Nibbling a gourmet style lunch-box in the pouring rain isn’t everyone’s ideal lunch break experience. For some of us however, the opportunity to feast on foodstuffs we might not usually cook at home – let alone pre-pack for a work lunch – is one that is taken with both hands and shovelled into our salivating mouths.
Street food allows for high-quality food at takeaway prices. No rents, no rates and no large overheads all keep costs down. Starting a new street food business can set you back £5,000, although many get going for around a grand.
However, both figures are higher than the average startup cost of £312, according to 2013 research by People Per Hour. It’s also worth noting that to trade at a street food market, organisers can charge traders a fee, ranging from £30-100, or a percentage of profits – often 10-20%.
Finances aside, most traders are in the business for their passion and adoration of food, alongside wanting to keep a vibrant community spirit alive in gentrified city centres. Even KFC have jumped on the street food bandwagon.
Over the past few years street food has become so popular that traders have been able to make the shift from flogging food in gritty car-parks to opening their own restaurants. Pizza Pilgrims, Meat Liquor and Pitt Co Cue all started off as street food traders and now run successful businesses across London and beyond.
For those whose popularity can’t quite afford to fill a 50 seater dine-in establishment, many are turning to the pubs of Britain. Is this a match made in business heaven?
Bad turn out
It’s not surprising since The Great Recession of 2008 the phrase “you going down the pub later?” isn’t heard as frequently as it used to be. People have been cracking open tinnies at home rather than flashing cash they can’t really afford to spend in a local watering hole. In 2009 pubs closed at a rate of 52 per week and today the figure is nearer 30 per week.
A report by the Institute of Economic Affairs cites that the 2008 rise in alcohol duty amidst tumbling wages and the VAT rise of 2011 meant that people simply were put off by the idea of boozing in pubs.
“Alcohol has always been significantly more expensive in pubs than in off licences and supermarkets. Drinkers have traditionally been prepared to pay a premium for the experience of drinking in a pub, but it is not an experience that they will buy at any price.”
Publicans are not silly people. They know what the general public want, and what better way to entice punters than get a local, well-known street food hero into the kitchen.
How do pubs run?
Pubs largely operate in one of two ways, either independent or owned.
Owned pubs are run by pub companies like Punch or Enterprise. These corps own the boozer and lease the venue to the landlord or licensee, setting them up as self-employed business people. The alcoholic beverages and sometimes the food are dictated by the pub company that owns the pub. This can mean less flexibility and less room for creativity.
Marc Hollingsworth, landlord at The Greys, said being tied to a pub company was a “double-edged sword”, and added:
“On one hand, we’re limited to one (free) delivery of stock per week, whereas independent pubs have the freedom to buy stock from whoever they like. On the other, we are spared a lot of the operational hassle that plagues other types of pubs, such as building maintenance and advertising”.
This is compared to an independent pub, the vast majority of which own the freehold, giving them complete control over what goes on. It’s a bit like the difference between owning your own house and renting it.
Matt Russell owns The Independent (no relation to the newspaper!) where he and business partner James set themselves up as a limited company of which they’re the sole directors.
“As a result of us being independent we have complete freedom to stock what drinks/food etc we want. Our food, unlike some of our competitors, is also run completely “in-house”. We hired our chefs ourselves, so again have complete control of the quality that we provide.”
Although Matt and James have opted to keep things in-house, they agree in regard to street food “it’s definitely something interesting and an area that we gave some consideration when we started the pub”.
How do they match up?
For the business savvy publican, approaching a street food trader can be a way to rejuvenate a tired pub kitchen.
John Purchese from Indigo – who oversees a collection of pubs in Brighton – has fostered an ability to transform struggling pubs into trendy hangouts. John’s latest coup is Little Blue Smokehouse, a Crowborough based smokery and street food vendor who now run their own kitchen at Seven Stars. Little Blue’s owner Martyn Cotton thinks:
“If street food is done well, it will work anywhere. Street food in pubs makes sense, but it must be made well and still keep its focus on freshness and originality. There are a lot of great pubs serving fantastic food but there are even more pubs with poor food that could benefit from external motivated talented people taking over the food side of the business.
A food operation is an expensive and time consuming business and so I can see why some pub companies and publicans would look favourably on the kitchen franchise model and as street food is so fashionable at the moment it fits the bill perfectly.”
Martyn operates as a limited company that is contracted by the pub. A similar circumstance worked for Jamaican-influenced traders Likkle Bickle. Owner Nephi Pratt would pay 10% of his turnover to the pub to “cover kitchen and bill costs” and views street food in pubs as “a great platform for businesses to scale their operations quickly”.
As with any market, saturation can occur. The rising rate of street food traders could lead to cannibalisation of the scene with traders eating each other out of business. The rate that street food taking over pubs is on the rise – will the public revert and soon miss the traditional pie and mash of yesteryear? As Nephi puts it “you often see street food traders end their partnership with a pub very quickly because they simply do not get enough customers.”
Pubs need more customers, traders are hunting out additional places to sell. Bringing street food into new areas and serving new customers allows for growth and expansion of both businesses. The well-known street food name also brings in additional trade to the pub. In most cases it’s a win-win situation.
Business collaboration happens all the time with varying levels of fan-fare. Bands sign to record labels, football players sign for teams, or actors sign up for films. By working alongside each other and looking out for each other, both businesses can benefit. Gaps in the market can be filled, higher profits can be made and business can be taken to new heights.