How are UK pubs adapting to modern drinking trends?

It has been a difficult period for pub and restaurant operators. Rising household expenses has led to consumer cutbacks, with a 4% fall in consumer spending on restaurants, pubs, and alcoholic beverages over the past 18 months. This has been coupled with the higher operating costs, in particular, energy and staff costs, which are in total 14% higher than pre-pandemic. The resulting pressure on profit margins has led to the closure of over 500 pubs in 2023. Still, it’s not all bad news. The rate of inflation is subsiding, real incomes are growing, and the UK is transitioning from recession to recovery. All positive for the leisure industry, and reflected in the recent announcement that Heineken will reopen 62 pubs that were closed in recent years and invest £39m in refurbishing hundreds of sites across the UK.

Our recent consumer survey provides further reasons for optimism. 65% of the 2,500 respondents plan to increase or maintain how frequently they visit a pub, restaurant, or grab & go outlet over the remainder of this year. The younger cohort (16–24-year-olds) planned to increase pub and restaurant visits more than others. Millennials wanted to maintain the frequency but noted that cost increases are making regular visits unaffordable. Looking geographically, those living in the South East, South West, and Scotland, in particular, planned to increase their frequency of visits across the food and beverage (F&B) sector. In addition, and positively for the pub sector, more city-based respondents plan to increase or maintain going to a bar or pub, than planned to decrease or stop visits.

Figure 1: Frequency of leisure activities in 2024

Source: CBRE Research

But the pub industry can’t afford to be complacent. Not least because consumer attitudes to alcohol are changing. Alcohol consumption increased more during the COVID-19 pandemic than in the last 50 years. However, since then has been some reversal, and around 20% of adults do not drink alcohol at all. Operators have tapped into patrons cutting back their alcohol consumption by increasingly offering a wider variety of alcohol-free beverages, with alcohol-free options on display, so are noticeably available. According to KAM and Lucky Saint, no alcohol was consumed during 29% of pub visits and 37% of restaurant meals in 2022.

Repeat custom is vital to restaurants and pubs, so operators have been exploring ways to adopt growing trends while maintaining the appeal of being an area of social interaction and community. But there are generational spits. Older cohorts are still more likely to drink alcohol than Generation Z, with 26% of that age group fully teetotal, compared with 15% of 55–74-year-olds who don’t drink alcohol. Targeting one generation over another may appeal in the short-term, however preferences change over time and ultimately, the pubs industry must appeal across generations so not to alienate customers. As well as changes in drinking habits, operators have been adapting their food menus to appeal to an array of customers, in particular, with a large growth in vegetarian and vegan options.

With Generation Z drinking less alcohol than their older cohorts, competitive socialising has been growing in popularity. Classic activities such as bowling, darts, and table tennis have been regaining interest and new options emerging such as shuffleboard, escape rooms, and virtual-reality gaming. Unlike meeting friends weekly in a pub or arranging sporadic after work drinks, competitive socialising is something teams can do as an infrequent social event where the emphasis is on the social and interactive experience, rather than focusing on the F&B options.

For those consumers who are planning to cut back, small treats and social engagement will be a key area they choose to spend. If operators are able to appeal to a wide range of customers with a variety of drinks and food offerings, the after work drinks or treat meal out will still be an expense consumers are willing to maintain.