12 September 2012
Pub and Restaurant Groups see London Sales Bounce in August
Pub and restaurant groups benefitted from an August sales boost – but almost exclusively in London. Latest data from the Coffer Peach Business Tracker, the industry’s sales barometer, reveals contrasting fortunes for operators inside and outside the M25 last month.
While combined like-for-like sales for August increased 5% inside the M25, they were ahead a more modest 1% outside of London compared with the same month last year. Those regional figures translated to a 2.1% like-for-like sales increase across the country as a whole.
“There were a number of factors at play – the bounce back from last year’s August riots, brighter weather for much of the month and, of course, the Olympics,” said Peter Martin of Peach Factory, the business intelligence specialist that produces the sector Tracker, the sector’s biggest and most comprehensive performance barometer, in partnership with Coffer Group, Baker Tilly and UBS.
“Across the country as a whole, the second week of the month, which coincided with the anniversary of the riots that severely hit areas of London and other major cities, saw the biggest increase against last year’s trading, suggesting a real riot-related bounce-back,” explained Martin.
“But what about the Olympics? While some operators saw their usual trade in London disrupted, as regular customers stayed at home, others have reported buoyant trading. It all seems to depend on where their sites were, particularly their proximity to the Games action.
“London pubs seemed to benefit most from the August uplift, with like-for-like growth approaching 7%. While casual dining chains in London may have been up only 2.8% against last August, it at least reversed a recent trend of falling like-for-likes inside the M25, where restaurant groups have been generally struggling against increasingly intense and diverse competition,” observed Martin.
“Gauging whether there was an overall Olympic bonus in the Capital, or how big it was, is clouded by the riots effect. However, it is fair to say that the rest of the country did not receive a Games dividend, with overall sales only marginally up on last year, despite the better weather.
“Nonetheless, the major pub and restaurant chains will not be too disappointed. An overall 2.1% lfl sales increase may not be scintillating, but it gets the market back in-line with the underlying growth rate, and is an improvement of the 0.2% market decline in July and the more modest 1.3% increase in June. The year-on-year like-for-like rate is currently running at around 2%,” added Martin
Total sales across the 25 companies in the Tracker sample were overall up by 6.2% on last August, including a 10.5% increase inside the M25 and a 4.6% gain outside, reflecting the increasing market-share that major chains are continuing to win in the domestic eating and drinking out market and they open more sites.
Mark Sheehan, managing director of Coffer Corporate Leisure, struck a positive note on the monthly numbers: “The incredible worldwide coverage for London and the UK this summer is the real story. Some operators in the UK have suffered badly, but the long-term benefit to the hospitality sector nationally will be immense. London will be top of the must visit list for many millions of people and the positive spirit within the UK may well help to get people spending again which will take us out of recession. In total these like for likes are surprisingly positive given the television coverage of the Games this summer and the mass exodus after the Olympics.
Ali Aneizi, M&A and private equity partner at Baker Tilly, said: “It’s been a choppy few months in the build-up to the Olympics, with LFLs up in June, then down in July and uncertainty over how trading was going to unfold in August. The speculation is now over, we’ve had a bounce back and a clear reversal of July’s negative trend. What’s not clear is how much of this reversal is due to an adrenaline shot from the Olympics and how much is due to last August’s riots. The consensus is that it’s probably a bit of both. It remains to be seen whether operators can translate the so-called feel good factor and the hoped for increase in visitor numbers into longer lasting sustainable growth.”
Jonathan Leinster, head of UBS European Leisure Research, commented: “Sales growth saw a significant bias towards inside the M25, though to some degree this is a reversion to the ‘norm’, as the Euro 2012 tournament appeared to cause a very strong but temporary increase in LFL sales outside the M25 during June. The last several months have seen a trend of pub-restaurants outperforming casual dining chains. Whether it is because the series of sports events has led to increased social drinking, an improved ‘value’ offering from the pubs or whether it is due to more intense competition amongst the casual dining brands is not clear. However it is likely that sporting events have at least had some impact over June to August.”