The past couple years have been tough on the pubs & bars sector to say the least, with the pandemic gladly now behind us. The sector is now facing new pressures of the cost-of-living crisis impacting their clientele and their own running costs. Lumina Intelligence launched our annual Pubs & Bars Market Report 2022 in September, here’s some key headlines discovered within the report.
UK Pub Market size
A year of unrestricted trading is expected to see the market gain back £8 billion of lost value from the pandemic.
For the first time in 3 years the industry will be allowed to operate without any lockdown restrictions for a full calendar year. Despite the current pressures facing the nation the pubs & bars sector is expected to grow by +56.7% in 2022, to reach a value of £22.5 billion, which is 98% of its 2019 value.
It is however important to not underestimate the current state of the nation with energy prices at record high consumers are certainly feeling the pinch, with pubs & bars market penetration (proportion of consumers who have had an eating/drinking out occasion in the past 7 days) has dropped 1.5% vs the 12W/E 15/05/22 at 9.8% to 8.3% 12W/E 07/08/2022.
Over 2023-2024 energy prices are however expected to ease, this will encourage a decrease in inflation and an increase in consumer confidence, with market growth expected in these years.
UK Pub Market growth
Acquisitions Result in Outlet Growth of Over 33%
The top ten pub groups by outlets have seen the growth of +33.4% from 2019 to 2022, because of selling and closing underperforming sites and buying pub packages from other groups. This acquisition activity has been fuelled by players such as Punch Pubs & Co, Liberation Group & Youngs. The increase of growth of managed vs tenanted pubs will come as no surprise in this case with managed increasing by 4.5 ppts since 2017.
Branded sites also continue to decrease in numbers, we’ve seen several value brands such as Harvester and Two for One being re-imaged into more premium sites due to consumer demand. The benefit of non-branded sites makes the experience in all a more premium one and boosts consumer conception of the outlet.
Not all lockdown legacies are here to stay as pub menus begin to grow toward pre-pandemic levels
Over the course of the pandemic, saw the pub industry hit hard with closures, staff shortages and having to be constantly quick-footed with ever-changing legislation. As a result of this, we saw pub menus become increasing simplified across the course of the pandemic to help ease pressures across staff and operators alike. Fast forward to 2022 and we’re seeing pub menu’s increase on average +12 dishes since the previous year with dish counts a mere -3 of 2019 levels. Main dishes, as core menu items, have seen the largest expansion across operators.
Premium experiences will enable future growth
31% of consumers 18-44 in the pubs & bars market prefer experiences over products, it is important for the sector to give consumers a reason to frequent them and develop an experience that differs from an at-home occasion. We’ve seen many developments of experience-led pubs & bars experience mainly originating from city-centric locations. With brands such as Brewdog, Flight Club, Electric Shuffle, Sixes, Puttshack The Cocktail Club and many more.
One stand-out operator is NQ64, they’re expanding across UK cities offering a retro arcade experience for adults. With reminiscent classic games and arcade-inspired cocktails to match.
Offering an experience doesn’t mean operators have to completely redesign their floorplan to allow for games tables and machinery. Bavarian-style beer cellar Albert’s Schloss Manchester has been able to create an immersive experience by installing a shuffleboard as well as a small stage for live music provided by local artists.
In summary, the channel will be challenging to navigate certainly over the next 12 months however the future is looking bright! With inflation due to ease by 2023/2024, allowing consumers to have more discretionary spending power and treat themselves more often in turn. The most important factor for the next 12 months is to provide consumers with choices and experiences, so when they do decide to treat themselves they’ll take advantage of a range of food and drink offers as well as any additional experiences offered.