London market pick-up boosts pub and restaurant group sales

November 13, 2013

• National like-for-like sales up 1.0% in October
• Inside M25 enjoys 2.3% like-for-like growth

Britain’s pub and restaurant groups saw collective like-for-like sales edge up 1% in October on the same month last year, fuelled mainly by a strong London market. Collective like-for-likes inside the M25 were ahead 2.3%, according to latest figures from the Coffer Peach Business Tracker.

“It was a better overall performance than September, when like-for-likes grew just 0.4%, but practically all the underlying growth in the eating and drinking out market is coming from London. Outside the M25 saw only a modest 0.4% like-for-like rise in October,” said Peter Martin of CGA Peach, the business insight consultancy that produces the Tracker, the sector’s most comprehensive performance barometer, in partnership with Coffer Group, Baker Tilly and UBS.

Total sales across the 27 companies contributing to the Tracker grew 3.9% during October, reflecting the continued roll-out of new sites.

“That top line growth is particularly marked outside of London. While like-for-like growth is harder to find away from the capital, new site openings, particularly from casual dining chains, are maintaining total sales momentum,” added Martin.

In general, casual dining had a tougher October than pubs and bars. Although restaurant chains in London were in positive growth, nationally LFL sales were down 0.7% for the month.

“The pub and bar market has been performing particularly strongly in London. Pubs in the capital saw LFL growth of 3.7% in October. While pub restaurants outside also saw growth, drink-led pub sales outside of London were flat,” said Martin.

“The buoyancy of the London economy is certainly helping the sector, and pubs in particular,” he said. “There is a different pub and bar culture, especially after work, in the capital, but the question for pub groups is whether there is something else about London pubs that can be exported to re-energise their estates in the rest of the country?

“For casual dining chains the question is more about whether their focus on new site openings outside of London is affecting their like-for-like performances in established sites?”, said Martin.

The longer-term trend for the managed pub and restaurant sector is positive, with year-on-year like-for-likes for the 12 months up to the end of October running at 1.5% up on the previous 12 months, with total sales growth running at 4.5% up.

David Coffer, chairman of The Coffer Group, said: “The market continues to show positive signs of growth and while this month the numbers are distorted slightly by strong performance in London, we only have to go back to the August when LFLs outside the M25 outstripped those within. It is challenging to achieve sustained growth regardless of location, however, what is particularly positive is that nationally we have seen collective LFLs rise in each of the last six months – albeit at times by very small amounts. The question going forward is whether this trend continues.”

Paul Newman, head of leisure and hospitality at Baker Tilly also picked up on this being the seventh consecutive month of like for like growth, “driven by another strong performance in the London market”. He said: “On the back of Hutton Collins’ acquisition of Byron, to become the latest private equity backed transaction in the restaurant sector, followed by the successful flotation of Everyman Cinemas on the public markets, we see these results as lending further support for the continuation of corporate activity into 2014.”

Jarrod Castle, leisure analyst at UBS Investment Research, observed: “Like for like growth last month was ahead of the year to date average, but perhaps slightly disappointing given comps were fairly weak against last October. However, this was still an improvement on September. Growth continues to be driven by London, and we have seen this trend in eight months so far this year. Comps get slightly tougher next month so this improvement may be short lived.”

The Coffer Peach Tracker* industry sales monitor for the UK pub and restaurant sector collects and analyses monthly performance data from 27 operating groups, and is recognised as the established industry benchmark.

Coffer Peach Business Tracker is powered by Demographix

About Coffer Peach Business Tracker
Peach Factory collects sales figures directly 27 leading companies. Participants include Mitchells & Butlers (owner of Harvester, Toby, Browns, All Bar One etc), Pizza Hut, Whitbread (Beefeater, Brewers Fayre, Table Table), Gondola (PizzaExpress, Zizzi, ASK, Byron), Spirit Group (Chef & Brewer, Fayre & Square), TGI Fridays, Tragus (Café Rouge, Bella Italia, Strada), Stonegate (Slug & Lettuce, Yates’), Marston’s, Orchid Pub Co, Wagamama, YO! Sushi, Novus (Tiger Tiger), Fuller’s, Carluccio’s, Young’s, Living Ventures, Amber Taverns, Hall & Woodhouse, Gaucho, Las Iguanas, Intertain, Tattershall Castle Group, La Tasca, Giraffe, Loungers and Le Bistrot Pierre.