The big chill

Customers are always causing trouble. Just when it looks like a business is starting to work out what it is it wants, they go and change their mind.

The 1990s saw an unprecedented growth in pub branding. Names like Rat & Parrot, Hogshead, Firkin, and O'Neills were as common on every high street as Dixons or Woolworths.

The consumers loved them and the big pub companies like Bass, Allied-Domecq and Whitbread kept releasing statements to the City that went something like "the trial in two pubs of our new Sparky McTavish's Beer Barn concept has been very successful and we hope to roll out another 500 by March".

These glorious times now seem to be in the past as the increasingly fickle consumer changes their mind. As a result, some are wondering if these high street "hard" brands have had their day.

In the space of five or six years, the face of the British pub industry has changed completely as the big breweries have stopped brewing and the changes in the pub game, with numerous sell-offs and acquisitions, are enough to confuse most people. Recent deals include Whitbread selling its 3,000 pubs to Laurel, Laurel selling 439 to Enterprise Inns, Greene King buying 135 from Old English Inns, Punch buying 1,500 from Bass and 2,700 from Allied Domecq, Pubmaster trying to buy Wolverhampton & Dudley but failing, so it's just bought the 1,200 pubs that make up the Inn Partnership from Nomura (which had bought them from Greenalls two years ago). And these are just a handful of the recent deals.

While all this has been, and still is, going on, the pub market itself, driven by consumer demand, has begun to change.

"Hard brands and theming have increasingly become a turn-off for today's more fickle consumer," says Killian Morris of Davis Coffer Lyons. "Generally, the level of theming that may be appropriate for, say, a family restaurant simply doesn't attract the higher spending young professional sought by most of the pub operators for their high street venue."

And that's the key. The barrel tables and fake nick knacks that worked in the early 1990s are seen as out of date. Customers want to go somewhere that reflects themselves, and the community they live in. Hard branded pubs just aren't cool and consumers think that drinking or eating in them shows a distinct lack of discernment.

"The more we go out and the more eating and drinking habits have changed, the more discerning we've become," explains Ted Scharma from Shelley Sandzer & Co. "Sitting in an average environment with below average food in a more crass, hard environment has become less appealing the more we experience it. That gap in the market has been spotted and is starting to be filled."

The way this consumer choosiness has manifested itself over the last couple of years, is by pub companies "softening" their hard brands. Overt signage is starting to disappear, more variable menus have been introduced and fashionable furniture has appeared.

Retaining standards
But, even though they're softening the brand, they can still try and retain the same standards of service and consistency that the chain pub product can guarantee.

As well as softening existing concepts, there have been an increasing amount of new brands, from both the big companies and smaller independents that are designed to be almost brandless.

"Soft branding has now encroached enough, I think, that a lot of the hard brands have had it. If you think back five years ago most pub operators' retail portfolios were predominantly focused on the expansion of hard brands with a couple of soft brands on the side," says Morris.

"Now that situation has reversed and the focus is on softer brands with fewer and fewer hard brands remaining on the market."

A quick look at properties currently being marketed confirms this theory. Laurel is presently touting 11 Dome, Hogshead and RSVP units across the country while Yates is looking to sell 18 sites following £4m losses last year including branded Blob Shops and Addison's.

What does this mean to the big operators? Traditionally, they have looked for successful concepts that can be templated and rolled off a production line to keep investors happy with its growth. But for this to work the concept needs a reasonably long shelf life, around seven or eight years, but the consumer is changing its tastes so quickly that, after two or three years, the company's brand could be half way through its roll out and no one likes it anymore.

This is where the independents or new pub companies step in. The smaller groups who think locally rather than nationally have the ability to change to suit the current tastes much more rapidly than big traditional companies. So much so that the big players have more or less stopped looking to acquire branded portfolios and are looking within their existing estates for underperforming assets they can "de-brand" and change to mimic successful local independents.

Emerging soft brands
The Living Room from Living Ventures is a prime example of an emerging soft brand that has got many big companies looking on enviously. The concept is based on a bar/restaurant theme with piano, contemporary dark woods and cocktails.

There are currently five units in Liverpool, Birmingham, Manchester, and Islington and West Smithfield in London with another six on the way; the company is actively seeking new sites.

It's this type of bar that people want to be seen in and, as a result, every company wants to have their own version. This is the reason why hard brands are suffering. The 1990s industry focus on huge managed estates of overtly branded pubs has changed; in the future there'll be more consolidation and an overwhelming trend towards tenancies. Local tenants can manipulate their soft brands to keep up with shifting consumer trends.

If it's done right, it can only be better for those consumers and, ultimately, for the operator as well.

The hard brand isn't dead…

…as themes still win hearts

While many high street hard brands are struggling, there are still many "new" hard brands that are winning punters' hearts. The most obvious one being Regent Inns' Australasian theme concept, Walkabout.

"Outside London in places like Reading and Southampton, Walkabout does phenomenally well," says Peter Spelman, leisure partner at Vail Williams. "It appeals to the 18-30 market and it's not just a theme bar, it's a hybrid between a venue, bar and nightclub." There are other companies that, like Regent Inns, are cashing in on this sector too. Old Monk are rolling out its Walkabout wannabe Springbok, the SFI Group is doing well with its Bar Med and Havana brands, as is Luminar Leisure with Chicago Rock.

"We're noticing that Luminar is very much in the market for theme bars at the moment," Spelman continues. "And maybe it's because it's a small pub company with no historic links to brewing that they're fully immersed in how to make a pub successful." You can never rule out Wetherspoon's who still have a very aggressive roll-out programme, but even now it is looking at areas away from the high street with more stylish fit-outs tailored to local markets. The company has just announced plans to open 500 Lloyd's No1 outlets over the next 10 years.

Licensed and Leisure Property Supplement, Spring 2002

A joint supplement by Estates Gazette and Caterer & Hotelkeeper magazine