Barclays report: Where Money is Being Spent in the Leisure industry and by whom...

Barclays Bank has released details of its survey of leisure, hospitality and pub operators in the UK to see how the cost of living crisis is affecting customer behaviour, investment and overall optimism in the sector – and the results are surprisingly optimistic.

The report is based on data collected in May 2023 from a sample of over 500 senior decision makers working in the leisure and hospitality industry and over 2,000 general consumers. The key findings are as follows:

• Under 25s are spending more in pubs than ever
• Nearly half of businesses are investing in premises upgrades and automation, such as cashless
• Competitve socialising is becoming increasingly popular with Shuffleboard a particular craze
• Confidence among leisure operators is highest in the East of England

Under 25s are bucking the spend trend

Over one third of people are going out to drink less often and also spending less on takeaway food (25%) according to the Barclays research. 

Despite this, adults under 25 are spending 28% more in pubs and bars and 26% more on eating out than in 2022

The report states, "For one in five consumers, a key strategy isto favour what they see as better value venues, or to seek out special offers. This finding supports recent good results for brands such as Wetherspoons and for Whitbread, owner of chains such as Beefeater and Premier Inn."

Shuffleboard is on the up

“With lockdowns still fresh in the memory, consumers are determined to have a good time. Many have limited their socialising due to the spending squeeze, but when they do go out, they make it count. They want a novel, stimulating time with friends – which helps.” Barclays evolving the experience report 2023

Competitive socialising was highlighted in the report as a particular opportunity for the sector  and this includes traditional activities such as darts pool, crazy golf and board games, but also newer activities such as shuffleboard and axe-throwing.

25% of under 45s take part in these events on a regular basis and a further 35% surveyed said they would be keen to try it.

. For 15% of Londoners, competitive socialising is now the main reason they visit pubs and bars.

The report stated “A new breed of standalone venues, led by the likes of F1 Arcade, Boom Battle, Red Engine and others, is springing up around the UK. Other chains, such as The Light, are evolving their own brands of competitive socialising. Some established operators are also incorporating these activities – for example, Greene King and BrewDog venues have adopted the shuffleboard experience offered by Liverpool-based SHUFL.”

Investment and Recruitment

Nearly half (48%) of businesses surveyed by Barclays claimed that they were undertaking some kind of premises upgrade this year.

The bank believes that some of this investment in infrastructure, may constitute spending that was delayed during the pandemic. These updates may also be carried out to justify an increase in prices or to move up the quality scale.

The good news is that there are tentative signs that the industry might have turned the corner when it comes to the other major challenge of the past few years of recruitment and retention.

In the survey, 34% of respondents stated that they are fully staffed and 36% are able to cover any gaps with flexible staffing solutions. Only 7% claim they are finding it difficult to recruit .  

"This suggests that the constellation of remedies put in place by operators – from subsidised accommodation to flexible shift patterns – is starting to pay off" says the report

Occasions and offers

This year, two-thirds of businesses will be running promotions linked to major events - both local and national. Many operators are depending on festivals and sporting events for an income boost.  Niney per cent of pubs and bars anticipate extra income from these events, and 60% say they will significantly swell their revenues.

Promos and vouchers are definitely an opportunity for the wider leisure industry. A total of 38% of customers responded to the survey saying discounts and promotions would encourage them to visit venues more often. 

Cashless and apps

Cashless payments are on the rise along with other digital solutions – 32% of hospitality businesses have launched remote menu ordering, including 55% of pubs and bars. Similarly, 35% of operators have introduced a customer app over the past year.

Where automation is truly frictionless for the consumer, revenues can rise, says Philip Richardson, Industry Director for Hospitality and Leisure, Barclays Corporate Banking. “Anecdotally, spend per head rises where digital platforms such as self-serve kiosks are in place,” he says. “One fast-food restaurant operator tells us the average spend per head can be up to 5-10% higher.”

Age is a factor when it comes to embracing self-service technology. 

Some 39% of consumers, interviewed for the survey, including more than half of all those in the under-45 age groups, are happy to use automated services provided there is human back-up on hand if needed.

Interestingly, the report states that 15% actively prefer the convenience of automation. Older customers are more resistant, with 43% of the over-55s declaring a preference for human interaction.

General optimism for the future

Despite widespread reports of pub closures, 95% of pub and bar operators claim to be confident about the future according to Barclays. In the East of England – operators are particularly bullish – with 89% expressing a positive outlook.

Despite the potential for declining footfall, the report claims that on average, hospitality and leisure businesses anticipate their revenues will grow by 33% this year over 2022 levels.

The biggest increases are forecast by businesses in the East of England (41% on average) and London (39%). The lowest are in the South West (19%) and Wales (17%).

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19 July 2023

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