Has there ever been a time when drinking establishments had it easy? Historically speaking, there’s been the likes of prohibition to contend with, as well as Victorian critics preaching the sin of drinking alcohol. Now, punters are more likely to be found knocking back cheap supermarket booze from the comfort of their own home than visiting their local, whilst 2005’s 24-hour drinking laws saw pubs framed as a sign of declining British morals. But, through thick and thin, pubs have survived.
In 2018, the challenges facing Britain’s pubs are very different, spurred on by the current political climate and fallout from the Brexit referendum. No matter the challenge, however, pubs must rise to the occasion if they’re to see the year out with success.
The following is just a glimpse at the five main challenges facing pubs in 2018 — the triple pinch, and then some! Knowing your challenge is just the first step to overcoming it, and with this information, pubs can plan their survival.
Whether you voted to leave or stay, it’s undeniable that the lack of certainty around Brexit and Britain’s next move has had an effect on pub economy. Unfortunately in this scenario, the resultant financial shake-up has seen the pound fluctuate harshly, with an overall fall in its value over time. Bad news when buying imported goods against foreign currency.
To make matters worse, the actual cost of importing food has increased as politicians attempt to hash out new trading deals with partner nations and the remaining EU states. As a result, many pubs are finding the option of serving food more costly than when the prospect of doing so first came about, and are having to quickly compensate.
Pubs without a focus on food are also feeling the Brexit sting, with a 2017 WSTA market report revealing the average price of wine rose more in 12 weeks than in 2 years. WSTA’s predictions of Brexit pushing wine prices up by an average of 29p rang somewhat true, with a 19p increase — not much to celebrate on. Meanwhile, post-referendum, alcohol giant Pernod Ricard announced a British-centric price hike in a bid to protect margins and stem the bleeding from a predicted inflation rise.
With expenditure for both food and drink rising, pubs are facing an attack on two fronts, leading to questions and controversies around quick-cook food and a much smaller alcoholic offering.
A significant part of this challenge comes as the sharp side of a double-edged sword. On one hand, workers are finding themselves successfully campaigning for a national living wage — great news for staff and their families who were previously struggling to make ends meet. On the other hand, this rise in employment costs hits employers directly, with no help from the government in order to make it possible. Do you just hire fewer staff to save money and risk dropping standards?
At the same time, the pool of potential staff has been heavily restricted by the prospect of Brexit (it’s a recurring theme), with many European candidates questioning their current position or avoiding moving to Britain to work altogether. This has cut the market off from a whole host of skilled individuals. This is further compounded by a recent report that a meagre 17% of millennials would even consider a career in hospitality, turned off predominately by the long hours culture.
It’s a tough choice to make for pubs as they find themselves needing to do more with less.
A controversial move by the government in 2017 saw business rates skyrocketing — with some facing astronomical rises. Bristol staple The Fleece, for example, saw their business rates surpass 400%. The first revaluation in business rates since 2008 did not receive a warm welcome, with a coalition of pub owners — including the likes of All Bar One and Greene King — writing an open letter to Westminster in a bid to convince ministers to scrap or moderate the rises. In the letter, pub heads estimated damage to the hospitality sector totalling £500million with some news outlets claiming the rise is akin to a 10% beer duty at 5p a pint, rising to 30p after other factors are included.
In this scenario, pubs will find themselves choosing between sticking it out and jettisoning as much expenditure as possible to afford that option, or selling up entirely. The knock-on effect of the latter is that a new landlord might not be able to afford to take up the lease, leaving the pub forever empty. In fact we’ve lost an average of 2 pubs a day since the rates increase came into affect. Not a pretty sight when our high streets are already emptying.
In Britain, our pubs have been the centre of the community for as long as we can remember. In that cosy position, they’ve previously been largely free from any serious local competition — especially in rural areas. In the 21st century, however, it’s a whole different ball game, with country pubs now closing at an alarming rate.
City pubs are faring no better, with the likes of Living Ventures, Brewdog and Alchemist — all beloved Trail customers, we might add — reshaping the competitive landscape by playing up to Millennial expectations. The ‘reputation economy’ has become ridiculously profitable, with venues opting to create an experience, tied into social media, events and themes.
In 2018, pubs will need to rise to the challenge set by their competitors and consider taking on board extensive changes. This re-tooling needs to range from raising brand standards and diversifying what’s on offer — including foods, craft beers and even themes — to hosting events and providing customers with more to do than just drink.
There’s also plenty of room for technology to play a role in this competition. Already, operations management applications are helping pubs improve productivity and ensure a consistent standard of quality, whilst some chains are looking at how software can improve front of house capabilities. Elsewhere, technological gimmicks — such as VR darts — could soon be a common sight in your local, as current trends collide with the need to keep up.
Whatever path pub owners might take to keep the heat on the competition, they would do well to remember what many of their customers with more modern tastes now look like: somewhere between the experience-seeking Millennial, and those tempted by a bottle of wine on the sofa after work is the ideal individual. Acknowledging those traits and applying some fresh thinking — be it technology, diversification or a total re-brand — will be the key to staving off the new wave of competition.
It’s certainly an interesting twelve months ahead for Britain’s pubs. Political uncertainty and an air of change in the industry are set to give landlords a serious set of challenges to overcome. It’s unlikely we’ll see the end of pub cultures as a result, however. Besides, they’ve survived far worse to date — so I’ll see you at the end of 2018 for a pint to celebrate!