17 April 2013

Pub and Restaurant Groups See Sales Suffer in Freezing March

• Like-for-like sales down 3% on March 2012 • Joint second coldest March since records began

March will be a month that Britain’s pub and restaurant groups will want to forget. Snow and freezing temperatures across the country contributed to a 3% fall in collective like-for-like sales compared with March last year, according to latest figures from the Coffer Peach Business Tracker. Total sales, which include the impact of new site openings, were essentially flat, registering a 0.2% drop.

According to the Met Office, March this year was the UK’s joint second coldest since records began more than 100 years ago. The mean temperature was just 2.2C, more than 3C colder than the long-term monthly average. It matched the average temperature of March 1947, with only 1962 being colder.

“Pubs and pub restaurants generally had a worse time than high street restaurant brands, with a 3.4%, compared to a 1.9%, like-for-like sales fall. However, looking regionally, eating and drinking-out spending was hit equally both inside and outside London. Simply, it was a bad month all round,” said Peter Martin of Peach Factory, the business intelligence specialist that produces the Tracker, the sector’s biggest and most comprehensive performance barometer, in partnership with Coffer Group, Baker Tilly and UBS.

“The damage was really done in the two middle weeks of March, when like-for-likes across the groups in our sample were collectively down 4.8% and 11% – with some operators doing worse than that.” said Martin. “Better trading at the end of the month, including the start of the Easter weekend, however failed to save the situation.

“The good news is that the four-day Easter holiday, as we reported earlier, was significantly up on Easter last year, with like-for-likes ahead 7%. The industry will hope that is a sign of latent public demand for going out and that warmer more settled weather will bring improved trading,” concluded Martin.

The poor March figures came on the back of better trading for pub, bar and restaurant groups in February, when collective like-for-like sales had been up 3.3% on the previous February.

On a year-on-year basis, like-for-like sales for sector remain just positive. For the 12 months to the end of March, like-for-likes were running at +0.6% against the previous year.

Trevor Watson, director at Davis Coffer Lyons, said: “The strong level of sales over the Easter weekend suggests that, when weather conditions allow, consumers are willing to spend on eating out. The overall numbers were predictably weak and we are now entering a period when like-for-like statistics will be affected by last year’s Diamond Jubilee celebrations, which could result in some strong figures in London in particular.”

Paul Newman, co-head of leisure & hospitality at Baker Tilly, added: “Notwithstanding the disappointing March data, our outlook on the sector remains upbeat. As reported over the weekend, the freezing conditions saw UK retail location footfall drop by over 5%. By comparison, this month’s data demonstrates continued resilience in the leisure and hospitality sector. This has encouraged further M&A activity with Little Chef and 3Sixty Restaurants reportedly joining the likes of Côte and Byron in considering transactions over the coming months. Advisors and shareholders alike will be hoping for a prolonged period of better weather to help heat up these processes.”

Jarrod Castle, leisure analyst at UBS European Leisure Research, said: “Weather has clearly had a significant impact on the eating out industry. We believe that as we move into spring, a combination of pent up demand, soft comparisons – LFL growth was -2% in April 2012 – and momentum at the end of March may lead to more encouraging growth figures moving forward.”

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. 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), 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, Bramwell Pub Co, Carluccio’s, Young’s, Living Ventures, Amber Taverns, Hall & Woodhouse, Gaucho, Las Iguanas, Intertain, Tattershall Castle Group, La Tasca, Giraffe and Le Bistrot Pierre.