with the big chains that are already major players. Mitchells & Butlers has already seen the share of its overall sales taken up by food rise from 11% to 29% across its estate in the last 10 years. It’s true much of the pub market is ill equipped to compete without adopting better systems and a real food culture. They will have to embrace change. And for those that think that eating-out is all about the family and "grey" market, drop into a Wagamama or La Tasca – it’s the under 30s that are eating out. That’s why a chain like Wagamama can taking over middling bar sites in towns like Tunbridge Wells and produce weekly sales of £30,000 to £40,000 – and with a no-smoking. Consumer tastes and attitudes are changing. Pubs have adapted in the past, and the optimist in me believes they will now as well. Good entrepreneurs can still out-think the big guys. But that does mean that some will miss out too. As Tom Peters says the only option is to compete, or face irrelevance. Of course, there may come time when local authorities and the Government have clamped down so much on selling alcohol out of the home, that there will be an epidemic of drinking alone at home, and that we eat out so often that the obesity problem just balloons. But until then. Qwhat future is there for