The latest monthly figures from the Coffer Peach Business Tracker, the sectors established sales barometer, show that the country is not giving up on going out to eat and drink in the wake of the Brexit vote.
Pub groups had the best of the months trading, with like-for-likes up 1.2% against a 0.4% decline among casual dining chains, with drink-led businesses doing best of all. As ever this can be put down to the good weather, said Peter Martin, vice president of CGA Peach, the business insight consultancy that produces the Tracker, in partnership with Coffer Group and RSM.
The reassuring thing is that overall business was marginally up on last year at a time when consumer confidence was expected to be fragile in the wake of the referendum, added Martin.However, performance was not uniform across the country, with London operators, seeing a healthy 2.9% like-for-like sales uplift against August 2015, continuing a trend seen in July. In contrast, those outside the M25 saw a slight 0.1% fall in like-for-likes sales against last year. Tourism will have helped the capital and the market will remain cautious as we move into the pre-Christmas period, he said.
Total sales for the month among the 34 companies in the Tracker cohort were up 4.2% on August 2015, reflecting new site openings over the past 12 months. The underlying annual sales trend shows sector like-for-likes running at just 0.8% up for the 12 months to the end of August, the same as at the end of July, with restaurant chains up 0.9% and pub groups ahead 0.8%.
Trevor Watson, executive director, valuations, at Davis Coffer Lyons, said: Within these figures there are certainly some interesting trends. Over the last three months, the rate of growth between the pub sector and the restaurant sector has been broadly similar, unlike the last four years when restaurant growth has been significantly faster. This is further evidence of the slowdown in growth in the restaurant sector as the number of new openings reduces and sector moves into a period of more modest growth. London is benefitting from staycations and weaker sterling. Overall, the results are considerably more positive than some might have expected. Business and consumer confidence in the autumn season for the time being, looks as though it is likely to remain positive in the run up to the key Christmas period.
Paul Newman, head of leisure and hospitality at?? RSM UK, added: Three consecutive months of like-for-like growth across the eating and drinking out sector provides some welcome respite for operators in an environment where cost headwinds are increasingly prevalent.
All operators are needing to work harder to remain relevant in the face of new competition. Refurbishments, redesigns and rebrandings are increasingly necessary for some established multi-brand operators. However, operators of all sizes need to remain flexible enough to remodel their offering in the face of changing customer needs. Investors should also plan to provide adequate cash headroom for existing site development capex that could impact ROI expectations and overall sector valuations.
The Coffer Peach Tracker industry sales monitor for the UK pub and restaurant sector collects and analyses monthly performance data from 34 operating groups, and is recognised as the established industry benchmark. CGA Peach is part of CGA Strategy.