Pubs and restaurants report rise in February sales

The latest Coffer Peach Business Tracker, which monitors the performance of 19 major pub and restaurant groups including Mitchells & Butlers, Whitbread and Gondola, found like-for-like sales increased by 3.9 per cent in February.

The rise in February like-for-likes come against a 1.3 per cent increase during the same period in 2010.

Total sales, including new openings, were up 5.1 per cent on 2010, and up 9.3 per cent on January levels.

The rise in out-of-home food and drink sales compares to the 0.4 per cent fall in sales experienced by the retail sector during February.

Strong results​

“This is the first month in some time that has been ‘clean’ in terms of weather and holiday comparisons," said Jonathan Leinster, head of European leisure and tobacco research, at UBS Investment Bank.

"A year ago like-for-like sales were +1.3 per cent in February, so this should be viewed as a strong result. 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.”

Shrugged off​

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 sector’s major corporate operators is most encouraging.

"The forthcoming extended holiday periods in April should assist in sustaining momentum through Q2.”

Caution​

However, Richard Hathaway, head of Travel, Leisure and Tourism at KPMG, added a note of caution. He said: “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.”

Mark Wingett is associate editor at BigHospitality sister publication M&C Report​​