15 October 2015

Pub and restaurant groups see steady sales growth continue into September

Total Like For Like Sales Growth

• Collective like-for-likes up 1.2% on same month last year
• Restaurant groups continue to out-perform the market

Britain’s managed pub and restaurant sector is seeing steady, if unspectacular, sales growth in 2015, reflected in the latest trading data for September. Collective like-for-like sales were up 1.2% on the same month last year, broadly in line with the underlying 12-month trend, latest figures from the Coffer Peach Business Tracker show.

“This year has generally been one of ‘steady-as-she-goes’ for the eating and drinking out market, with annualised like-for-like sales to the end of September running at 1.3% up on the previous 12 months,” said Peter Martin, vice president of CGA Peach, the business insight consultancy that produces the Tracker, in partnership with Coffer Group, Baker Tilly and UBS.

“This time last year we were seeing growth of twice that rate, showing that despite the fact people are continuing to eat and drink out the bulk of any uplift in consuming spending is largely going elsewhere, such as on bigger ticket consumer goods,” Martin suggested.

“Weekly numbers show that drink-led pubs performed strongly in the last weeks of the month, coinciding with the start of Rugby World Cup midway through September. But overall, restaurant chains still performed best throughout the month with like-for-likes up 2.8% on last September. While drink-led pubs had a better month, also helped by better weather, pub groups collectively were ahead just 0.4%,” said Martin.

Competition in the sector was heating up, driven especially by ambitious brand roll-outs by casual dining chains, he said. Total sales, which include the impact of new openings, grew 4.6% in September among the Tracker cohort of 32 operating companies – and are running at 5.5% for the year to date. Total sales for restaurant groups were up 7.5% for the month, and 10.6% ahead of last year outside of the M25.

Regionally, London had a slightly worse month than the rest of the UK with like-for-likes up 0.9% against 1.3% for the rest of the country.

The Coffer Peach data comes directly from 32 participating companies, including a cross-section of managed operators, from major players such as Mitchells & Butlers, Whitbread, Stonegate, Pizza Hut and Pizza Express to smaller, and sometimes regionally-based, groups such as Living Ventures, Hall & Woodhouse, Byron, Loungers, Laine Pub Co and Bistrot Pierre. (See full list below)

David Coffer, chairman of Coffer Group, said: “There is a continuing trend for operators to find value by the constant migration from an ever more expensive and competitive London area. However, the culture of eating close to home will also drive up local values. Tall trees can’t grow to the sky and there surely will be a point where rentals, premiums and menu pricing in central London become untenable. It will be interesting to see whether these trends continue.”

Paul Newman, head of leisure and hospitality at Baker Tilly, said: “After some pretty atrocious weather in August, early Autumn sunshine brought like-for-like September trading figures back up towards their long term trend. Favourable economic conditions and a benign political climate have led to increased confidence in the investment environment, fuelling competition within the banking sector to support the more successful operators. Cost of capital has continued to reduce and we anticipate the pace of out of London new site openings to increase further over the coming months. Of concern is how far this growth can continue before over supply becomes a pressing issue.”

Jarrod Castle, leisure analyst at UBS Investment Research, observed: “September showed a slight acceleration in monthly LFL growth at 1.2% against August’s 0.6% and July’s 1.1%, although the 12-month moving average was 1.3%, slightly lower than the 1.5% in August, and 1.9% in July. The 12-month LFL moving average inside the M25 is now 1.9% against 2.3% in August, while outside it is 1.1% against 1.2% a month ago. Potentially the Rugby World Cup will have a positive impact on the sector, although the magnitude is too early to tell.”

The Coffer Peach Tracker industry sales monitor for the UK pub and restaurant sector collects and analyses monthly performance data from 31 operating groups, and is recognised as the established industry benchmark. CGA Peach is part of CGA Strategy.

About Coffer Peach Business Tracker
CGA Peach collects sales figures directly 32 leading companies. Participants include Mitchells & Butlers* (owner of Harvester, Toby, Browns, All Bar One etc), Pizza Hut, Whitbread (Beefeater, Brewers Fayre, Table Table), Pizza Express, Spirit Group (Flaming Grill, Fayre & Square), TGI Fridays, Casual Dining Group (Café Rouge, Bella Italia), Stonegate (Slug & Lettuce, Yates’), TCG, Marston’s, Azzurri Restaurants (Zizzi, ASK), Wagamama, YO! Sushi, Novus (Tiger Tiger), Fuller’s, Carluccio’s, Young’s, Living Ventures, Strada, Amber Taverns, Hall & Woodhouse, Gaucho, Las Iguanas, Intertain (Walkabout), La Tasca, Giraffe, Loungers, Byron, Peach Pub Co, Le Bistrot Pierre, Laine Pub Co and Downing LLP (investment partner of Antic London).

Coffer Peach Business Tracker is powered by Demographix