11 June 2015

Restaurant and pub groups report strong sales for May

Total Like For Like Sales Growth

• May like-for-likes up 2.1% on 2014
• Follows tougher start to 2015

Eating and drinking-out was up in May, with leading managed pub and restaurant groups seeing collective like-for-likes sales grow by 2.1% against the same month last year, according to latest data from the Coffer Peach Business Tracker.

The strong trading numbers follow a tougher start to 2015, with like-for-like sales among the 30 companies that make up the Tracker cohort ahead only 1.2% in April after a marginal 0.3% decline in March.

“This is a particularly encouraging performance, especially in a time of low inflation, and sees the sector return to the growth levels seen towards the end of last year. It also shows trading outside of London was equally as strong as inside the M25,” 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.

Total sales in May among the sample were ahead 6.2%, reflecting the continued roll-out of new sites, especially of branded restaurants outside of London.

“Overall, restaurant chains had the best of the month’s trading, with collective like-for-likes up 4.3% nationally, and ahead 5.3% away from London,” said Martin. “Total sales for the branded casual dining groups were up 12.5% on May last year, underlining the continuing fast pace of new site openings.”

“Managed pub groups also saw positive, if more modest, growth in the month, with collective like-for-likes up 1.1% nationally and 0.9% outside of the M25,” he added. “The pub market away from London remains essentially flat, and what growth there is in the market is coming almost exclusively from food sales. Nationally food sales in pubs were up 4.5% in May, against a 0.9% decline in drink sales,” said Martin.

The effect of the weather on sales in the month was mixed, with May being sunnier than the average for the time of year, but also colder and wetter.

David Coffer, chairman of the Coffer Group, said: “The most noticeable element of this month’s figures is that without exception each segment shows dramatic uplift in comparison to last year. Furthermore, the growth in total sales outside the M25 is 50% greater than central London, which is indicative of the trend that is beginning to dominate acquisitions in all sectors. Currently, the cost of London sites, in terms of both rents and premiums, has reached such a high level many operators are looking at expansion elsewhere in the UK – hopefully at a lesser cost. This is a trend we have seen in previous eras when the capital’s market becomes over inflated. However, operators should be wary that when the market inevitably cools the provinces and suburbs decline at a far greater rate than central London and they need to be careful of over-exposure.

“There is no doubt that the General Election ‘relief effect’ is beginning to make its mark and will continue to do so moving forward. Availability of stock has never been scarcer and prices and rents are higher in all parts of the UK than we’ve seen in our 50 years of records. The same syndrome is occurring for all leisure related investments, with yields at an all time low.”

Paul Newman, head of leisure & hospitality at Baker Tilly, added: “These results underline why the eating and drinking-out market continues to see such a huge increase in demand for funding. This funding is driving fierce supply growth, particularly amongst branded, casual dining operators although we don’t see why this growth won’t continue given the UK consumer’s unprecedented interest in food and eating out.”

Jarrod Castle, leisure analyst at UBS Investment Research, said: “We estimate that given the strong trading over the Easter weekend, the April numbers imply the rest of the month saw LFL growth of less than 1%, so the improvement in May is in fact better than it first appears. The 12 month moving average inside the M25 is now 2.3% LFL, while outside is 1.5%”

The Coffer Peach Tracker industry sales monitor for the UK pub and restaurant sector collects and analyses monthly performance data from 30 operating groups, and is recognised as the established industry benchmark.

About Coffer Peach Business Tracker
CGA Peach collects sales figures directly 30 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’), 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), TCG, La Tasca, Giraffe, Loungers, Byron, Peach Pub Co, Gaucho and Le Bistrot Pierre.

Coffer Peach Business Tracker is powered by Demographix.