Vianet-Cask Marque joint report shows pub profit opportunity available through improved quality management
At a time when operating costs are set to escalate significantly in the coming years, pubs are missing out on an average of over £14,600 per year in profit through inadequate beer quality management, in-depth new research has revealed.
The findings, published today (Thursday, 6 April) in the Beer Quality Report 2017, show a significant untapped profit opportunity due to in-pub quality issues which could more than offset the new business costs coming on stream from additional employment regulation and this year’s business rates revaluation.
Analysis shows the industry as a whole is losing a staggering £709m a year in value through multiple issues around sub-standard quality from cellar to glass. The figures come from a combination of waste, missed till yield, over-ranging and low throughputs, alongside equipment and cellar maintenance failings and lost sales through reduced visits and repeat purchase. This headline figure equates to 5.8% of total UK on-trade beer sales.*
Broken down in detail, analysis shows the pub industry is missing out on:
- An achievable extra £206m in waste reduction at a retail selling price of £3.50 per pint; and 2% improvement in till yield of £248m. In simple terms, these are the amounts of extra revenues that could be gained by maximizing the beer sold from each barrel and the amount of money taken against each pint poured.
- An additional estimated £182m in potential sales by delivering a consistently great pint , typically through improved line cleaning and serving beer to the customer at the correct temperature and specification.
- Some £73m through the cost of over-ranging and wasted beer taps on the bar. The second annual Beer Quality Report once again combines key data and insights from two organisations right at the heart of beer quality in the UK – Vianet and Cask Marque. The report analyses critical quality measures from more than 220,000 Vianet devices in pubs and cellars across the country, which is then informed and validated by quality scores from Cask Marque’s annual visits to more than 22,000 pubs.
Opportunity for all
The report shows that retailers have failed to act on improving beer quality following last year’s report, with the same proportion of beer served too warm. On the critical issue of line cleaning, this year’s report shows that, according to Vianet Business Insight research, one in three pints served to a UK consumer is via a line overdue a clean – again the same proportion as last year.
Cask Marque audits reveal that, based on visual inspection, only 72% of beer lines are perfectly clean, with the remaining pubs failing to keep adequate records and visible yeast build up.
The report finds that the average annual difference in beer volumes of pubs that serve almost all beer via clean lines (between 90-100% of beer) and those that serve less than half (40-50%) via clean lines is 63 barrels. This equates to 18,144 pints over the course of a year – and is worth approximately £63,500 at a retail selling price of £3.50 per pint.
Assuming a gross profit margin of 50%, that’s still worth almost £32,000 per year to the operator, a significant profit opportunity.
Steven Alton, managing director of Vianet, said:
“This report lays bare the profit opportunity for all operators across the pub sector, regardless of whether they run managed, tenanted or independent outlets. With a raft of new business costs hitting the industry this year, for instance further uplifts in the national living and minimum wages, pension auto-enrolment and the apprenticeship levy, as well as substantial hikes in business rates for many pubs, profitability is under pressure like never before.
“The message is good operators could have better businesses by driving up retail standards and, in turn, help safeguard the future of the category and keep pubs attractive to consumers. Draught beer remains in value growth and beer still accounts for about seven in 10 drinks sold in pubs. However, the findings in our report provide a much-needed reality check and demonstrate the category’s continued health could be threatened by quality.”
Paul Nunny, director of Cask Marque, added:
“Cask Marque has spent nearly 20 years banging the drum about beer quality and still the message is not getting through to retailer. This is a damning report on the quality offer to consumers. Findings from our own recent research showed that 49% of pubs are not meeting Cask Marque standards thank goodness nearly 10,000 pubs can! It remains vital for the future of the category we don’t disappoint customers when it comes to serving a perfect pint, every time.”
Other key findings:
- Too many beer taps on Britain’s bars – with pubs over ranging by an average three pumps
- One in four pubs had a major temperature issue last year, resulting in 6% of all pints served too warm – equivalent to 208 million pub pints
- One third of cellars are outside recommended temperature specification
- Six in 10 taps are dispensing less than 88 pints per week
- The North East and North West is where beer quality is at its best
*Based on CGA Strategy figures for on-trade beer sales 2016
Vianet now offer over 20 e-learning courses to help ensure you and your employees are compliant with current regulations. Developed in conjunction with our training partners & eLearning experts, the CPL Training Group, we are proud to offer you and your staff an e-learning system designed for the licensed hospitality industry. The system also contains a reporting platform that records all training taken by you and your staff, giving you an audit history that you can download and print for any purpose. E-learning is the quickest and most efficient way for you to train your staff, and the system is easy to use.
- As of June 2016, there are a total of 92.1m contactless cards in issue in the UK. This is an increase of 2.2 million (2.5%) on the previous month and 33.5% over the year – There are now more contactless cards in circulation than there are people living in the UK
- 1 in 6 card payments are now contactless. £1,882.8m was spent in the UK in June using a contactless card, this is 681.8 million more than was spent in December. An increase of 232% over the year
- 218.9m contactless transactions were made in June. This is an increase of 169.4% over the year
- The YTD volume of contactless transactions for 2016 have now exceeded the total volume for 2015. 1.1bn vs 1.04bn
- 393,032 bank-owned terminals are available in the UK where contactless cardholders can make a contactless transaction. This is an increase of 3.4% on the previous month and 51.7% over the year
- On average, each contactless transaction is for £8.60
Contactless payment is the safest, most secure way to pay
- Contactless cards are built using the same secure system as Chip & PIN, so you can be fully confident when paying
- Every contactless card includes a range of robust security features which safeguard your information and protect you against fraud
- There have never been any confirmed reports of money being ‘stolen’ from a contactless card still in a cardholder’s possession in the UK
- And remember, unlike if you lose cash, if you are victim of card fraud you will get your money back from your bank and will never be left out of pocket
Vianet’s analysis of the tournament from Friday 10th June to Sunday 10th July detailing the impact of the competition on draught beer sales in sports and non-sports pubs.
With England dumped out of the Euros by Iceland, Wales became the last home nations country to keep flying the flag, the match on Friday the 1st showed that overall UK control pubs (inc pubs in Wales) had a year on year decline of 12% on the same day last year.
Overall Sports pubs (inc pubs in Wales) showed a lesser decline of 8%, this clearly shows that the majority of English consumers did not go out of their way to support Wales, but that the sports pubs still attracted a slightly bigger crowd. Its also reflects upon the summer we are currently ‘enjoying’ with weather on the same Friday last year being much warmer and coming at the end of a week of good weather (25c in London for example)
In Wales however control pubs were up 15% and Sports pubs a relatively modest 37% with volumes on average of 407 pints per pub. Run rates in match time for Wales were 69 pints per hour, outside of Wales that dropped to 32 pints.
It will be interesting to note the effect of the semi final on Wednesday; being both a midweek match and with English fans seemingly not flocking to support wales in lieu.
Vianet’s snapshot of the event from 11am to midnight on Monday 27th, shows that although England’s poor result against Iceland has meant pubs can look forward to 1 less match day than we all probably expected, the day was still a success, with volumes up 63% for Euro pubs versus the same day last year with the average volume on the day being 195.99 pints. (an increase in volume on same day last year of 75.77 pints).
Peak trading time was between 8 & 9pm with the run rate prior to the match averaging 12.08 pints. The run rate in match averaging 27.26 pints and the run rate post-match averaging 5.42 pints. This is the lowest post-match run rate suggesting unhappy fans headed for the door rather than commiserating over a pint.
The value to the Euro sports pub above normal trade at £3.50 per pint is £265.20 , with England now out of the competition the average uplift across the 4 matches was £1710.32.