Public Not Giving Up on Eating and Drinking-Out
August 15, 2011
July like-for-like sales up 1.0% on last year
Out-of-home food outperforming retail
Consumer spending in pub and restaurant groups grew in July – showing that the British public is still prepared to go out to eat and drink. Like-for-like sales were up 1.0%. Total sales, which include the effect of new openings, were 3.1% ahead of the same time last year.
The figures come from the Coffer Peach Business Tracker, which monitors sales performance across 23 major pub and restaurant operators.
“This is encouraging news for operators. Like-for-like sales saw a healthy 3.9% leap in June largely because of the dampening effect of the previous year’s football World Cup, but to see continued growth in July, when the weather was not particularly helpful, shows that the leading chains are working hard getting their consumer offer right,” commented Peter Martin of Peach Factory, the market consultancy which produces the sector Tracker in partnership with KPMG, UBS and the Coffer Group.
The data show that pub and restaurant chains also continue to out-perform the retail sector. According to the British Retail Consortium / KPMG Retail Sales Monitor like-for-like retail sales were up just 0.6% in July.
“The football World Cup in June last year had a mixed impact. While drinks-led pubs in general saw an upside, restaurants generally suffered sales drops. Big sporting events are a mixed blessing – and even pubs didn’t perform as well as they had hoped last year,” added Peter Martin.
“But operators will not be complacent. Last week’s city riots will have hit trade badly for many, and they will be concerned about the long-term effect on confidence and the willingness of people to continue to go out, particularly in urban areas,” added Martin.
Commenting on the latest figures, Trevor Watson, Director at Davis Coffer Lyons, part of the Coffer Group, said: “These latest results are broadly encouraging. The sector continues to grow against a backdrop of weak consumer confidence, particularly away from the South East. The rioting will have led to a short term impact on sales, however the continued global financial uncertainty is a more serious threat to consumer confidence in the medium term. There is no room for complacency – operators need to continue to work hard to win their share of consumer spending.”
Richard Hathaway, Head of Travel, Leisure and Tourism at KPMG in the UK added: “While maintaining underlying growth in spite of the wider consumer and economic backdrop is encouraging, behind the headline figures operators continue to face significant challenges. Cost inflation continues to put pressure on margins, for example.
“Different consumers are being hit to varying degrees, with the impact on sales growth therefore very different depending on location and the demographic of operators’ and their brands’ customer base. Being adaptable and flexing brand and site portfolios (particularly new site roll-out plans) to take account of current and relevant specific customer trends is vital if out-performance of the general retail sector is to continue.”
Jonathan Leinster, Head of UBS European Leisure Research, observed that some stock-market listed operators had reported stronger July trading than the Coffer Peach Business Tracker might suggest: “JD Wetherspoon’s lfl sales are running up 1.6%, Marston’s 2.0% and M&B 2.8%. This is a reversal from last month when branded restaurants had benefited from easy World Cup comps.”
“The numbers suggest there is still demand for dining out. Value for money will continue to be important into 2012, although we believe there is potential for household cash flow to stabilise. Accordingly, we have Buy ratings on JD Wetherspoon, Marston’s and Greene King.
“Some investors have raised concerns about margin pressures as utility and food and beverage contracts are renewed. We are less concerned. Groups dealt well with much greater input cost pressures in 2008/2009, and labour and rent costs are much less of an issue now,” he added.
He added: “Some investors have raised concerns about margin pressures as utility and food and beverage contracts are renewed. We are less concerned. Groups dealt well with much greater input cost pressures in 2008/2009, and labour and rent costs are much less of an issue now.”