13 March 2014

Flat February fails to dampen underlying eating-out growth

• Collective like-for-like sales up just 0.2% on February 2013
• London outstrips rest of country with 1.3% growth

Pub and restaurant groups had a flat February with collective like-for-like sales up just 0.2% on the same month last year. The London market performed best, with a like-for-like increase of 1.3%. Total sales, including the impact of new openings, were ahead 2.7% on this time last year.

The latest figures from the Coffer Peach Business Tracker, the sector’s leading sales barometer, come on the back of a strong Christmas trading period and a 7.2% leap in like-for-like sales in January for the nation’s pub, bar and restaurant groups.

“Again the winter weather was a factor, if a more benign one this last month,” said Peter Martin of CGA Peach, the business insight consultancy that produces the Tracker for the out-of-home market in partnership with Coffer Group, Baker Tilly and UBS. “February last year was a relatively good trading month, with LFL sales up 3.3% on 2012, wedged as it was between the two snow-hit months of January and March. So to record similar figures this year, especially on the back of a bullish January, will still be good news for the sector.”

Operators inside the M25 together had the best monthly results with a 1.3% like-for-like sales increase, driven mainly by the performance of London pubs. This compared to a collective 0.3% fall for the rest of the country. Restaurant groups were the best performers outside of the capital in February.

“However, underlying growth in the managed pub, bar and restaurant sector remains solid,” added Martin. “Year-on-year, like-for-like sales for the combined 27 companies in the Tracker sample were running 2.0% up for the 12 months to the end of February, with total sales running 4.6% ahead. The London market continues to outperform the rest of the country, although out-side of the M25 is also in long-term positive growth.

“The beginning of every year is always a relatively quiet trading period, but there is a growing optimism among operators, reflected in the results of CGA Peach’s own annual Business Leaders’ Survey of 170 top executives, which showed 61% fairly optimistic and a further 29% very optimistic about the prospects for their businesses this coming year.”

Paul Newman, head of leisure and hospitality at Baker Tilly, said: “After sparkling like-for-likes in January on the back of a strong festive trading period, further growth however small is viewed as extremely positive in a month hit by atrocious weather in many parts of the country. With the British Retail Consortium recently reporting that year on year sales in the retail sector have fallen 1% in the same trading period, these results offer further evidence that the consumer continues to favour eating and drinking out over shopping. The robust characteristics the sector is exhibiting align well with the positive M&A and IPO interest we are seeing from a number of corporate operators.”

Trevor Watson, director at Davis Coffer Lyons, added: “The recovery to normalised growth is now complete and we expect sales to further accelerate throughout the UK over the next 12 months. Demand from operators for sites in our core markets is increasingly strong, which is putting upward pressure on rents, premiums and property values. This, in turn, is leading to unprecedented prices being paid for a wide range of leisure properties – particularly in central London. The ongoing debate about whether an increase in national minimum wage will strengthen the recovery is an interesting one which operators and investors will need to keep a close eye on.”

Jarrod Castle, leisure analyst at UBS Investment Research, observed: “While these figures appear disappointing following on from strong LFL growth in January, February was not able to benefit from weather effects. Within the M25, pubs and restaurants saw 1.3% LFL growth compared to the regions -0.3% LFL decline. This is inline with a longer-term trend of better growth in the capital. However, site growth is higher in the regions given total sales growth reached 2.8% outside London compared to 2.0% within the M25. The 12 months rolling average declined from 1.7% last month to 1.4% in February. Whilst this is still ahead of the historical average of 1.1%, this is a reversal of the improving trend we have seen since November 2013.”

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), 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.