Managed pub and restaurant operators saw sales growth slow in May after a strong start to 2014, with collective like-for-like sales up just 0.2% compared to the same month last year, according to latest Coffer Peach Business Tracker figures. It follows a 4.4% increase in April and a 4.6% advance in March.
However, underlying year-on-year same-store trading is still running at +2.9%, with May’s figures marking 14 consecutive months of like-for-like sales growth for the sector. Total sales for May, which include the impact of new openings, were ahead 2.5% on last year.
“The levelling off of growth will be a reminder that recovery is not guaranteed, although the underlying trend for the market remains strongly positive as the public continue to go out to eat and drink. But competition from smaller and newer operators and also other leisure attractions remains fierce,” said Peter Martin of CGA Peach, the business insight consultancy that produces the Tracker, in partnership with Coffer Group, Baker Tilly and UBS.
“Overall, London performed slightly better than the rest of the country, with combined like-for-likes up 1.1%. But the capital still presented a mixed picture, with pub sales up 3% (4% for drink-led businesses), while casual dining chains saw LFL sales dip 1.3%,” Martin added.
“Outside the M25, it was the other way around, with pubs suffering and restaurant groups seeing a 1.9% increase in like-for-likes. The big story outside London was that total sales for casual dining chains increased 9.1% on May last year, highlighting the continued roll-out of new branded sites away from London.
“Staying fresh and offering something new remains a big challenge for even the most experienced operator,” Martin said.
The 28 companies now contributing to the Tracker have together seen positive like-for-like sales for each of the past 14 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 May, in line with the end of April, and with total sales running 5.4% ahead.
David Coffer, chairman of the Coffer Group, said: “This month’s figures once again show that the leisure market remains robust. Although collective LfLs are only up slightly, they do follow two strong months of growth and it is understandable that the pace of growth will vary from month to month. The strength of the casual dining sector outside the M25 shows that the recovery, which is often considered to be London-centric, is now spreading to other parts of the country and, as we move into the summer, I imagine the regional pubs market will see a change in fortunes.”
Paul Newman, head of leisure and hospitality at Baker Tilly, observed: “This month’s UK-wide like for like figures were again supported by a strong London eating and drinking out market. On the other hand, total year on year sales growth outside the M25 was higher than inside the M25 implying a greater intensity of new site openings outside of the capital. Signals from the Bank of England that interest rates could rise this year may cause mortgage-indebted Londoners to rethink their spending habits. If this is the case, operators would be wise to continue this trend and prioritise growth away from an increasingly competitive London market.”
Jarrod Castle, leisure analyst at UBS Investment Research, added: “With LFL sales growth for May at 0.2% ,down from 4.4% for April, this leaves the 12-month moving average growth rate at 2.3% for like-for-like sales. While the numbers are weak, we also note the tougher comps for May compared to April and March.”