Hope is not a strategy – An action plan for growth for the licensed trade
The first of this year’s three Britvic Business Success Fora (held in Dublin, Cork and Belfast) found 350 to 400 people in the Ballsbridge Hotel’s Conference Room, all slightly awestruck as four guest speakers painted a fascinating – and sometimes frightening – picture of the problems and challenges in the licensed trade as they saw it. But they also offered a number of solutions to tackle the fall-off in on-trade customer numbers.
Economic trends
All recessions end – it’s crucial to bear this in mind, pointed out economist, author and journalist David McWilliams who kicked off proceedings by warning us nevertheless that “recessions can last longer than some can remain solvent for”.
‘Now’ is the crucial factor, he said, pointing out that for a recession to end, foreign investors are not as important as indigenous businesses as a recession needs to end at home first.
There are two major trends in the economy, he believed – economic/fiscal & economic/demographic.
The first trend consists of those attempting to pay back debts at a time when prices are dropping (deflation).
The second seems to indicates that the market is growing despite emigration.
The ‘paradox of thrift’
Money spent in the boom times was spent on things which are now falling in value.
In his “paradox of thrift” analogy David McWilliams explained that what’s good for the individual is not necessarily good for the collective. If, for example, everybody’s saving, then nobody’s spending.
And the trade should not reduce prices in this time of recesession.
“Reducing prices doesn’t bring people in” he explained, “it keeps them away,” waiting for tomorrow’s better bargains.
But large-scale default on mortgatges can be expected, if not welcomed as it’s the only thing that will help clean-up the economy which would then promote growth, he indicated.
Increasing population
On the upside, the last five years of turmoil had nevertheless seen the Irish population increase (366,000 births) faster than at any time in its history with the fastest-growing counties being Meath, Kildare, Wicklow and Louth.
“There’s been a 14 per cent increase in towns of over 10,000 population,” he told the audience.
As for immigration, 2006 saw Polish men outnumber Polish women here by two to one whereas today the numbers are almost equal.
This is because women are now coming over here to join their husbands in setting up families, he said, so their value to the family pub and hotel should rise.
68 per cent of people are currently under 15 so pubs should offer more family-friendly activities.
The same can be said for the over 50s who’re currently witnessing a large increase in population.
The economy is still alive and the population continues to grow, he concluded, “The question is how do we bring these people into the pubs and restaurants and keep them there?”.
Britvic’s Business Development Audit
Motivational speaker Dermot McConkey has been helping Britvic Licensed Wholesale put together a Buiness Development Audit for the trade which will be distributed to its customers in due course.
With the average customer spending 90 minutes in the pub, the question arises as to whether staff should approach the seated customer seeking to renew the order.
After all, the customer might just welcome the advance if they’d been simply uninclined to go to the bar or may have felt that the bar was just too crowded.
What can you do to grow your business?
Dermot pointed out that what people really buy into is: Time (speed of service), Money (how much), Quality and Quantity.
“Customers have gone from regarding lunch in the pub as a ‘habit’ to regarding it as a ‘treat’,” he warned, pointing out that there’s no loyalty any more.
“98 per cent of people won’t complain, but will simply not come back – so where do all the lost customers go every year?” he wondered aloud.
And while staff may well need coaching in Best Practice it’s equally up to the proprietor to constantly monitor this every single day, he advised.
Adding value and visibility
Britvic Licensed Wholesale’s Head of Marketing Debbie Vard spoke about adding value and visibility.
“Adding value is about getting your customer to want to come back,” she explained. So what makes us go to a pub?
46 per cent of consumers say it’s the food while 26 per cent state that it’s what they can get from drinks promtions.
Sales of soft drinks continue to declinine as draught beer continues to outsell soft drinks. Overall, there has been a 12 per cent decline in soft drinks sales in the 12 months to last June yet there’s a 76 per cent margin on a spirit & mixer where there’s only a 58 per cent margin on a pint of beer, she pointed out.
However over the last six months soft drinks had shown a gradual recovery with a 2.5 per cent improvement in volume growth this year as the price dropped — and it had only dropped 0.5 per cent.
Getting the price point right and boosting sales can be much more effective than a huge price cut.
€5 is reckoned to be around the right price.
“At €5 consumers are more likely to get a second order in,” she added, “And at this price you’re still getting a margin of 18 per cent over the pint”.
She also reminded everyone of the importance of POS, explaining, “34 per cent of consmers say they buy what they see”.
Consumers are looking for soft drinks all the time: designated drivers, family occasions, sporting events, with food etc “… while spirits and mixers are 30 per cent of your drinks profit”.
Soft drinks & food
Britvic has POS available for carvery services and tent cards for tables – all to help promote soft drinks at lunchtime.
Selling soft drinks with food represents probably the single biggest opportunity to upsell.
Food can account for 52 per cent of turnover yet only five per cent of food is sold with a soft drink, she pointed out, “… compare this with the 80 per cent figure in fast-food outlets”.
It has also been found that 60 per cent of consumers are going to the pub less often while 61 per cent of them have stated that spirits & mixers are poor value for money.
The consumer’s ideal price point is between €1 and €1.50, stated Debbie Vard and selling soft drinks at this price might encourage them to add-on.
Tap water troubles
Displaying tap water simply drives up consumption of free tap water. Fast food outlets don’t have water, she pointed out.
“Where soft drinks promotions are run we’re seeing a 25 per cent uplift in a market that’s declining by about 10 per cent. Remember just 10 cases of soft drinks extra a week equates to €20,000 in one year.”
She’d also looked at how publicans might maximise social media, pointing out that 80 per cent of consumers now have smart phones.
With all information now available in the palm of one’s hand it’s important to talk to customers prior to them deciding where they’ll go.
72 per cent of them use SMS texting while others use Facebook.
As a result, Britvic Licensed Wholesale has launched its Pub Hub app for publicans to advertise to customers, especially as 25 per cent of customers now decide where to go on an evening based around where pub promotions are running.
In order to get a better understanding of the importance of social media, Britvic Licensed Wholesale invited Niall Harbison, the Co-Founder of Simply Zesty, Ireland’s leading social media agency, to address the Forum.
Niall firstly established that four out of five people in the room had a smartphone.
Earlier, he’d tweeted for ideas as to what might bring in more customers and the answers tended to emphasise providing more entertainment. Social media could help the publican here.
For example Niall suggested raising the pub’s profile by blogging on the best chat-up lines heard at the bar and asking your customers to send in their own favourites.
Thursday and pre-lunchtime on Friday are the best times for social media promotions – but cut out graphics where possible, he advsied, as most people receive their communications on a mobile phone.
