Wednesday, 21 May 2014

Valued customers

I reported recently on the launch of the Pound Pub chain – which in fact is selling a pint for £1.50. However, as I quoted in the comments, first impressions as quoted on the Wetherspoon’s Yahoo Group, were not good:

"Had to go through Atherton on Saturday, so I popped into the Pound Pub to see what it was like – and the place is AWFUL!

"The economies they have made to keep the prices down obviously include not spending any money at all on refurbishment – the place nicks a lick of paint, some polish and new furniture at the very least. Another economy appears to not bother signposting the toilets – the gents turned out to be through three doors, all of which were completely unmarked!

"As for the beers, well since funding doesn’t seem to stretch to pump clips, you have to guess what is available from the shape of the dispenser!! There were 4 handpumps, three of which were out of use, and which had a crudely hand-written note “Wells & Young 4.3%, £2.20 per pint”. Theakstons was advertised (outside the pub), but that turned out to be keg mild.

"To get away quickly I asked for a half of Fosters – but was served a pint!

"One thing the budget does stretch to is satellite TV which was showing the absolutely crucial match of Spurs v West Ham. The place was reasonably full, but hardly anyone was watching.

"I still think the name is great, and the concept is good, but they will have to do a lot better than this if they want to make a success of it!"

Cheapness isn’t a virtue in itself if other aspects of the offer are poor. There’s a big difference between no-frills and grotty. However, as I have said before, over the years the pub trade has collectively shot itself in the foot by continually raising prices by just a little more than the rate of inflation. Recently, though, Wetherspoon’s and, to a more limited extent, Sam Smith’s have shown that there is a demand for an obvious “value proposition” in the market.

In any town, Spoons will have at least a scattering of customers when other pubs are empty. The fact that standard draught beer and cider are generally at least 50p a pint less than the local competition must have a part to play in that. Likewise, in the right location, a Sam’s pub will be a magnet for older male customers. The Boar’s Head on Stockport Market Place remains busy and bustling despite there being four other closed pubs and bars within 100 yards.

In the days when Holt’s were famous for their bargain prices and no-frills boozers (including the customers) it was said that you could open a Holt’s pub virtually anywhere and that characteristic Holt’s clientele would magically appear. They are now doing their best to take themselves upmarket, of course, and the traditional Holt’s ambiance is fast becoming a thing of the past. However, it underlines the fact that low prices may tempt customers out of the woodwork who otherwise might not go to the pub at all.

Sam Smith’s business plan (if they have one) does not seem to include acquiring others’ cast-off pubs, although there are plenty of locations where I would expect a classic Sam’s pub to do well – the centre of Hazel Grove being a good local example. But you do wonder whether there’s a gap in the market for something in between Sam’s and Spoons which would be on a more intimate scale than Spoons and would be suited to locations where the standard Spoons format would be too big and the demand for food perhaps rather limited.

If ALDI and Lidl can do it to the major supermarkets, some ambitious new entrant could surely do it to the major pub companies. But, as with the discount supermarkets, it would be important to maintain a classless image and avoid giving the impression of somewhere only the lower classes would visit, which is a failing of many current pubs that make a point of cheap prices. Spoons achieve that and, while some Sam’s pubs are dog-rough, the company as a whole doesn’t come across in that way.

24 comments:

  1. I await the opening of the 1st mudgie pub.

    "If you build it he will come"

    Put your money where your mouth is, fella.

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  2. When I win the Euro Millions, Cookie...

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  3. It has no risk, it has no reward, unless you have skin in the game.

    Waiting until it doesn't matter if you fail? When it matters if you fail, you get up in the morning and you play to win.

    You have a chance of proving the whole world wrong by making the Mudgie pub a success.

    Timbo Martin never waited for his lottery numbers.

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  4. Why does cheap always have to mean nasty? Why can't someone come up with a business plan for a pub that is both good value and a nice place to spend time?

    Here's a start: instead of adding a fixed % markup to your beer that averages out at £1.50 per pint, just add a flat £1.50 to each pint.

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  5. Thinking about this, there is really a gap in the market for a chain of sports pubs that actually show sport and are decent places to sit and have a half decent pint as well.

    Most "sports bars" are just shitty bars that pretend to show sport but don't really do it properly. I went in "sports bar number 1" in London to try and watch the cricket the other day and they were showing wrestling (which no-one was watching), and playing loud music.

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  6. Very often "Sports Bar" is more about the target clientele than what's on offer inside.

    When it was on free-to-air TV a lot of pubs would just show the Test Match through the day.

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  7. Cookie, how could I invest in pubs? I'm a poverty-stricken semi-retired codger struggling to get by on a meagre income. The main reason I frequent Sam's pubs, Spoons and Home Bargains is because they're cheap.

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  8. Good god man, money has never been cheaper. Historically low interest rates are the new normal. Has cost of capital ever been cheaper? Never a better time to acquire the capital to start an entrepreneurial venture.

    As for your age, Ray Kroc was a late 50’s milkshake machine salesman who wondered why one small restaurant in Des Moines bought 4 machines when the usual for a restaurant of that size was 1 and bigger places might buy 2. He sat in the car park and watched the McDonalds brothers sell more burgers and shakes with their quick service system than anything he’d seen before. Despite failing at every venture he had previously embarked upon and being close to retirement he walked into the store and signed a deal to sell the quick service system to other restaurants figuring he’d increase his milkshake machine sales. He was a millionaire before his 60th birthday.

    The question is “do you believe in the mudgie pub system?”

    Most critics would question your concept. They would point out that cheap pubs require high turnover. High turnover requires a soulless pub atmosphere. They would point out pubs sell hospitality not beer. That pricing the dead legs out is a requirement of a decent gaff.

    Great atmosphere & Low prices????

    I believe in you. I believe Mudgie pubs are the future.

    If you build it, he will come.

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  9. "Sam Smith’s have shown that there is a demand for an obvious “value proposition”"

    This mostly a myth. Except for a few draught products, you pay through the nose for almost anything else.

    But the proposition of cheap and reasonable comfort isn't such a bad one. I dare say, apart from the intimacy, Timbo think he has done that.

    And py " I went in "sports bar number 1" in London to try and watch the cricket the other day and they were showing wrestling (which no-one was watching), and playing loud music."

    You should try New York. A dozen tvs, all on different channels and music you have to shout over. I think that is what sports bars do.

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  10. Professor Pie-Tin21 May 2014 at 14:52

    I was in a pub in Cork city last week that has a bar specifically designated as selling Irish craft beer - which is in itself quite unusual.
    However, all the beers on offer from a number of different breweries were being sold for €5.05c a pint.
    Not a round five euros which is already an outrageous price for a pint of keg bitter but the extra 5 cents.
    " Why " I asked the barmaid.
    " Haven't a clue " she said " it drives us just as bonkers as the customers. "
    We both agreed it was nothing but greed.
    The bar is called The Crane Lane and the owner Benny McCabe should be ashamed of himself.

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  11. christ, pie tin, that's £4.09 in real money.

    wasn't Timbo gonna give our fenian cousins some reasonably priced hooch at some point?

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  12. Professor Pie-Tin21 May 2014 at 16:04

    @Cookie.
    And that's cheap,biy.Them fellas up in Dublin will fork out even more if they're out late and a bit trolleyed.
    Yup,Timbo pressing ahead with plans - he's at the planning stage for alterations to the building he's bought in Cork.
    It will absolutely shake-up the trade I've no doubt.
    Out of town in my country local the stout is €4.10 a pint, considered a steal in these parts.

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  13. I'm always pleased when I see one of those big Sky Sports banners. I know just to keep on walking.

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  14. @Tandleman - yes, but it's the price of the draught beers that makes the difference for a large group of customers.

    @RedNev - plenty of decent pubs have Sky Sports, though (e.g. Armoury and Nursery in Stockport). Indeed, around here pretty much every pub apart from specialist alehouses, Sam's and Spoons does.

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  15. Sounds like hell to me, Curmudgeon. Nothing worse than a crowd of men shouting at the ref on a TV - as a communication device, it's one-way only, chaps - all making a pint of lager (perhaps two if the licensee is really lucky) last the whole match. Then they all go home and don't come back unless there's another match they want to see. Some places have taken Sky Sports out as they found it wasn't paying its way. I just dislike having sport rammed down my throat, so I avoid places that show it. Fortunately, that still leaves me with a good choice around here.

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  16. Hold on Mudgie,The Boars Head is doing relatively well because 20
    (20) pubs within 20 minutes walk are dead or shut
    Same as my local (Yawn) Spoons
    fairly busy ,no wonder 25 local pubs are either boarded up or now
    off licence corner shops
    A sad aspect of the pub debate is how many like to mention a pub that is doing well without mentioning the nearby closures


    Porter Fan

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  17. It doesn't necessarily work like that - it's far from axiomatic that if one pub closes its customers will simply decamp to another. Indeed, as I argued here, very often in the pub trade it's a case of success breeds success and failure breeds failure.

    To quote from Chris Maclean, "Worse still is the idea that you can profit from another’s demise. People believe that if their nearest competitor is destroyed in this process somehow they’ll be able to mop up the additional business. How wrong can they be? A closed pub seems to blight the area. It seems to me that, if you drive through an area, if one pub is shut then the others nearby are struggling."

    Given the general decline of the Stockport Market Place scene, I would say it's impressive that the Boar's Head is still going when all around it have fallen, rather than being a direct consequence of their demise.

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  18. Yet, despite the problems with the pubs Stockport is the forth happiest place to live in Britain.

    http://www.thisismoney.co.uk/money/mortgageshome/article-2634006/Harrogate-named-happiest-place-live-Britain.html

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  19. Martin, Cambridge21 May 2014 at 23:07

    Stockport and Preston (also on that list) are the 2 places I'd most like to retire to. The pubs in both are relatively cheerful places with self- deprecation (and severe mickey-taking in the Older Vic) aplenty.

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  20. Watch out, Curmudgeon: you're being far too positive for that single issue-obsessed, anally retentive Anon. He'll fall out with you for not spreading terminal doom and gloom. On the plus side, we won't have to suffer his predictable doggerel.

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  21. Crikey Mudge,

    Looking at these comments, I reckon you can build a quorum of investors to back the Mudgie pub. You can gamble other peoples hard earned rather than your own easy come by. Always a better way of investing.

    Build it and he will come.

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  22. RedNev: You take rather a hard line on this, translating your personal dislike into a generalism.

    I agree with walking past the pub with a Sky banner. It will almost certainly just sell John Smiths. But there are more subtle uses of sport on tv which are far more benign.

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  23. There are those that like John Smiths and football matches.

    They see a "CAMRA Pub of the Year" banner and it's something to walk past.

    Never the twain to meet.

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  24. I like sport on tv AND a wide range of cask ale. My tastes are criminally under-provided for.

    Surely there must be some kind of market for middle class pubs that sell middle class beer (aka cask ale) and show middle class sports like test cricket and rugby, where a nice middle class chap can meet a nice horsey girl he could introduce to his mother?

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