18 July 2012
Mixed Fortunes for Pub and Restuarant Groups in June – But Market LFLs Up 1.3%
UK pub and restaurant groups saw a collective 1.3% increase in like-for-like sales in June, according to latest Coffer Peach Business Tracker data. But a combination of rain, football and the jubilee produced contrasting fortunes for pub and restaurant operators.
“While drink-led pubs saw a healthy jump in like-for-likes, casual restaurant chains suffered a corresponding fall against June last year,” said Peter Martin of Peach Factory, the business intelligence specialist that produces the sector Tracker, in partnership with Coffer Group and UBS.
“The market overall was up on last June. But the wet weather, sport and the jubilee celebrations affected businesses is very different ways,” Martin added. “That was particularly apparent in London, where pub trading was especially strong, but casual dining brands had a tough month.
“Competition inside the M25 is also fiercer than elsewhere in the country, and the distractions of football on TV, in particular, just added to that,” he said.
Much of the increased competition is coming from the chains themselves, reflected in the fact that total sales reported by the Tracker, which include the effects of new openings, were up 5.0% on the same period last year, and were positive across all parts of the market. Overall, chains saw more growth in June outside of London than inside.
The Coffer Peach Tracker industry sales monitor for the UK pub and restaurant sector collects and analyses monthly performance data from 25 operating groups.
“The eating and drinking-out market has been volatile, like the weather, for most of this, although the overall picture is of a steadily expanding branded sector, driven, by new openings, but with like-for-like growth essentially flat ” added Martin.
“Tracker data shows the annualised like-for-like sales growth rate for the leading groups is currently running at around 1.5%, with total sales running at around 5.6%,” he added.
Mark Sheehan, managing director at Coffer Corporate Leisure, said: “We are seeing a change in the pattern of trade in the hospitality sector. Pubs are outperforming restaurants and the provinces are trading better than London. While the weak euro is currently affecting tourist trade in London, the Olympics will be the greatest ever advertisement for London and the UK and we expect to see significant long term benefits for the whole sector especially in areas that traditionally benefit from tourism.”
Jonathan Leinster, head of UBS European leisure research, commented: “Despite a difficult comparative and with some mixed weather, like for like sales growth in June of 1.3% appears a strong result. The trends in June were unusual in that ‘wet-led’ pubs appear to have performed better than ‘casual dining’, and outside the M25 performed better than inside the M25. Our conclusion is that the prime impact in the period was the Euro 2012 competition, rather than the Jubilee or the wet weather.
“Therefore it is far from clear that these trends are anything more than one-off, though a move towards value does appear to have helped pub-restaurants at the expense of the casual dining restaurants. Looking forward the dominant impact in July will be whether the Olympics has a significant impact, which remains an unknown.
“Over the last 12-moths average total sales growth has accelerated to over 5%. This has been due primarily to growth in space. Therefore despite the slowing LFL sales growth, the chain operators continue to believe the returns are more than acceptable. We believe, however, that a continuation in these trends can only lead to intensifying price competition over time.”
Coffer Peach Business Tracker is powered by Demographix
About Coffer Peach Business Tracker Peach Factory collects sales figures directly from 25 leading companies every month. 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), Tragus (Café Rouge, Bella Italia, Strada), Stonegate (Slug & Lettuce, Yates’), Spirit Group (Chef & Brewer, Fayre & Square), TGI Fridays, Orchid Pub Co, Marston’s, Wagamama, Las Iguanas, YO! Sushi, Novus (Tiger Tiger), Young’s, Amber Taverns, Hall & Woodhouse and Fuller’s.