16 July 2015

Restaurant and pub groups see continuing eating-out growth

Total Like For Like Sales Growth

• June like-for-likes up 1.7% on last year
• Strongest trading in branded restaurants outside M25
• World Cup effect holds back pubs

The growing popularity of branded restaurants was a major factor in boosting eating-out sales in June, latest data from the Coffer Peach Business Tracker show. The country’s leading managed pub and restaurant groups collectively saw like-for-likes sales grow 1.7% against June last year – with restaurant chains’ like-for-likes up more than twice that at 3.6%.

“We expected pubs to do relatively less well, and restaurants better, this month because of the boost that drink-led pubs in particular received this time last year from the football World Cup. But the truth is that restaurant chains have been outperforming the pub sector for some time now,” 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.

“The World Cup, and especially the weeks that England were still in it, helped both pub and drink sales grow last June – in what was otherwise a flat market for branded restaurants and the market as a whole. So last month’s trading is more than just a bounce back, as even pub sales were up slightly,” he added.

Martin said that while casual dining brands were generally trading ahead of the market, it was their performance away from London that was particularly impressive, “Collectively restaurant chains saw same-store sales grow 5% outside of the M25 compared with June 2014 – and that is also where those groups are concentrating their brand roll-outs,” he said. “Total sales for branded restaurants outside of London, which reflect the impact of those new openings, were ahead 12.8% compared to last June. That compares with a 5.8% total sales uplift for the sector as a whole,” Martin added.

Managed pub groups, including the major pub restaurant operators, saw like-for-like sales up 0.8% for the month against last June, with food sales making up for a poorer drink performance, even in drink-led sites. Pub food sales grew 3%, while drink was down 0.5%, the Tracker showed.

“The strong showing of restaurants in June also meant that overall London trading was less good than the rest of the country – at least among established players. Even with the distortion of the World Cup, the underlying market is showing steady progress,” added Martin.

Paul Newman, head of leisure and hospitality at Baker Tilly, said: “The eating and drinking out market continues to demonstrate rates of growth significantly ahead of the wider economy. Despite an unremarkable June in terms of the weather and sporting events, the industry’s sustained feel-good factor amongst consumers is unrelenting. Households have led the charge in the recovery since the recession. The key question for us is whether that spending growth will continue to sustain the significant new site rollout plans of so many well-funded branded operators.”

Mark Sheehan, managing director of Coffer Corporate Leisure, added: “Yet again we are seeing pub and restaurant like-for-like growth outperforming inflation. This growth is no longer dominated by London and we are seeing the rest of the UK continuing to power forward. The sustained growth of restaurant chains in the provinces will be hurting independent operators and we expect to see an increased number of casualties in the future.”

Jarrod Castle, leisure analyst at UBS Investment Research, observed: “June’s like-for-like growth of 1.7% follows May’s 2.1%, April’s 1.2%, and March’s decline of -0.3%. This leaves the 12-month moving average growth rate at 1.7%. However, while there was no real difference in LFL growth between London and the regions last month, the 12-month moving average inside the M25 is now 2.4% while outside it is still lower at 1.4%.”

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