Business Advice Centre

Monday 5 December 2016

Problem Solver: Any food for thought? I’m looking at the pros and cons of moving into pub grub

Feargal Quinn

Published 02/06/2016 | 02:30

Feargal Quinn
Feargal Quinn

Q: I run a good pub in a semi-residential area and have a nice clientele. I am considering adding food to my offer but very unsure if this is the right thing for my business.

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A: As with all of these type of projects, when you are encountering a new area where you have no prior expertise, the best advice as a first step is always to talk to others who have gone the journey before you.

I would recommend that you make contact with the Licensed Vintners Association and see what information it has that might assist you.

You might also be able to identify pubs who have gone through a similar transition in another part of the country to yourself who would be willing to share their learnings with you. That would certainly be a good start point.

We read a lot lately about many pubs adding in food and being really pleased with the result as they were able to broaden their overall appeal to consumers and increase revenue at times when alcohol might not otherwise sell.

There are some serious considerations. Perhaps your existing clientele go to your pub for the very reason that it is an authentic pub that does not serve food and instead provides a superb beverage offer. Have you sought the views of your customers?

If we look at some of the pub chains in the UK, the reality is that they’re no longer pubs but rather restaurants that happen to sell alcohol.

I am not sure whether the alcohol was in terminal decline before the food came, or was it the arrival of the food that pushed away the pub patrons. Certainly worth doing some more research on that one!

The other key question is that of expertise. It is probable that right now you don’t have food experience and if you do determine that it is correct for you to enter the food arena, you then need to decide at what level you do this.

Perhaps it would be wise to enter with a simpler, snacking-type menu to start off with which wouldn’t be overly complex for your team to manage and would allow your customers to enjoy good quality food in a simple way.

Alternatively, you could make significant investment in equipment and personnel and provide a full food offer throughout the day.

From the type of pub you have described earlier, it definitely sounds to me like your food offer will need to be at the quality end of the market to mirror the standards in your pub so that does suggest a certain minimum standard that you cannot drop below.

Take advice from others, visit the marketplace and if necessary pay a third party expert to help you get up and running professionally. This is a significant change for your business and whatever your decision is, you need to make sure that it is the right one.

Q: I run a successful business with three outlets and I was thinking of creating a franchise model to roll this out further.  Is there any advice you can give me?

A: The model I operated in business always relied on us owning each of the shops ourselves, and having full control over the staffing, premises, etc. I am not the franchise expert, but there are some things for you to consider as part of your decision making.

The big positive is that it allows you to roll out more outlets at a faster pace as you do not have to fund the fit out and other costs associated with opening branches. This will allow you to move at a nimble pace and potentially much faster than you might do if you were trying to raise funds for each of these outlets yourself.

In order to facilitate the rollout of a franchise you need to have a clearly defined model with every minute detail and process worked out and documented. In other words, you need to create a franchise book of standards that can be handed to the new franchisee.

Next, think about where your revenues are going to come from. Typically, you will get a franchise fee from the operator, possibly a marketing fee which is to be reinvested and usually your franchisee must buy all of their goods from suppliers predetermined by you, from whom you will potentially receive a rebate.  Sometimes the franchise fee and the rebates do not amount to big amounts of money on a per outlet basis and rely on multiple outlets opening before you can make a reasonable amount of money.

Controlling franchise standards will become a big part of the business expansion and you will probably have to resource this separately.  Equally risky are franchisees who decide to breach the sourcing rules and buy from unapproved supply channels thus potentially jeopardising the whole business model from a reputational point of view and also cutting off a revenue stream from you. My advice would be that you go and find a franchise expert to assist you and attend as many of the franchise shows as possible to build your expertise.

Send your small business questions to himself@feargalquinn.ie

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