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Morning Briefing for pub, restaurant and food wervice operators

Fri 9th Nov 2012 - Friday Opinion
Subjects: Fighting the supermarkets, marketing events and margin opportunities
Authors: Tony Brookes, Ann Elliott and Nick Griffin

Taking the battle to the supermarkets by Tony Brookes

My company The Head Of Steam is making a super-human effort this period leading up to Christmas to get as much of its customers’ take home drinks trade for itself, thereby cutting the amount of purchases from supermarkets. The company is focusing on elements of the trade that supermarkets can’t compete with. It is incentivising its staff by paying them a bonus for sales made for taking home. 

One of the big problems pubs increasingly face is the gap in price between equivalent drinks bought in the supermarket and the pub (where costs per drink are massively higher than in a supermarket). Pubs need to make its customers offers which close that gap, with quality products, trading on the fact that their customers love them more than they love the supermarket. Pubs need to recognise that off-sale prices have to be on much lower margins than can be enjoyed on drinks bought for consumption in the pub, and this is often a mental stumbling block for pub operators. Our company doesn’t have that block, given its off licence background.

So our company’s take home offer includes a range of the most popular real ales at heavily discounted prices – but only in bulk, aimed at the party trade – 18, 36 and 72 pint containers, with a small discount for take out volumes of a gallon. Discounts are also available on draught and packaged ciders, imported and British bottled beers and lagers, and cases of wines. Pubs need to look at what supermarkets can’t - for example, they can’t sell real ale or cask ciders. They also can’t sell some of our pubs’ most popular bottled beers, like Sam Smiths of Tadcaster – because Sam Smiths – like quite a few breweries – refuse to supply supermarkets. So if you like Sam Smiths beers, you can buy them from our pubs. We intend to attack the supermarkets head on – it’s up to us to encourage our devoted customers to support their local pub rather than the ubiquitous supermarket. But they’ll only do that if the price is right and can clearly be seen to be vaguely comparable to supermarket prices, for equivalent products.

Another feature of our take home offer will be a range of imported and British bottled beers and lagers in presentation gift packs, with, for example, two bottles and a branded glass. We are giving our customers the chance to get all their Christmas presents from our pubs, if they wish the presentation gift packs are very reasonably priced; but we also have T-shirts and other items which would make excellent presents. Our customers are being encouraged to do something that appears to be new; customers have always been able to buy real ales and ciders to take home in two, four or eight pint containers, as well as larger container sizes. Customers having a party, rather than having a large container of a beer, can, instead, have a whole range of ales and ciders in small quantities of each, where a pub offers a reasonable range. It’s a great offer for a guest at a Christmas (or birthday or any other sort of) party - to be faced with a veritable beer festival of choice, rather than a boring can of Fosters, which is all many parties offer. 

We’re also offering mixed cases of unusual but delicious Scottish beers – heather, gooseberry and wheat, elderberry and Scots pine – from Williams Brothers of Alloa – to make Hogmonay go with a special swing. Gift packs will be available for Christmas and New Year (and Burns Night) presents. We’re also working with Titanic Brewery of Stoke to offer free presentation packs of their Plum Porter bottles and glass, by having a collector card stamped when they buy Titanic’s Plum Porter, Chocolate and Vanilla Stout and Cappuccino Stout. This promotion again gives back to our customers. These lovely rich, dark winter drinks burst with flavour – but you’ll only find the deal in our pubs, not in the local supermarket. To add extra attraction, the prize packs will have discount drinks vouchers for use in the company’s pubs during the dark months of January and February. 

One booming part of the licensed trade is quality world and British bottled beers. Many customers are coming to the pub less frequently, but when they do, they are often experimenting with rare and high-value beers. So most of The Head Of Steam pubs have had new big bottle chillers installed to be able to offer literally hundreds of different bottled beers. The Head Of Steam in Newcastle has even converted a back room to become a World Beers Bar. It is noticeable, having studied their drinks stocking policy over recent years, that supermarkets are stocking an increasingly huge range of imported and British bottled beers and lagers – many at very low prices. Even if they can’t compete on price, pub operators should realise they have to at least offer a similar great choice – because that’s what their customers want. If they don’t, their customers can get what they want from the supermarkets.

One secret of fighting supermarkets is to offer really good value for money wherever possible. Most of The Head Of Steam pubs now offer draught 2.8 per cent ABV bitter - Hop Back Heracles (branded ‘Northern Pacer’) or Caledonian 2.8 (branded ‘Scottish Pacer’) - and lager (Sam Smiths ‘Alpine’) – both delicious and strong in flavour but lower in strength. We sell the lower strength beers and lager at just £1.95 a pint, which makes them price-competitive with many supermarket offers and cuts the price gap between pub and supermarket. 

It is very clear that pub operators have to tackle the threat to their trade from home drinking, via supermarkets, very seriously and need to develop a series of offers which keep their customers coming through their own doors and away from the supermarkets. Landlords and staff need to show their customers – whether regulars or occasional visitors – that they are loved and valued, and that the pub wants their trade.
Tony Brookes is managing director of nine-strong north east operator Head of Steam

Marketing your events by Ann Elliott

When journalists have their pick of events to attend, and resources are being constantly squeezed, how do you ensure that the media come to your next opening or launch event? Unique concepts will always provide appeal but get the approach wrong and you’ll be left wondering where everyone is. It’s not rocket science but does take time, energy and considerable thought. Here are some tips to help:

1. Build relationships months in advance of your event. The media are more likely to attend your event if they have already bought into your brand and rely on you as a source of information.

2. Give considerable thought to whether a press event is the right tactic to use to communicate your message. If you cannot see a reason for a journalist to attend your event, don’t do one. An event will be relevant if you have something exclusive or unique to offer.

3. Choose your event date careful. Do your research beforehand to ensure it doesn’t clash with any industry events or announcement date for a key news story.

4. Make the invitation itself as attractive as possible. With any number coming through the door, especially at this time of year, the first challenge is to make yours stand out from the crowd. Creativity is good but be wary of going too off brand. Also consider the best way to contact your target media; some may appreciate a physical invitation, while an email or tweet will be more appreciated by others.

5. Give as much notice as possible ahead of the event. It sounds obvious but less than three weeks’ notice simply isn’t realistic. Just because it fits in with your schedule does not mean it’ll work for your target media.

6. Give considerable thought to your event schedule. Providing an experience will always be more attractive than a champagne and canapé reception, especially if your event doesn’t have a fantastic story to accompany it. Even if you do have a fantastic story, some media would rather receive a press release than attend an event so be wary of this. Timings are also important to think about. Would your event work best as a breakfast, lunch, dinner or evening event?

7. It goes without saying that relevance to the journalist is key. You may love for the editor of the Sunday Times to attend your event but what’s in it for them? The fastest way to alienate the media is to pitch something irrelevant to them, so treat each as an individual and tailor your event messaging accordingly.

8. Is your event particularly visual? If so, invite a press photographer along to the event. Call and ask to speak to the picture desk or if they don’t have one, a reporter. If they are unable to send a photographer on that day, take good quality digital photos at the event and email them through to the news desk with a press release afterwards.

9. Never assume that your invitation has arrived. Follow up to ensure your contacts received their invitation then, closer to the time, follow up again to confirm their attendance and, at the same time, confirm final details.

10. Finally, run a guest list to ensure journalists receive VIP treatment on the night. If they enjoy themselves, encouraging them to attend your next event is going to be that little bit easier.

Of course you could avoid all this work by employing a great PR!!
Ann Elliott is chief executive of Elliott Marketing and PR

The challenge of margin by Nick Griffin

In golf, the cliche is “drive for show, put for dough” and, not to be outdone, the retail industry has its own version, “takings for vanity, profit for sanity”. I fear for many here a lesson in egg-sucking may be on the cards, but I am still truly amazed by the number of publicans I meet who give the impression that their understanding of margin goes no further than a faint line down the left hand side of a page of foolscap. Let’s not kid ourselves here, there’s much we could learn from retailers outside of the licensed sector. My training at Selfridges taught me plenty and that retail background has allowed me to see the good, the bad and the downright ugly! Let’s take something we will all know. For over a quarter of a century I have been walking into pubs and asking the same question “Evening, what do you recommend?” and for over a quarter of a century I have received the same answer over and over again. Given an open goal I am recommended the lowest margin product on the bar.

No question as to what I might like, no leading down the path to a more profitable product, no siree! Why is this? Why are we, as publicans, so reticent to improve our own lot through recommending a higher margin product? Is it an anachronistic throw back to the days when all pubs were brewery-owned, clearly benefiting from the promotion of beer sales? Surely it isn’t because those of us with pubco-owned premises, tied for beer only, can’t appreciate the difference between a 45 per cent margin and a 70 per cent one? Could it be a fear of our knowledge on wines and spirits being revealed to be lacking whilst we are extremely confident on the ale and lager front? Or could it simply be because we have our backs to the highest margin products whilst the beer is right in front of us! There’s no simple answer, it’s possibly a combination of all of the above. Really there is no point in worrying about it either - spilt milk and all that. But surely, given these difficult times, we must all start to look at our margins and train both ourselves and our staff to try and maximise our earnings opportunities.

Whenever I suggest this I am normally met with a rolling of the eyes. “Yeah, yeah Nick, as if my customers want to drink wines and spirits, or, heaven forbid, minerals!” It’s as if they are being asked to take on a task of such difficulty that the greatest minds of the land, all MENSA’d up to the hilt, would turn their back on the challenge. Nothing could be further from the truth. That’s the great thing about margin, it is your friend, not your enemy and treated with respect it will pay you back in spades. The difference between the margins achievable for different products is so vast, in some cases almost double, that one needs only to pursue a course of gentle persuasion, not one of full-scale arm twisting, to make a real difference to ones bottom line and eventually cash in the back pocket (after tax of course!).

A wider selection, some simple training often available for free from brand owners and suppliers and some confidence is often all that is needed to add a couple of percentage points to your overall margin. That’s a few thousand pounds straight onto the bottom line of the average pub. It’s not just pubs that get it wrong though. There are some fantastically stocked bars out there that have a product range to die for. Sadly, they also fail to understand margin, but for a wholly different reason. It’s no good simply applying a margin across the board to a product range, doing so can lead to some rather expensive mistakes, with the best products on the bar simply out of the reach of most customers.

It is here that one needs to look at your cash margin not the percentage. Again this is money in the pocket. It is no good achieving 70 per cent margins if the product is simply too expensive. By applying a smaller margin, you will give the product a chance, you will still be creating a greater margin than your pint of beer and you will definitely be putting more money in the till. It’s not rocket science. It’s the very basics of what we do as retailers. So apologies if anyone is offended by the simple nature of the lesson. But be honest with yourself, how often have you recommended a pint because it’s easy when you could have made yourself a few pence more with just a little effort? Whiskey please bartender, one lump of ice!
Nick Griffin is managing director of Pleisure, which has won industry awards for its spirits range

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