Spotlight: Gastropub Strategy Considerations

KITCHEN (name changed) is a small independent enterprise restaurant/bar in a small town, founded in 2006 serving gastropub style food and drinks.

Due to the nature of the business being in Cornwall UK, there are more potential customers during holiday periods and therefore sales are often much higher around these times.

Competition is primarily from other independent restaurants, pubs and cafés, as there is a lack of chain restaurants/bars in the area.

The rationale for this marketing strategy report is to boost overall consistency of sales by increasing sales over the shoulder period of the year.

PESTLE Analysis for a Gastropub

Political

• Support for smaller businesses in current climate
• Political uncertainty around Brexit and Covid-19
• Move towards ensuring employees are looked after

Economic

• Disposable income will fluctuate over coming years
• Economic stability at risk
• Customers will look to get better value
• Access to debt easier

Social

• Decrease in people going to pubs due to cost
• Increase in diet trends such as veganism
• Expectation of being able to access details of pub online

Technology

• Food delivery services such as Deliveroo on the rise
• Expectation of being able to order on mobile
• In-pub technology increasing

Legal

• Consumer health and safety laws will change
• Food preparation regulation increasing

Environmental

• Increase awareness of sustainability
• Desire for sustainable sources of food
• Organic, local produce demand rising
• Desire for brands to be ethical

Read the Ultimate Guide to PESTLE Analysis.

Five Forces Analysis for a Gastropub

This analysis shows that overall, competition is medium. Key factors are;

• The moderate rivalry amongst competitors, due to the low number of restaurants and med/high number of independent pubs in the region

• High number of substitutes such as McDonalds, Fish & Chips and other takeaways/fast food

• The pubs in particular offer stronger competition, as there is more of them and they offer both food and drinks. In this particular example, there is one substitute competitor which presents more of a threat than other substitutes as it is a takeaway that currently offers the only delivery service available in the area.

• The threat of suppliers is low and should not affect KITCHEN. However, the customers hold a lot of power as they have such low switching costs, with a wide range of available substitutes and competitors. It is therefore important that KITCHEN meets the needs of customers as best as possible to avoid switching.

In more detail…

Threat of New Entry: Medium

• High level of initial investment required
• Often difficult to win over loyal customers from other local restaurants, despite lowering prices
• A lot of regulations e.g. health requirements and alcohol license
• Plot of land confirmed with 1 restaurant near KITCHEN
• Lack of competitors in market so looks like opportunity for new entry
• Threat of economies of scale

Threat of Substitutes: Medium

• Low switching costs
• High availability of substitutes
• Restaurants offering lower-quality or reduced food/drinks service; therefore, performance of substitutes may be unsatisfactory

Power of Suppliers: Low

• Lots of local suppliers for raw materials e.g. meat, fish and veg and dairy
• Most deliver directly to the business
• Cheap to switch to other suppliers

Power of Buyers: High

• Low switching costs
• Medium variety of firms

Industry Rivalry: Medium

• Med/high number of independent pubs that serve food
• Low number of actual ‘restaurants’ in area
• Low number of chain restaurants in area
• High amounts of ‘fast’ takeaway style foods e.g. Fish & Chips, Chinese, Indian
• Low switching costs for customers
• Low amount of café/bistro establishments
• Decreasing market as restaurants/bars close

Complete your own Five Forces here.

SWOT Analysis for a Gastropub

Strengths

• Reputation for quality
• Strong social media presence
• Good location

Weaknesses

• Lack of vegetarian/vegan options
• Unable to compete with drinks prices to the extent of competitors
• Low economies of scale

Opportunities

• Access the take-away market
• Being more responsive to social changes in vegetarian/veganism
• Increase is customers willingness to pay more for higher quality or health benefits
• App development
• Community events and quiz nights

Threats

• People going out to the pub less
• New restaurant opening nearby
• High number of substitutes

Read the Ultimate Guide to SWOT Analysis.

Compete Through Innovation

Some of key factors encouraging innovation for KITCHEN are:

• Intense competition
• Changing customer needs
• New customer targets

One of the main innovations should be around a delivery service, by partnering with a company or developing an offering an inhouse delivery service. At the same time, menu items to suit the changing consumer needs should be provided.

Innovating based on these factors aims to maximise the potential gains from KITCHEN’s resources. By understanding the needs of customers and focusing on creating new innovative value through offering a delivery service for premium food, with a wide range of vegetarian/vegan options distinguishes innovation from novelty.

Competing in this way will maintain fast innovation diffusion because of factors such as:

• Advantage over previous solutions
• Compatibility with existing processes
• Low complexity for ease of understanding
• Divisibility to facilitate trial
• Communicability

The result of fast innovation diffusion in this case is that the service should gain good momentum throughout the local population, with customers adopting the new behaviour, idea and products being offered.

In order to successfully innovate, KITCHEN must focus on a shared vision led by strong management that focuses on the challenges in the future rather than successes from the past. Doing so, will help to avoid potential barriers involving perceptual, intellectual, cultural, environmental and emotional issues.

The many changes impacting the macro environment will bring new opportunities to KITCHEN, so if they capitalise on the key innovations and keep moving forward, they’ll continue to be really successful.