The closure of British pubs often fuels the headlines, but there is much growth taking place in today’s multi-dimensional outlets. Rich Robinson, Head of Hospitality & Leisure at Barclays UK Corporate Bank, looks at the reasons behind this growth.
Pubs are so characteristically British that they frequently feature at the top of tourists’ to-do lists and they have also historically been the focal points of the UK’s major soap operas, which suggests their uniqueness is universally loved.
What lies ahead for the modern pub?
Despite the important role they play, the media headlines have repeatedly focused on the downfall of the public house. However, behind the headline-grabbing figures, there are many reasons to be positive about the pub sector. The key aspect to consider is that the pub has very much evolved from the romanticised one-dimensional image – of the traditional Victorian boozer with its etched glass windows and dark wooden interiors – but it very much persists.
It is the sad closure of these outlets that fuels the headlines, but the pub today is now multi-dimensional and represented by a broad array of different types of premises with a variety of underlying business models. The good news is that there is much growth taking place in these new interpretations of the pub.
What trends are shaping the industry today?
Typifying its evolution is the rapidly growing Loungers chain that describes itself as a café bar1 but at heart they are licenced premises serving all the same functions as a regular pub. Such is the appetite for these casual venues with their all-day offerings – from breakfast through to cocktails and supper – that there were 257 outlets countrywide at the company’s year-end2.
JD Wetherspoon, one of the country’s largest pub companies3, is also contributing to this evolution of the boozer as it focuses on opening new, increasingly large, venues in ‘non-pub’ buildings. It has been closing some older properties that have often been smaller pubs so although the number of pubs is decreasing there has been a net gain in square footage.
Indicative of this upsizing by some pub operators, often at the cost of closing smaller venues, is data showing that there were 40 fewer pubs in London in 2023 than there were in 2022, but the total number of employees in the capital’s pubs rose 4.3%, according to the ONS4.
Although JD Wetherspoon venues are undoubtedly regarded as pubs, Tim Martin, founder and chairman of JD Wetherspoon, has been reported in the media as stating that their highest selling draught product by some distance is Pepsi5. But even this is outsold by coffee and tea. Not a pint in sight. The reality is that products sold in pubs have radically evolved in recent decades and food is undoubtedly the primary factor, with many venues now indistinguishable from restaurants and a growing number earning Michelin stars.
Food has certainly been a major focus for two of London’s major pub operators who are among those businesses continually investing heavily in their estates and the dining offer has become increasingly important as they have navigated an environment where drink sales have been under pressure. There have also been acquisitions in the capital, with Young’s purchasing the 55-strong City Pub Group for £162 million6 and Fuller’s acquiring the Lovely Pub Company and its seven outlets for £22.5 million7.
Pubs with rooms enjoyed year-on-year growth of 4% in accommodation in July 2024 and room occupancy of 83%, according to CGA by NIQ and RSM8. Some of the pub groups have also embraced the acquisition of boutique hotel chains with strong F&B offers to tap into this new revenue stream.
Another particularly buoyant part of the drinks-led market are micro-pubs that represent a major evolutionary step from the Victorian public house. Often carved out of former retail units they are stripped down, compact versions of pubs that have gained major followings in their local communities. Of the four shortlisted pubs for the CAMRA (Campaign for Real Ale) national pub of the year competition two are micro-pubs9.
What innovations could define the pub of tomorrow?
Such recognition highlights how the pub sector has not been hidebound by its heritage but is instead a vibrant industry that continues to evolve and innovate to meet the changing appetites and thirsts of its customers.
Based on what we’re seeing with clients, investment has been a welcome feature across the regions with various chains doing so with the support of their banks and lenders. Along with food, these businesses have also been increasingly recognising the value of adding accommodation to their properties.
Footnotes:
- https://loungers.co.uk/about/
- https://loungers.co.uk/u/2024/08/269031-Loungers-RA-2024-WEB-.pdf
- https://www.statista.com/statistics/310844/ten-leading-independent-pub-companies-in-the-united-kingdom-uk-by-number-of-pubs-owned/
- https://www.ons.gov.uk/employmentandlabourmarket/peopleinwork/employmentandemployeetypes/adhocs/1908onslocalpublichousesandbarslondonboroughs2001to2023
- https://www.propelinfonews.com/pi-Newsletter.php?datetime=2019-03-16%2006:00:00
- https://pubandbar.com/story.php?s=2024-03-05-youngs-completes-city-pub-group-acquisition
- https://www.fullers.co.uk/corporate/media-and-pr/press-releases/fullers-acquires-lovely-pubs
- https://cgastrategy.com/cga-and-rsm-hospitality-business-tracker-to-monitor-pub-accommodation-sales/
- https://camra.org.uk/media-centre/press-releases/camras-fantastic-final-four-pubs-93702
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