17 May 2011
April Holidays Provide Lift for Eating and Drinking-Out
Holiday fever helped to boost spending on eating and drinking out-of-home in April, with like-for-likes sales figures overall up 3.8% for the month.
Figures from the Coffer Peach Business Tracker, which monitors sales performance across 21 major pub and restaurant operators, also showed total sales, which include the impact of new openings, ahead by 6.2% on the same month last year.
However, the headline figures hide a more complex picture of consumer spending. “While the school holidays had a positive effect, Easter 2011 wasn’t as good as Easter 2010 and while the hot weather helped pubs in particular, it also brought out more home barbecues as a counter-attraction,” said Peter Martin of Peach Factory, the market consultancy which produces the Tracker in partnership with KPMG, UBS and the Coffer Group.
“The extra holiday for the Royal Wedding, Easter being later, how school holidays fell and the sunny weather all played a role, but not always as might have been expected,” said Martin.
“The challenge for pubs and restaurants has been to convince people to go out rather than stay at home and watch the Royal Wedding on their own TV, for example, or enjoy the sun around their own or friends’ barbecues. So to grow sales over the month is good news, with the run up to the Easter weekend particularly strong,” he added.
“Hot weather, as we had this year, generally tends to favour pubs, especially those with outside areas, rather than restaurants. Last year, it rained over Easter and many people went shopping especially to malls, and to inside entertainment like the cinema, benefiting restaurants in those locations. Good weather can be a double-edged sword.”
Separate figures the four days of Easter, from Good Friday to Easter Monday, actually showed sales down –6.5% on a like-for-like basis on the 2010 Easter weekend holiday, while total sales were –3.7%.
“The Easter effect is interesting,” added Martin. “Last year, the long weekend off was right at the start of the month and the weather was wet; this year it was at the end of April and it was hot. Last year, it was also in the middle of school holidays, this year some children had gone back to school before Easter.”
However, he said, the school holidays probably had a bigger positive impact on sales than the bank holidays: “Our research across the year highlights the big positive effect that school holidays are having on trade, particularly with people staying in the UK.”
The April results mark a continuation of steady, positive like-for-like growth across eating and drinking-out this year, with March ahead 0.9% and February up 3.1% on the comparable months in 2010.
Month on month April was down -11.2% on March, because March was a five-week, rather than a four-week, month.
Despite being generally positive, the results have prompted a degree of caution too.
Trevor Watson of Davis Coffer Lyons, part of the Coffer Group, said: “The Royal Wedding has been the best advert for London in 30 years, and will have a long-term beneficial effect for years to come. With the Olympics around the corner, London is experiencing a boom as a result of this global publicity. Nonetheless, while we expect strong London trade to be largely sustained in 2011, consumer behaviour continues to vary across regions.
“Although the Royal Wedding was good for family related leisure businesses, some venues found the succession of long weekends disruptive to trading patterns. Around the country, people are now beginning to feel the impact of tax rises, and underlying inflation. Consumer spending nationwide is likely to remain under continued pressure over the next few months.”
Richard Hathaway, head of Travel, Leisure and Tourism at KPMG in the UK, added: “While April saw good overall year on year growth, the hot weather brought BBQs out across the country and as a result the Easter weekend was itself significantly down on 2010.
“Also, last April was relatively flat given the impact of the ‘Ash Cloud’ disruption on London in particular and this suggests that although like-for-like sales growth continues, a sustained level of underlying growth at or above the rate of inflation will be hard to attain, even for the major pub and restaurant operators.
“Further pressures from the recent VAT increase, low consumer confidence and falling disposable incomes will apply additional strain on operators. To add to the burden, mounting fuel and utility costs and an uncertain jobs market is making many businesses nervous about the rest of 2011.”
Jonathan Leinster, head of UBS European Leisure Research, said: “Hardly a shabby result but all things considered, this is not a spectacular outcome for the month. April this year had Easter, a royal wedding and a record number of hours of sunshine. The warm weather, extended holiday calendar and alternations to school holidays did not favour branded pubs and restaurants. We believe those who remained in the UK did celebrate, but more did so at home this year.
“Footfall will have contributed to the rise. We estimate that price and mix have contributed most of the like-for-like growth so far this year, but in April we estimate that just short of 2% of the 3.8% growth came from higher volumes. Current trading reports in upcoming results could be tricky. Marston’s, Greene King, and Enterprise Inns are all reporting their first half results this week. Calendar effects will make trends difficult to read, but we expect trading following the Royal Wedding will have slowed on a like-for-like basis.
Coffer Peach Business Tracker is powered by Demographix