Don't let it bring you down

Two surveys published have highlighted three underlying trends in the hospitality sector - the continuing squeeze on pub trading, an underlying resilience in the UK eating-out market and the fact that the sector is not reacting uniformly to a tightening in the economy.

After Christmas, the ALMR, the pub industry organisation, revealed the results of its poll of 31 pub companies, operating almost 2,500 outlets between them. Like the Peach Factory survey published a few days earlier, it showed a wide variance in year-on-year sales performances between individual businesses over the festive period ' ranging from -12% to +12% for liquor and -6.9% to +17% for food. The overall result was a 3.6% decrease for alcohol sales and a +3.6% increase for food. The ALMR figures showed that community locals were suffering most.

The Peach Factory survey covered both pub and restaurant companies. Within its poll of 33 company chief executives it found that 81% of pub groups had suffered negative like for likes sales over the Christmas period in contrast to 72% of restaurant groups enjoying positive like-for-likes.

But, as with the ALMR findings, even pub groups with falling overall sales saw an uplift in food turnover. To put it simply, booze continues to bomb.

This in itself should not be surprising. The current economic wobbles merely seem to have magnified a long-term trend the market has been well aware of for some time ' that of falling alcohol sales and rising food business.

What might be more surprising is the strength of eating-out, whether in a branded restaurant or managed pub environment. Food sales have continued in growth, despite all the doom and gloom about downturns and dwindling consumer confidence.

Why is food standing up? There are a number of reasons. First is that people are not giving up on the convenience of eating-out, and rediscovering the art of cooking at home.

The second is that even if consumer spending is being squeezed, it is not happening uniformly. Going out for a meal may offer an affordable indulgence the public will be happy to continue to pay for even in tough times ' especially in those businesses that provide real value and a real experience.

Remember that another trend we have been tracking over the past two or three years has been the shift in consumer spending away from just buying 'things' to expenditure on 'experiences'. There is no reason to believe that this will stop, even in a downturn.

The relative buoyancy of eating-out may well be down to a continuing change in consumer tastes and priorities. The sobering truth for the traditional pub trade is that a pint down the local no longer holds the attraction it did a decade or two ago.

This, of course, holds a challenge for the market to stay fresh and ahead of consumer tastes ' a fact borne out by the vast spread of operating performances found in both the Peach Factory and ALMR surveys.

Operators do not provide equally attractive offerings and consumers are making their choices. In tougher economic times the effects of those choices may become starker.

Good operators, particularly those in the restaurant arena, are already focussing more on operational efficiencies and, perhaps most importantly, on staying close to their customers, particularly through increased and more targeted research and marketing.

The retail sector may be suffering some pain at the moment, but its success in recent times can be laid firmly at its ability to stay in tune with changing consumer tastes and habits.

Keeping abreast of customer needs on a regular basis has been a mainstay of retailing for years, although only now gaining acceptance in the eating-out market. For retailers this is now not enough, particularly as consumers are so much more knowledgeable than they used to be. Regular feedback has been replaced by continuous consumer tracking.

This recent quote from a leading retailer is as relevant to eating and drinking out as it is to high street shopping: 'When the music stops, any retailer who hasn't focussed on the customer will find themselves without a seat''

As last week's two surveys have shown, eating-out has the opportunity to continue to prosper even in tougher economic times, but only if the experiences that operators offer continue to chime with the consumer.

If they manage to do that, the optimism shown by both the ALMR and Peach Factory polls for trading at the back end of 2008 may well prove justified.

First published in M&C Report Online on 20/01/08