Pub Food

Eating Out

Eating Out

The Size Of The Market

In 2003–4, average personal expenditure on eating out per week was estimated at £ 10.93, with a further £ 22.67 spent on food and drink brought home; eating out expenditure accounted for over 30% of overall food and drink spending (DEFRA report 2003–4).

Food sales in pubs were estimated to account for 23.9% of their total turnover in 2004 compared with 12% in 1987, showing the increased importance of food in pubs. Pub catering sales are now over £ 5.4 billion per annum, rising 27% from 1997 to 2002, and showing continued growth today. New research from Mintel shows that 41% of people surveyed said that a meal in a pub was their first choice for an evening meal when going out to eat.

Other reports show that the total eating out market grew by 25% between 2000 and 2005, and is now estimated to be worth £ 27.5 billion (Mintel report 2005).

The Demand

The demand for eating out has been fuelled by a number of factors:

Increases in disposable income: since 1982, household disposable income per head has seen year-on-year growth (National Statistics Social Trends Report 2004).
More women out at work: since 1984, the number of women in employment has increased by 30% – (Labour Market Survey – Office of National Statistics).
Increasingly active retired people: the ageing population and the increased spending power of the ‘grey market’ means increased demand.
Increases in single households: from 1998 to 2003, single households grew by 8.7% and are now the fastest growing household segment in the UK (Mintel Report).
Personal time is at a premium: increasingly busy lives are making personal time precious.

The Opportunity

The rising demand for eating out provides the licensee with an opportunity to increase pub turnover and profits. Typical gross profit percentages for food are as follows:

Low-priced/quality food	30–40%
Mid-priced/quality food	40–55%
Higher priced/quality food	60–70%

Your food turnover will be driven by the following:

Your location.
The volume of local demand for food.
Specific customer needs.
The extent and quality of competition.
How well your competitors meet the demand for food.
How well you meet the demand for food.
Your prices.
Your facilities.
The quality of your food.
The quality of your customer service.
How well you communicate with customers and potential customers.
Your past reputation for food (if applicable).

What Type Of Food Should You Offer?

You should offer the type of food that will meet the needs of your customers and potential customers. To ascertain this, it is useful to step into the shoes of your target customers, think about their lifestyle and visualise:

When may they want to eat? — Traditional meal times or at other times of the day?
Who will they be with? — Partners, family, friends, colleagues or alone?
How much time do they have? — No limits or a quick lunch break?
What are their eating occasions? — Special event, big night out, sociable get-together, meeting or a quiet visit?
What is their budget? — High spending, medium spending, low spending?
What are their tastes and preferences? — Traditional, ethnic, vegetarian, low fat, children’s?

Answering these questions for each of your target customer-types helps you put together a menu which focuses on satisfying their needs, instead of writing a menu on a whim and hoping for the best.

Limiting Factors

Unfortunately, you may not fully exploit the local demand for food because your ‘offer’ may be limited by your lack of expertise, availability of experienced staff, kitchen facilities, and equipment or limited capital. If this is the case and you wish to improve your food offer, you will need to overcome your limiting factors. For example:

Lack of expertise:	Obtain additional training and experience.
Lack of experienced staff:	Train existing staff.Utilise local catering colleges.
Poor kitchen facilities:	Develop new kitchen.
Limited equipment:	Purchase, lease or rent new equipment.
Limited capital:	Business loan.Brewery or pub company development(lease or tenanted).

You will need to weigh the cost of each solution against the benefit of improved food sales, being careful to make an objective, well-considered assessment. For large-scale investment or additional borrowing, you should seek professional advice from your accountant before going ahead. (Use three scenarios – optimistic, realistic and pessimistic to forecast your anticipated food sales and consider the implications of each.)