11 September 2013

August sun provides boost for eating and drinking-out market

• Pub groups benefit more than restaurant chains
• Out-of-London sees Olympics bounce-back

Britain’s pub and restaurant groups saw collective like-for-like sales grow 1.9% in August compared to the same month last year, according to latest figures from the Coffer Peach Business Tracker.

“The good summer weather and the effect of last year’s London Olympics have continued to be the main factors influencing summer trading patterns,” said Peter Martin of CGA Peach, the business intelligence specialist that produces the Tracker, the sector’s most comprehensive performance barometer, in partnership with Coffer Group, Baker Tilly and UBS.

“The hot weather continued to help sales in pubs in particular during August, as it did in July, but the Olympics effect was different. Last year, London’s eating and drinking-out market suffered a lull in the run-up to the Games, while outside of the capital saw flat sales during the August event, in contrast to London’s sales boost. So this year, London enjoyed a bounce-back in July, while the rest of the country saw its recovery come last month, ” Martin said.

The 27 groups contributing to the Tracker saw collective like-for-like sales grow 2.4% outside of London this August compared to last year, while like-for-likes inside the M25 were up a more modest 0.7%.

“Within those figures, pub groups recorded like-for-likes up 2.5%, with almost equally strong trading both inside and outside London, while casual dining restaurant groups saw just 0.3% growth,” said Martin.

“Interestingly, although people were generally choosing pubs over restaurants during the hot weather, they weren’t going just for the beer but to eat too. Food sales growth in pubs was actually four-times higher than drinks growth over the month,” added Martin.

Total sales for the sector grew 5.1% in August, reflecting the continued roll-out of new sites, particularly from casual dining chains, and to a lesser extent pub restaurants, outside of London.

“But, despite the welcome boost the summer has brought, year-on-year sales for the 12 months up to the end of August were running at just 0.9% up for the sector, the same as at the end of July,” added Martin.

David Coffer, chairman of The Coffer Group, said: “To see like-for-likes outside of London outstripping those within the M25 is extremely encouraging. While the figures may still be warped by the effect of the Olympics, they would suggests that the positivity we have already seen emerging in the capital is now filtering out to the rest of the country. This may, however, be in part due to the increased number of families opting for a ‘staycation’ holiday and it will be interesting to see whether the trend continues as we move into the autumn.”

Paul Newman, head of leisure and hospitality at Baker Tilly UK, said: “The consumer feel good factor on the back of some long awaited positive economic news, combined with this summer’s prolonged spell of hot weather, has been a perfect combination in driving positive like for likes in the sector for the fifth month running.

“We have seen a very strong build-up of early stage mergers and acquisitions activity over the last few months. As the UK economy continues its recovery, we would not be surprised if this pipeline translates into a flurry of pub and restaurant sector deals being announced in the 4th quarter of this year.”

Jarrod Castle, leisure analyst at UBS European Leisure Research, added: “This is the joint highest LFL growth figure since February. This strong performance is likely driven by the warm weather, evidenced by the stronger growth of pubs compared to casual dining restaurants. There were tough comps in London due to Olympics, but LFL growth was still positive.

“We expect to see healthy growth continue next month, given the easy comps and the momentum that has been building over the summer. Improving consumer confidence data increases the positive outlook for H2.”

The Coffer Peach Tracker* industry sales monitor for the UK pub and restaurant sector collects and analyses monthly performance data from 27 operating groups, and is recognised as the established industry benchmark.