Britain’s leading restaurant and pub groups enjoyed a welcome sales boost in February after poor trading in January. Collective like-for-like sales were up 3.3% on the same month last year, with total sales, which include the impact of new site openings, up 6.1%, according to latest Coffer Peach Business Tracker figures.
“School half-term holidays, which this year were staggered over two weeks, helped drive sales, with pub restaurants and casual dining chains doing particularly well. Overall, trading was slightly better in London than outside the M25,” said Peter Martin of Peach Factory, the business intelligence specialist that produces the sector Tracker, the sector’s biggest and most comprehensive performance barometer, in partnership with Coffer Group, Baker Tilly and UBS.
The improved trading figures for February come on the back of a poor, weather-affected first month of the year, which saw the 25 companies in the Tracker sample collectively record a 2.4% drop in like-for-like sales against January 2012.
A halt to the downward trend
“The figures, however, seem to have produced a halt to the downward trend in the rate of market growth which we have seen since last summer. In August, year-on-year like-for-likes were running at +2.0%, but have shown a steady decline every month since then, until now,” said Martin. “The rate is now up to +1%, after dropping close to zero at the start of the year.”
“The February results will also bolster confidence in the market, which has remained remarkably high despite tough trading conditions,” he added.
Optimism about prospects
Peach Factory’s annual Business Leaders’ Survey of 120 senior executives carried out in January showed that despite 58% believing it would take over 18 months for the economy to return to growth, 52% were optimistic about prospects for the eating and drinking out market and 78% were optimistic about their own business’s fortunes.
Continued demand from consumers
Paul Newman, co-head of leisure & hospitality at Baker Tilly, added: “February’s results for both inside and outside the M25 are very encouraging and reflect the UK consumer’s continued demand for eating and drinking out during tough economic times. This has not been missed by the mainstream banks, which are demonstrating a renewed appetite for supporting concept roll out strategies, in particular in the casual dining sector. Santander’s recent investment in the healthy eating chain Vital Ingredient comes on the back of a similar deal for burrito concept Tortilla and suggests that the sector is still attractive from a funding perspective.
“While the potential reduction in cost of capital is good news for operators, an abundance of well-funded businesses now competing for sites could well result in increased rents and premiums. This is particularly relevant for inside the M25, which could be reaching a tipping point, despite continuing to demonstrate above average growth in both LFL and total sales. We would not be surprised if this results in a greater share of outside the M25 site openings throughout the course of the year.”
The Coffer Peach Tracker industry sales monitor for the UK pub and restaurant sector collects and analyses monthly performance data from operating groups, representing combined annual turnover of £6.4 billion, and is recognised as the established industry benchmark
Coffer Peach Business Tracker is powered by Demographix