14 August 2013

Pubs prosper, as restaurants struggle, during July’s hot spell

• London also bounces back from last year’s pre-Olympic lull
• Drink-led pubs see like-for-like sales jump 5.7%
• Restaurant chains suffer 2.5% like-for-like sales fall

London pubs had plenty to shout about in July, benefiting not just from the prolonged sunny weather but also from a revival in trade in the capital after last July’s pre-Olympic sales dip, according to latest figures from the Coffer Peach Business Tracker.

Across the country, managed pub groups saw collective like-for-likes up 2.9% on last July, with drink-led pubs up 5.7%. Inside the M25, managed pubs saw like-for-likes ahead 7.6%, with drink-driven pubs up a massive 9.5%.

“We had two forces at work last month – fantastic hot weather, which was good for pubs, and a rebound in the London market in general after the lull last July caused by the run up to the Olympics,” said Peter Martin of CGA Peach, the business intelligence specialist that produces the Tracker, the sector’s most comprehensive performance barometer, in partnership with Coffer Group, Baker Tilly and UBS.

“The good weather may have benefitted pub operators, but was at the expense of casual dining restaurant chains – while the London effect seemed to be good for everyone,” added Martin.

Overall, restaurant groups saw like-for-like sales fall 2.5% against July last year, with a 5.4% like-for-like drop outside of the M25. Restaurants in London were, however, up 2.6%.

“Put together, the overall eating and drinking out market showed a 1.3% increase in like-for-like sales on July last year, which was a particularly wet month. Total sales, taking in the impact of new openings, were ahead 3.6%. The overall London market was up 5.4% on a like-for-like basis and 6.6% ahead in total,” explained Martin.

“The weather always has an affect on trading, with good weather generally favouring pubs and poor conditions better for restaurants, as we’ve just seen. In addition, the impact of the Olympics will continue with August’s trading comparisons.

“So we need to be a little cautious about drawing too many positive conclusions. Outside of London trading was essentially flat in July, and looking at the longer-term trend, collective like-for-likes for the 12 months up to the end of July were running at just 0.9% up on the previous 12 months for the market as a whole, with total sales up 4%.

“Pubs will no doubt take comfort from July’s particularly strong trading. But looking at the longer-term trend, and stripping out the bullish London market, pubs that rely on drinks sales are showing a 1.1% year-on-year decline. It is still a tricky market out there,” concluded Martin.

Trevor Watson, director at Davis Coffer Lyons, said: “The difficulty in drawing reliable comparisons with 2012 – the Olympic year – is on-going. As expected, the figures are very positive for the drink-led sector and the London market. The disappointing casual dining stats are likely to be partly due to a rather indifferent output of new film releases failing to sustain leisure park and cinema visitor numbers.”

Paul Newman, head of leisure and hospitality at Baker Tilly UK, added: “There is little surprise with this month’s results as the warmest July in years has led to a great British exodus to the nearest bar. Summer is typically a time to take stock of the year to date, formulate plans for the post-holiday season and begin to focus on the run in to Christmas. With the British economy in recovery mode and the consumer demonstrating increased spending in pubs and restaurants, we believe that larger operators exploring their strategic options will look to the IPO markets, potentially opening up a new exit route to sellers who over the last few years have been constrained to a narrower, typically private equity associated buyer pool.”

Jarrod Castle, leisure analyst at UBS European Leisure Research, observed: “Growth in July was slightly weaker than the previous month, at 1.3% versus 1.9% in June. This is a slight disappointment given comps were relatively weak, and we attribute the strength in London to easy comps given the weakness seen ahead of the Olympics last July. Despite the small decline from last month in the July headline LFL figure, the 12-month moving average is still ticking up.”

The Coffer Peach Tracker* industry sales monitor for the UK pub and restaurant sector collects and analyses monthly performance data from 27 operating groups, and is recognised as the established industry benchmark.

Coffer Peach Business Tracker is powered by Demographix

About Coffer Peach Business Tracker
Peach Factory collects sales figures directly 27 leading companies. 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.