Restaurant brands making UK debuts set to put pressure on existing operators

The warning comes in the latest Coffer Peach Business Tracker which overall made for positive reading for the UK hospitality industry. Twenty seven leading pub and restaurant groups performed better last month than May 2012 - total sales, including the impact of new openings, were up by 4.5 per cent.

However Paul Newman, co-head of leisure and hospitality at business advisory firm Baker Tilly, said the pressure on the UK's established restaurant and pub operators was set to increase despite the sales uplift.

"The UK is increasingly being targeted by international brands seeking to exploit strong positive headwinds. US burger chains Five Guys and Shake Shack are following the likes of Chipotle by testing their concepts in the London market and Jumeirah-owned brand Noodle House is also poised to hit the UK over the coming months.

"While great news for the consumer, these nimble and well-funded market entrants are likely to increase the pressures facing incumbent operators in an already highly-competitive marketplace,” he warned.

London's contradiction​

After a weather-affected start to 2013, restaurant and pub groups, particularly those operating in London, had a more successful May. Trading in the nation's capital remains ahead of the rest of the UK - like-for-likes in London were up by 1.8 per cent driven by the success of managed pubs.

Although the figures show a continued appetite among consumers to go out to eat and drink, May's sales growth was not uniform. Pubs outside the M25 did not have a great month although branded casual dining restaurants outside London did well.

The data appears to indicate that London continues to be a better trading area than the rest of the UK but is providing less opportunity for growth, especially for restaurant groups.

Jarrod Castle, leisure analyst at UBS European Leisure Research, said: "London continues to outpace the regions, but site expansion is slower. The performance gap between sites inside and outside the M25 has narrowed from last month, but is still significant with pubs and restaurants outside the capital seeing 0.8 per cent like-for-like growth versus 2.0 per cent for sites in London.

"Despite the weaker performance, the brands surveyed continue to accelerate their expansion outside the capital," he added.

Fragile UK​

The latest business tracker delivered good news for those concerned about consumer appetite for restaurants and pubs.

Trevor Watson, director at leisure property specialists Davis Coffer Lyons, said the data would improve further this year but warned against over confidence.

“Although London performed strongly, the underlying trade across the country still looks fragile. The weather in May 2013 was below the long-term average; however, it was better than May 2012.

"Recovery in the housing market, particularly in the south east is giving rise to greater consumer confidence and I expect the statistics to improve over the summer months," he added.