11 June 2013

May Brings Sales Uplift for Pub and Restaurant Chains

• Like-for-like sales up 1.2% on
May last year
• London trading ahead of rest of Britain

Pub and restaurant groups saw collective like-for-like sales increase 1.2% in May, against the same month last year. Total sales, including the impact of new openings, were up 4.5%, according to latest figures from the Coffer Peach Business Tracker.

The London market had the healthiest growth, with like-for-likes up 1.8%, and with managed pubs in the capital performing particularly strongly.

“After a poor, weather-affected start to the year, operators will be pleased to see some real growth in the market,” said Peter Martin of Peach Factory, the business intelligence specialist that produces the Tracker, the sector’s most comprehensive performance barometer, in partnership with Coffer Group, Baker Tilly and UBS.

“Despite May being colder and wetter than average, the public have shown they still have the appetite to go out to eat and drink,” Martin added.

However, sales growth was not uniform across the market. While pubs and bars in London had a good month, collective like-for-likes for those outside the M25 were essentially flat, with drink-led pubs seeing a like-for-like sales decline.

In contrast, mainstream restaurant chains saw a better performance away from London, both in terms of like-for-like and total sales growth. “Much of the market’s new openings are coming from the branded casual dining sector outside of the M25,” Martin added.

Underlying growth trends also improved last month. On a year-on-year basis, collective like-for-like sales for the 27 companies in the Tracker sample were ahead 1.0% for the 12 months up to the end of May against the previous 12 months. Total sales were running ahead 4.1% year-on-year.

Paul Newman, co-head of leisure and hospitality at Baker Tilly said: “The UK consumer’s ability to maintain eating and drinking out spend in a benign economic climate continues to be impressive. As such the UK is increasingly being targeted by international brands seeking to exploit strong positive headwinds. US burger chains Five Guys and Shake Shack are following the likes of Chipotle by testing their concepts in the London market and Jumeirah-owned brand Noodle House is also poised to hit the UK over the coming months. While great news for the consumer, these nimble and well-funded market entrants are likely to increase
the pressures facing incumbent operators in an already highly competitive marketplace.”

Jarrod Castle, leisure analyst at UBS European Leisure Research, added: “The bounce back continues as UK pubs and restaurants
grew LFLs by 1.2% – a good return to growth following LFL figures of -3.0% in March and 0.1% in April. London continues to outpace the
regions, but site expansion is slower. The performance gap between sites inside and outside the M25 has narrowed from last month, but is still significant with pubs and restaurants outside
the capital seeing 0.8% LFL growth versus 2.0% for sites in London.

Despite the weaker performance, the brands surveyed continue to accelerate their expansion outside the capital. We estimate site
growth of 3.8% compared to 2.4% within the M25.

Following months of poor weather impacting performance, May provided us with an opportunity to assess the health of the industry. Despite tough comps of 2.6%

LFL growth in May 2012, the improving data signals that consumer
appetite for eating and drinking out remains.”

The Coffer Peach Tracker* industry sales monitor for the UK pub and restaurant sector collects and analyses monthly performance data from 27 operating groups, representing combined annual turnover of £6.4 billion, and is recognised as the established industry benchmark.