13 August 2015

Restaurant chains outstripping pubs in market sales growth

Total Like For Like Sales Growth

• Collective like-for-likes up 1.1% in July against last year
• Strongest trading in branded restaurants outside M25

Expanding casual dining brands are increasingly competing with pubs for out-of-home consumer spending, latest figures from the Coffer Peach Business Tracker show. In July collective like-for-like sales for the managed pub and restaurant market grew 1.1%, with the highest growth coming from restaurant groups.

“While the overall eating and drinking out market continues to grow steadily, it is the growth of branded restaurant chains, especially outside of London that is driving the market,” 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.

“Restaurant operators in our Tracker sample collectively registered like-for-like growth of 4.3% last month – and 4.9% outside of London. In contrast, pubs and bars had an essentially flat month against the same time last year, with food-led pubs, including pub restaurants, collectively seeing a fall in like-for-like sales. It is a trend that we been seeing for some months now,” Martin added.

“Big name casual dining brands have been opening new sites, particularly away from London, and also improving their offerings, giving the public more choice – and the public has been taking advantage of that choice,“ he said.

The Tracker numbers show that total sales in July, which include the impact of new openings, were ahead 4.8% across the market as a whole. Within that, restaurant chains contributed a 9.2% total sales increase against July 2014, with a 12.3% increase outside the M25. “These figures simply underline the fast roll-out of new sites that casual dining groups are driving,” added Martin.

“Where managed pubs are doing better is in London. Like-for-like sales were up 1.4% in July, with drink-led pubs, aided by better food sales, performing best. Alongside solid casual dining growth in the capital, this helped London to trade better than the rest of Britain in July, with like-for-likes up 2.1% compared to just 0.8% for the rest of the country,” he said.

“In a highly competitive market, the public is being given more choice than ever, and appears to be happy to be tempted by the new and different,” Martin concluded.

Trevor Watson, director at Davis Coffer Lyons, part of the Coffer Group, said: “The continuing strength of these results is being replicated in the property market with strong corporate demand for sites outside London. The central London market is equally strong, however. It is dominated by fast growing smaller independent operators, which are more difficult to track due to their size and emerging status. The health of the sector is also clearly reflected in recent corporate activity as well.

“The impact of the National Living Wage on consumer spending and operating margins is not yet clear; while the impact on costs can be modelled with a degree of certainty, the effect of increased disposable income on spend in restaurants and pubs for those earning the National Living Wage is more difficult to predict at this stage.”

Paul Newman, head of leisure and hospitality at Baker Tilly, said: “The eating and drinking our sector is arguably in a bull market following another month of robust LFL sales. The surge in overall supply will make LFL growth more challenging in the future as new sites reach maturity. We expect major branded casual dining chains to continue to take market share from pubs and independents and the winners will be those who can best balance site expansion with innovative menu and brand re-development.”

Jarrod Castle, leisure analyst at UBS Investment Research, observed: “London continues to produce stronger LFL growth than other UK regions July like-for-like sales inside the M25 grew by 2.1%, compared to 1.4% in June and 2.1% in May. The 12-month moving average for LFLs inside the M25 is now 2.7%, while outside it’s 1.6%.”

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 31 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, Le Bistrot Pierre and Downing LLP (investment partner of Antic London)

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