14 May 2014

Pub and restaurant chains delivering sustained growth

• Collective like-for-like sales up 4.4% in April
• Outside of London sees 4.8% sales boost

Britain’s managed pub and restaurant operators are enjoying a strong start to 2014, with collective like-for-like sales up 4.4% in April against the same month last year. It follows a 4.6% increase in March. These latest figures from the Coffer Peach Business Tracker show that trading has been positive throughout the winter and spring, with April’s results marking 13 consecutive months of like-for-like sales growth for the sector.

Total sales for April, which include the impact of new openings, were ahead 7.0% on last year, as the British public found more places to go out to eat and drink.

“What will be especially pleasing is the fact that growth is not confined to London. During April businesses outside of the M25 performed in general better, with collective like-for-likes up 4.8%,” said Peter Martin of CGA Peach, the business insight consultancy that produces the Tracker, in partnership with Coffer Group, Baker Tilly and UBS.

“Most of the new site expansion is being seen away from London, where total sales growth was up 8.0% last month, compared to 4.7%in London, fuelled especially by new restaurant brand openings,” Martin added.

“The late Easter break helped April’s numbers, as the holiday weekend partly fell in March last year, but the important fact is we are now seeing consistent growth from the sector. March numbers were strong and we are seeing positive trading from both pubs and restaurants and inside and outside of London.

“The underlying trend is upward. The 28 companies now contributing to the Tracker have together seen positive like-for-like sales for each of the past 13 months. Looking at the long-term trend, year-on-year like-for-like sales were up 2.9% for the 12 months to the end of April, with total sales running 5.8% ahead. The eating-out and drinking-out market may now be a more reliable barometer of the general health of the economy than retail,” Martin said.

Trevor Watson, director at Davis Coffer Lyons, said: “In spite of weaker Easter trading compared to 2013 (due to its timing), April’s statistics are strong with total sales growth well ahead of RPI. This reflects the confidence that we are seeing from operators in property transactions. There is, however, a shortage of quality sites, which is driving up rents while also slowing down some operators’ expansion plans. Despite the lack of opportunities, we expect the remainder of 2014 to continue to show buoyant trading.”

Paul Newman, head of leisure and hospitality at Baker Tilly, observed: “The excellent start to 2014 continues. Although the UK’s economic outlook remains broadly positive, we see an increasing risk of businesses in the sector pushing operational gearing to the limits in search of growth. The impact of an early Bank of England base rate rise on consumer disposable incomes would disproportionally affect those pub and restaurant groups with new sites tied into high levels of current rent with upward only reviews. Operators need to ensure they retain a sensible level of cash flow and bank covenant headroom in case growth begins to slow.”

Jarrod Castle, leisure analyst at UBS Investment Research, added: “Underlying growth appears strong given the solid performance seen last month. While regional growth has underperformed London over the last year – growth inside M25 has averaged 3.4% over the last 12 months, whereas outside M25 has seen an average of 2.0% – April saw LFL sales growth of 4.8% outside M25 (up from 3.4% in March) versus 3.2% inside (down from 7.3%). Total sales growth for London and the regions were 4.7% and 8%, respectively, versus 8.1% and 6.6% last month.”

The Coffer Peach Tracker* industry sales monitor for the UK pub and restaurant sector collects and analyses monthly performance data from 28 operating groups, and is recognised as the established industry benchmark.

Coffer Peach Business Tracker is powered by Demographix

About Coffer Peach Business Tracker
CGA Peach collects sales figures directly 28 leading companies. Participants include Mitchells & Butlers (owner of Harvester, Toby, Browns, All Bar One etc), Pizza Hut, Whitbread (Beefeater, Brewers Fayre, Table Table), Gondola (PizzaExpress, Zizzi, ASK), Spirit Group (Chef & Brewer, Fayre & Square), TGI Fridays, Tragus (Café Rouge, Bella Italia, Strada), Stonegate (Slug & Lettuce, Yates’), Marston’s, Orchid Pub Co, Wagamama, YO! Sushi, Novus (Tiger Tiger), Fuller’s, Carluccio’s, Young’s, Living Ventures, Amber Taverns, Hall & Woodhouse, Gaucho, Las Iguanas, Intertain, Tattershall Castle Group, La Tasca, Giraffe, Loungers, Byron and Le Bistrot Pierre.