Size matters

In the days when large companies operated heavily subsidised staff canteens, I was working for an investment firm whose head office dining room was a ten-minute walk from my satellite building. Such was its exceptional value for money that some workers dined there every lunchtime but, alas, I was all too frequently diverted into the East India Arms or White Swan.

East India Arms: cosy

The former was so compact and busy it didn’t bother with seats at all while the latter was a Fuller’s pub with possibly the smallest ground-floor space of any of the company’s properties. Its compact and bijou bar was run by a top-quality manager, who could dispense an entire round without moving his feet.

The appeal of small pubs remains with me today, probably because you can’t fail to be in the thick of the action wherever you sit or stand. Sadly, not everyone agrees and the small boozer has been an endangered species since the smoking ban was introduced in 2007.

The micro-pub phenomenon has been fighting this trend. These perfectly formed units, typically carved from a former retail site, have become a welcome feature on many high streets. One early micro-pub owner described the economics as workable under the following conditions – earn as much as you would on benefits and keep revenues below VAT level. Clearly this model isn’t going to make anyone rich and micro-pubs are generally run by beer enthusiasts as a lifestyle choice.

The compact bar in the White Swan

In 2019, the number of pubs with fewer than ten employees rose for the first time in 15 years, according to data from the Office for National Statistics, albeit a modest 0.4% increase to 22,925. This contributed to the overall number of pubs increasing in 2019 for the first time in a decade – with a net gain of 315 venues.

This is a welcome reversal from the continuous decline endured between 2007 and 2019, with pub numbers falling from 50,120 to 39,130. While this looks horrendous, the most interesting statistic is total employment grew from 426,000 to 457,000 during the same period. This reflects the changing face of pubs as the share of bar staff has declined from 37.6% in 2007 to 28.6% in 2019, whereas the number of people employed in the kitchen or as waiting staff has leapt from 29.1% to 43.8%.

This suggests the average size of pubs has increased significantly in the past 12 years. Big has become increasingly better – certainly from a financial perspective. The economies of scale when running a large pub are clear and the likes of JD Wetherspoon have shifted their estates out of smaller units while opening increasingly large outlets.

It would be hard to find any pub company that has been doing anything other than targeting larger sites or extending successful properties. When it comes to food-led pubs, size is even more important as it’s paramount to have a critical mass of covers to counter the overheads of operating a kitchen and with the appropriate number of staff front and back of house.

At each end of the spectrum we have micro-pubs and mega-pubs – and both are performing well. Fleurets, in its latest survey of pub prices, states: “The market for smaller, bottom-end properties and larger prime sites has been strong.” In contrast, it suggests the mid-market is subdued as a result of the domination of individual buyers immobilised by economic uncertainty and lack of finance options.

Yet again the middle ground is the loser. Regardless of the sector, anything in the middle seems to be squeezed. It’s a case of go large (or small) or go home, which is pretty much what customers are doing.

This piece was originally published on Propel Info where Glynn Davis has a regular column. Beer Insider would like to thank Propel for allowing the reproduction of this column. 

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