16 February 2017

Restaurant and pubs groups avoid the post-Christmas hangover

Total Like For Like Sales Growth

Britain’s managed pub and restaurant sector saw collective like-for-like sales grow 1.9% in January against the same month last year, according to latest figures from the Coffer Peach Business Tracker – with casual dining chains seeing the biggest jump in trade.

Restaurant groups in the Coffer Peach cohort were collectively 3.3% up on last January, on a same-store basis, while pub group sales were ahead a more modest 1.0% across the board.

“After a busy Christmas and New Year period, when sector like-for-likes were up a healthy 2.2% on 2015, many expected January to be more muted – but consumers seem to have continued to go out to eat and drink, and in particular eat,” said Peter Martin, vice president of CGA Peach, the business insight consultancy that produces the Tracker, in partnership with Coffer Group and RSM.

“Part of the rise can be put down to a prolonged New Year break, and results have also been uneven. Although the majority of the operators in the survey saw a rise in sales, that was not universal,” he added.

Trading in London was strongest, with like-for-likes inside the M25 up 2.2%, against a 1.6% uplift in the rest of the country. Restaurant groups within the capital saw a 3.8% like-for-like increase.

“It also has to be remembered that January is always a weak trading month, so swings at this time of the year will not overly affect business fortunes, but with latest figures showing inflation running at 1.8%, this is a level of the growth the market will need to maintain,” Martin added.

The other feature of last month was the continuing participation of some of the public in Dry January. CGA’s separate research shows that Dry January – now in its fifth official year – is maintaining momentum.

CGA chief executive Phil Tate said: “One in five consumers now take part in the annual detox with 28% of 18-34-year-olds choosing to abstain, although only 14% of over 55s take part. But it’s also worth noting that our survey shows the nation’s resolve weakened as the month progressed.”

Total sales growth in January among the 34 companies in the Tracker cohort was up 4.4%, reflecting the impact of new openings. However, the underlying annual sales trend shows sector like-for-likes running at just 0.8% ahead for the 12 months to the end of January, essentially in-line with most of last year.

“Consumer confidence is proving to be resilient in spite of a background of accelerating inflation. The next few months will see significant cost pressures for operators in both the pub and restaurant sectors, not least of which is the new rates assessments. Operators are likely to look to pass these costs on through higher menu prices. Some brands and businesses will be better placed than others to do so,” said Trevor Watson, executive director, valuations, Davis Coffer Lyons.

“The phenomenon of Dry January has been a ubiquitous feature of a usually slower trading month so these results offer cause for optimism albeit with a dose of realism. Besides exchange rates and rising transport costs, unusually cold weather in Europe is pushing up fruit and salad prices in particular. Operators will need to see sustained levels of sales growth continue in the months ahead just to stand still,” added Paul Newman, head of leisure and hospitality at RSM UK.

The Coffer Peach Tracker industry sales monitor for the UK pub and restaurant sector collects and analyses monthly performance data from 34 operating groups, and is recognised as the established industry benchmark. CGA Peach is part of CGA Strategy.