Mitchells & Butlers recent half year report included some interesting research they had conducted into the market segments in which they operate, the positioning of their brands within them, and the resulting opportunities for expansion that are open to them.
Given M & B’s scale and ambition, it will be interesting to see their plans develop across the five ‘market spaces’ that they identify below. The market values that M & B attributes to each market space may indicate the priority that will be given to each. On the other hand, the scale and extent of competition both regionally and nationally will significantly influence planning.
Background
M & B is the UK’s largest operator of managed restaurants and pubs, with a leading portfolio of well-recognised brands and a high quality freehold estate. Theyfocus on long-term growth in the eating-out market, have achieved a 45% increase in food sales since 2007, and around three-quarters of turnover is now generated from the guests who eat in their restaurants and pubs.
The market, brand positioning and expansion opportunities
M & B operates a wide range of scale brands and formats which offer food and drink across a broad spectrum of price points and occasions, from a casual meeting with friends to special occasion dining.
In order to update their understanding of current and future consumer trends, opportunities, and brand growth potential, M & B recently completed a significant piece of consumer research.
As part of this research, 8,000 consumers were interviewed about 14,000 leisure occasions they had recently experienced; future trends in eating and drinking out were discussed with industry commentators; M & B’s own brand positioning was examined along with that of their competition; and they conducted a review of macro-economic indicators and forecasts.
As a result of this process, M & B now believes that there are areas of substantial opportunity to grow through increasing share in their highly fragmented market, worth £75bn in the UK.
M & B has identified five ‘market spaces’ in which to focus, covering around half of the total market size:
- Upmarket social: value £8bn. This space is focused on relaxed but refined environments in urban and suburban locations. It is about friends and colleagues socialising and enjoying a drink. Theirbrands and formats in this space are All Bar One, Castle, Nicholson’s and Alex.
- Special: value £22bn. This large space covers special occasion dining, from established and trusted brands offering reliably special and high quality food, to destination brands offering a premium experience to adventurous and knowledgeable guests. Brands and formats in this space are Miller & Carter, Vintage Inns, Village Pub & Kitchen, Premium Country Dining Group and Browns.
- Family: value £5bn. This space is focused on family dining, from brands which appeal to younger children where a stress-free and value-for-money experience is essential, to relaxed and familiar environments with broad appeal to bring the whole family together. Brands and formats in this space are Harvester and Toby Carvery.
- Everyday social: value £2bn. This space encompasses brands which play a community role and provide casual, comfortable environments that bring people together. Brands and formats in this space are Ember Inns and O’Neill’s.
- Heartland: value £4bn. This space describes an area of the value market where guests enjoy regular and familiar experiences – for a drink with friends, a quick meal or to take their families as a social activity. Brands and formats in this space are Sizzling Pubs, Crown Carveries and Oak Tree Pubs.