That was the verdict of Peter Backman, managing director of foodservice consultancy Horizons, who was speaking to an audience at a Travel & Leisure Conference in London earlier this week. Speaking at the event, organised by investment bank Numis Securities, Backman said the pub food market was almost at saturation point.
The UK growth opportunities that still existed for mid-scale casual dining or quick service restaurants should be what pub operators look to copy in order to survive, as opposed to increasingly turning to traditional food offerings to boost revenues.
Backman said pubs needed to change their food model to emulate businesses such as Wagamama and Nando’s and increase footfall, improve efficiency and up-sell more.
"These operators are profitable because of their fast turnover and high footfall, while cash-pressed customers are attracted by their value-conscious, reliable food," he said.
“The big pub operators, such as Marston’s, Greene King, JD Wetherspoon and Mitchells & Butlers all now report food as over 40 per cent of sales. However, food in pubs has lower margins than drink sales because of the higher cost of producing meals, consequently either pub food businesses need to charge more for their food, or the food model in pubs needs to change,” Backman added.
In September last year the Association of Licensed Multiple Retailers (ALMR) reported food was continuing to play an integral part in pubs' business plans, with a third of pubs saying food accounted for 30 per cent of turnover despite the higher operating costs.
However Backamn said lessons could be learnt form the recession and high street operators such as Giraffe and Pizza Express that had continued to experience strong sales despite the economic climate.
“The benefit of these brands is that many customers prefer their faster service, cheaper food and familiar menus, and because of this, operators are able to turn their tables more rapidly. I believe this is the market that pubs would be well served to explore,” he said.
The sensible option for pubs, Backman concluded, was for them to do the same and rethink operations to cut costs and attract the budget-conscious customer.