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Pub Visiting - UK - May 2016

“Many publicans have evolved their venues and placed a greater emphasis on food in order to remain profitable. That ‘high-quality food’ is the factor which is most likely to entice people to try a new pub underlines how an appealing menu can help to pubs to broaden their customer base.”
– Chris Wisson, Senior Drinks Analyst

This report examines the following areas:

  • New National Living Wage puts pressure on pubs
  • Pubs should look to embrace technology more
  • Balancing food and drink opportunities

Pubs are still closing at a rate of more than 25 per week, with the downturn in on-trade sales of drinks such as beer a core reason for this. Despite the government’s intervention by cutting alcohol duties in recent years, on-trade prices remain much higher than in the off-trade, contributing to a reduction in many pubs’ footfall. A variety of developments such as the National Living Wage and new alcohol guidelines are set to pose additional problems for many landlords.

As a result, many pubs have looked to adapt by putting an increasing emphasis on food in attempts to compete more effectively against restaurants for the leisure pound. That a much higher share of pub-goers prefer venues with dining space than without shows the rising expectations for pubs as food venues. A high-quality food menu can help landlords to position their pubs as destination venues, appealing to key groups such as families and older age cohorts. However, there are also a number of drink-related opportunities for landlords to tap into in the coming years, such as craft beer’s growth and the newer popularity of wine on tap.

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Table of contents

  1. Overview

    • What you need to know
      • Covered in this Report
      • Executive Summary

          • The market
            • The pub industry turnover passes £23 billion in 2015
              • Figure 1: Forecast for total UK pub industry revenues, 2010-20
              • Figure 2: Forecast for UK pub industry revenues of alcoholic drinks, 2010-20
            • The managed segment of the market is thriving
              • UK consumers cutting back on alcohol
                • The pub industry continues to shrink
                  • Publicans under pressure from further cost pressures
                    • Population changes will have an impact
                      • Companies and brands
                        • Pubs look to stand out
                          • Little advertisement in the category
                            • The consumer
                              • Almost nine in 10 Brits go to pubs/bars
                                • Figure 3: Frequency of visiting pubs/bars/nightclubs to eat and drink in, March 2016
                              • A quarter of adults are cutting back on pub visits
                                • Socialising is the main reason for visiting pubs/bars
                                  • Figure 4: Reasons for going to pubs/bars, March 2016
                                • High-quality food is the main draw to try a new venue
                                  • Dining space is a draw for many pub-goers
                                    • Figure 5: Preferences regarding selected attributes of pubs/bars, March 2016
                                  • What we think
                                  • Issues and Insights

                                    • New National Living Wage puts pressure on pubs
                                      • The facts
                                        • The implications
                                          • Pubs should look to embrace technology more
                                            • The facts
                                              • The implications
                                                • Balancing food and drink opportunities
                                                  • The facts
                                                    • The implications
                                                    • The Market – What You Need to Know

                                                      • The pub industry turnover passes £23 billion in 2015
                                                        • The managed segment of the market is thriving
                                                          • UK consumers cutting back on alcohol
                                                            • The pub industry continues to shrink
                                                              • Publicans under pressure from further cost pressures
                                                                • Population changes will have an impact
                                                                • Market Size and Forecasts

                                                                  • The pub industry turnover passes £23 billion in 2015
                                                                    • Figure 6: UK pub industry market size and forecast, 2010-20
                                                                  • Tenanted/leased segment struggles
                                                                    • Alcoholic drinks struggle
                                                                      • Figure 7: Estimated UK pub industry turnover, by segment, 2012-15
                                                                    • Food forges ahead
                                                                      • Forecasts
                                                                        • Figure 8: Forecast for total UK pub industry revenues, 2010-20
                                                                        • Figure 9: Forecast for UK pub industry revenues of alcoholic drinks, 2010-20
                                                                    • Segment Performance

                                                                      • The managed segment of the market is thriving…
                                                                        • Figure 10: Turnover of selected leading pub operators in the UK, 2011/12-2014/15
                                                                      • …while the tenanted/leased segment struggles
                                                                        • Leading players sell off sites
                                                                          • Freehold/independent pubs could thrive
                                                                          • Market Drivers

                                                                            • UK consumers cutting back on alcohol
                                                                              • New guidelines on alcohol intake
                                                                                • Alcoholic drink prices have risen dramatically
                                                                                  • Figure 11: UK excise duty rates for selected alcoholic drinks, 2004-16
                                                                                • Business rates put pressure on landlords
                                                                                  • Figure 12: Average rateable value of pubs in England and Wales, 2005 and 2014
                                                                                • Councils allowed to set licence fees locally
                                                                                  • Pub closures remain commonplace
                                                                                    • Steps to protect pubs
                                                                                      • Pubs as ACVs
                                                                                        • The Community Pub programme
                                                                                          • New Clause 2
                                                                                            • Possibility of Brexit poses uncertainty for pubs
                                                                                              • Utilities and live sport costs add pressures on publicans
                                                                                                • A dip in energy prices in 2015
                                                                                                  • Figure 13: Utility prices paid by non-domestic consumers (including the Climate Change Levy), 2007-15
                                                                                                  • Figure 14: Average fuel prices at the pump for unleaded standard and diesel, 2007-16
                                                                                                • Sports TV subscriptions
                                                                                                  • The National Living Wage has not been unanimously welcomed
                                                                                                    • Late-night legislation remains a controversial subject
                                                                                                      • Additional late-night schemes and initiatives
                                                                                                        • Local Alcohol Action Areas
                                                                                                          • Best Bar None
                                                                                                            • Purple Flag
                                                                                                              • Business Improvement Districts
                                                                                                                • National Pubwatch
                                                                                                                  • Population changes present challenges and opportunities
                                                                                                                    • Growth of over-55s on the cards
                                                                                                                      • Decline of 18-24s set to pose a challenge
                                                                                                                        • Significant growth expected among C2DEs
                                                                                                                          • The weather can also influence pub visits
                                                                                                                            • Figure 15: Hours of sunshine in the UK, by month, 2011-15
                                                                                                                        • Key Players – What You Need to Know

                                                                                                                          • Managed segment on the rise
                                                                                                                            • Little advertisement in the category
                                                                                                                              • Mixed performance among the leading operators
                                                                                                                              • Selected Leading Companies

                                                                                                                                  • Market overview
                                                                                                                                    • Figure 16: Selected leading pub operators in the UK, by outlet numbers, 2012-15
                                                                                                                                  • Enterprise Inns
                                                                                                                                    • Company overview
                                                                                                                                      • Financial performance
                                                                                                                                        • Figure 17: Key financial data for Enterprise Inns PLC, 2012-15
                                                                                                                                        • Figure 18: Enterprise Inns PLC turnover, by segment, 2012-15
                                                                                                                                      • Selected recent activity and innovation
                                                                                                                                        • Greene King plc
                                                                                                                                          • Company overview
                                                                                                                                            • Financial performance
                                                                                                                                              • Figure 19: Key financial data for Greene King PLC, 2012-15*
                                                                                                                                              • Figure 20: Greene King PLC revenue, by segment, 2012-15*
                                                                                                                                            • Selected recent activity and innovation
                                                                                                                                              • JD Wetherspoon plc
                                                                                                                                                • Company overview
                                                                                                                                                  • Financial performance
                                                                                                                                                    • Figure 21: Key financial data for JD Wetherspoon PLC, 2012-15
                                                                                                                                                  • Selected recent activity and innovation
                                                                                                                                                    • Mitchells & Butlers plc
                                                                                                                                                      • Company overview
                                                                                                                                                        • Financial performance
                                                                                                                                                          • Figure 22: Key financial data for Mitchells & Butlers PLC, 2012-15
                                                                                                                                                        • Selected recent activity and innovation
                                                                                                                                                          • Punch Taverns
                                                                                                                                                            • Company overview
                                                                                                                                                              • Financial performance
                                                                                                                                                                • Figure 23: Key financial data for Punch Taverns PLC, 2012-15
                                                                                                                                                                • Figure 24: Punch Taverns PLC revenue, by segment, 2012-15
                                                                                                                                                              • Selected recent activity and innovation
                                                                                                                                                              • The Consumer – What You Need to Know

                                                                                                                                                                • Almost nine in 10 Brits go to pubs/bars
                                                                                                                                                                  • A quarter of adults are cutting back on pub visits
                                                                                                                                                                    • Socialising is the main reason for visiting pubs/bars
                                                                                                                                                                      • High-quality food is the main draw to try a new venue
                                                                                                                                                                        • Dining space is a draw for many pub-goers
                                                                                                                                                                        • Frequency of Visiting Pubs/Bars

                                                                                                                                                                          • Almost nine in 10 Brits go to pubs/bars
                                                                                                                                                                              • Figure 25: Frequency of visiting pubs/bars/nightclubs to eat and drink in, March 2016
                                                                                                                                                                            • Men are more likely to drink in pubs/bars
                                                                                                                                                                              • Nightclubs hit by late-night pubs
                                                                                                                                                                              • Changes to Visiting Pubs/Bars

                                                                                                                                                                                • A quarter of adults are cutting back on pub visits
                                                                                                                                                                                    • Figure 26: Changes in frequency of visiting pubs/bars/nightclubs to eat and drink in, March 2016
                                                                                                                                                                                  • Only 9% are going to the pub more…
                                                                                                                                                                                      • Figure 27: Reasons for increased visits to pubs/bars, March 2016
                                                                                                                                                                                    • …while 25% are going less often
                                                                                                                                                                                      • Cost is a key barrier
                                                                                                                                                                                        • Home comforts appeal to many
                                                                                                                                                                                          • Pubs not seen to be falling behind
                                                                                                                                                                                            • Figure 28: Reasons for fewer or no visits to pubs/bars, March 2016
                                                                                                                                                                                        • Reasons for Visiting Pubs/Bars

                                                                                                                                                                                          • Socialising is the main reason for visiting pubs/bars
                                                                                                                                                                                            • Figure 29: Reasons for going to pubs/bars, March 2016
                                                                                                                                                                                          • Pub food has become an important driver of visits
                                                                                                                                                                                            • Formal dining remains rare
                                                                                                                                                                                              • Sport has little appeal to pub-goers
                                                                                                                                                                                              • Enticements to Try New Pubs/Bars

                                                                                                                                                                                                • High-quality food is the main draw to try a new venue
                                                                                                                                                                                                  • Figure 30: Enticements to try new pubs/bars, March 2016
                                                                                                                                                                                                  • Figure 31: Enticements to try new pubs/bars, by gender, March 2016
                                                                                                                                                                                                • Recommendations are influential…
                                                                                                                                                                                                  • Pubs’ own online presence matters
                                                                                                                                                                                                    • Half of patrons check pub website before visiting
                                                                                                                                                                                                      • Welcome offers prompt nearly half of 18-24s
                                                                                                                                                                                                        • Catering to screen needs
                                                                                                                                                                                                          • …as are external considerations
                                                                                                                                                                                                            • External appearance is a pub’s calling card
                                                                                                                                                                                                              • Figure 32: Cask Marque accreditation and Food Hygiene rating signage, 2016
                                                                                                                                                                                                            • Parking space matters to older patrons
                                                                                                                                                                                                              • Outdoor space a draw for one in five patrons
                                                                                                                                                                                                              • Pub/Bar Preferences

                                                                                                                                                                                                                • Dining space is a draw for many pub-goers
                                                                                                                                                                                                                  • Figure 33: Preferences regarding selected attributes of pubs/bars: dining space, type and choice of pub/bar and origin of products, March 2016
                                                                                                                                                                                                                • Local food and drink appeals to a minority
                                                                                                                                                                                                                  • Live sport on TV, entertainment and music prove to be divisive
                                                                                                                                                                                                                      • Figure 34: Preferences regarding selected attributes of pubs/bars: live sport on TV, March 2016
                                                                                                                                                                                                                    • Entertainment and music divide opinion
                                                                                                                                                                                                                      • Lively atmosphere deters many over-55s
                                                                                                                                                                                                                          • Figure 35: Preferences regarding selected attributes of pubs/bars: atmosphere, entertainment and music, March 2016
                                                                                                                                                                                                                        • Children in pubs also polarises opinions
                                                                                                                                                                                                                            • Figure 36: Preferences regarding selected attributes of pubs/bars: children in pubs/bars, March 2016
                                                                                                                                                                                                                        • Appendix – Data Sources, Abbreviations and Supporting Information

                                                                                                                                                                                                                            • Abbreviations
                                                                                                                                                                                                                              • Consumer research methodology
                                                                                                                                                                                                                              • Appendix – Market Size and Forecasts

                                                                                                                                                                                                                                  • Figure 37: UK pub industry revenue, by segment, 2010-20
                                                                                                                                                                                                                                  • Figure 38: Best- and worst-case forecasts for the UK pub market, 2015-20
                                                                                                                                                                                                                                  • Figure 39: Best- and worst-case forecasts for UK pub industry revenues of alcoholic drinks, 2015-20
                                                                                                                                                                                                                                  • Figure 40: Forecast for UK pub industry catering (meals) revenues, 2010-20
                                                                                                                                                                                                                                  • Figure 41: Forecast for UK pub industry soft drinks revenues, 2010-20
                                                                                                                                                                                                                                  • Figure 42: Forecast for UK pub industry revenues of other items*, 2010-20
                                                                                                                                                                                                                                • Forecast methodology

                                                                                                                                                                                                                                Companies Covered

                                                                                                                                                                                                                                To learn more about the companies covered in this report please contact us.

                                                                                                                                                                                                                                Pub Visiting - UK - May 2016

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