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News release

Melbourne

Innovation key to success for Victorian pubs

"Publican's must reinvent their local to retain market share"


​Victorian pubs need to innovate to keep ahead of increasing competition as more retail outlets look to diversify their product offerings by including alcohol and food.

"Pubs can no longer serve just Parmigiana's and pots of Carlton," Mitchell Humphreys, Vice President – Pub Investment Sales, JLL's Hotels & Hospitality Group, said.

"Publican's must reinvent their local to retain market share given the changes in peoples drinking habits and increased competition from renovated themed pubs and wine/ cocktail lounges."

"Pub owners need to be across all facets of their business from food, wine, beer selection and service. The pub design, its architecture and theme have become topical for patrons, which is creating more pressure for operators to constantly update and spend capital on their venues."

The good news is that plenty of Victorian pubs have decided to modernise with great results for both the owners and consumers.

"Pubs such as The Smith in Prahran, The Emerson in South Yarra and The Terminus in Abbotsford have all been renovated and are now thriving." Mr Humphreys said.

"The Smith was previously Edwards Tavern, an old suburban local, which has now been transformed into a modern glamorous bar and restaurant, created by renowned chef and owner Michael Lambie and George Sykiotis. Similarly, The Emerson, formerly the Market Hotel, has been sensationally renovated with the new building owners and operators spending millions of dollars creating Melbourne's first ultra-club with a substantial rooftop boasting VIP areas."

"The Terminus in Abbotsford was a grungy local in a quiet inner city suburb. Recently leased by Sand Hill Road group, the hotel has since been refurbished into a substantial multi-themed pub with a strong food offering combined with a large beer garden, and is now a staple venue servicing the rapidly growing young apartment-living demographic of the area."

The Victorian Commission for Gambling and Liquor Regulation (VCGLR) has reported that there were 20,667 liquor licenses as at January 31, 2015. This is a steep increase from the 16,513 liquor licenses that were held in 2003-04.  

The biggest increase has been in the granting of licences in the restaurant and café market, which has risen from 3,547 liquor licences in 2009-10 to 4,415 liquor licences in 2012-13.

"Understanding the demographic of an area and matching operators to venues is now an integral part of an agents' role in transacting on non-gaming pub and restaurant freehold and leasehold opportunities." Mr Humphreys said.

According to an IBISWorld report, Pubs, Bars and Nightclubs in Australia, released in December 2014, revenue for the industry is $16.5 billion expecting to grow annually at 1.4 per cent for the next five years until 2019-20.

Victoria has the second largest market share at 24.5 per cent but challenges remain for pubs to keep growing their revenue and profits.

"Local pubs need to have a standout offering to draw consistent patronage such as great seafood or steaks, a huge craft beer selection, spacious beer gardens or a rooftop feature." Mr Humphreys said.

"Pub owners also need to think about themed nights and inventive marketing to retain their market share and ultimately increase it."

"The battle is on, but Australians still love their pubs, so now is the time for pub owners to prove to the diversified Victorian market that they are the one-stop shop for their food, alcohol and entertainment needs." concluded Mr Humphreys.