Pub and Restaurant Chains Lift the Economic Gloom with Month-on-Month Revenues for February Ahead 9.3% on January
March 13, 2011
The eating and drinking-out market gave a much needed boost to the UK economy in February, with leading pub and restaurant groups reporting combined like-for-like sales up a healthy 3.1% on the same month last year.
Total sales, including the effect of new site openings, were ahead 5.1% on 2010, and up 9.3% on a month-on-month basis against January levels.
The figures come from the monthly Coffer Peach Business Tracker produced by industry consultancy Peach Factory in partnership with KPMG, UBS and the Coffer Group. The Tracker records sales performance across 19 major pub and restaurant operators, including Mitchells & Butlers (the Harvester, Toby and All-Bar-One owner), Whitbread restaurants, Pizza Hut, Punch Pub Co, Gondola (owner of PizzaExpress), Tragus (Café Rouge and Bella Italia), Wagamama and TGI Fridays.
The uplift in out-of-home food and drink sales is in contrast to a more depressed retail sector, which saw a 0.4% fall in February sales according to British Retail Consortium figures.
Consumers may be cutting back on big ticket purchases, but they are still willing to go out to eat and drink, said Peach Factorys Peter Martin. People may tell researchers they intend cutting-back on pubs and restaurants, but these figures tell a different story.
Martin added that one of the factors behind the February boost was the impact of the school half-term holiday. Weve seen over the last year, that families increasingly seem to be going out to eat when schools are out. School breaks are good for business. Half term week this time saw a double digit spike in sales against the same week last year.
This Februarys numbers come on the back of a +10.7% like-for-like increase in January, and compare to a 1.3% increase for February 2010.
Trevor Watson, director at Davis Coffer Lyons, part of the Coffer Group, said: It is evident that the sector has shrugged off the VAT increase. The cumulative effect of positive like for like performance across the sectors major corporate operators is most encouraging. The forthcoming extended holiday periods in April should assist in sustaining momentum through Q2.
David Coffer, chairman of the Coffer Group, added that the figures were reassuring and warming against the chill of January trading: However, it is important not to place too much confidence on this as the public continue to have fickle dining out habits and it is anticipated that there may be a considerable amount of fluctuation in the months ahead.
Richard Hathaway, head of Travel, Leisure and Tourism at KPMG added: The eating and drinking-out market continues to show positive signs and the start to 2011 has been promising for the sector. However, confidence remains fragile, just like the UK economy and particularly outside of London.
Also, while pubs and restaurants top lines are holding up well overall, they have been hit, as have their customers, by significant recent rises in taxes, fuel and other input costs. With the Budget around the corner, the sector will be watching closely to see what specific measures are introduced to boost the economy and to mitigate some of these seemingly endless cost increases.
Jonathan Leinster, head of European leisure and tobacco research, at UBS Investment Bank, said: This is the first month in some time that has been clean in terms of weather and holiday comparisons. A year ago like-for-like sales were +1.3% in February, so this should be viewed as a strong result. Like-for-likes covering February were +3.1% at Whitbread, +2.8% at Wetherspoon, and +3% for The Restaurant Group. Our forecasts are for pub-restaurant like-for- like sales growth to slow very modestly in March, then to rise in April due to the extra bank holiday.
We believe most of the like-for-like growth is in food sales, and mostly on price with only a small increase in volume. Operators have noted that while the VAT rise affected drink sales in 2010, the impact has been negligible this year, even at the value end of the market. With input prices rising, particularly from utility costs and food costs, strong like-for-like sales growth is encouraging with respect to maintaining margins. At the low-priced end of the pub- restaurant market, customers seem to be able to continue to justify going out because of relative value.