Sales surge for pubs and restaurants driven by branded chain expansion

According to the latest Coffee Peach Business Tracker total sales in May were up 6.2 per cent, reflecting the continued roll-out of new sites - particularly among branded casual-dining sites outside of London.

The results follow a tougher start to the year for the sector, with like-for-like sales among the 30 companies that make up the Tracker up just 1.2 per cent in April after a 0.3 per cent decline in March.

“This is a particularly encouraging performance, especially in a time of low inflation, and sees the sector return to the growth levels seen towards the end of last year. It also shows trading outside of London was equally as strong as inside the M25,” said Peter Martin, vice president of CGA Peach.

Restaurants​

Restaurant chains reported the strongest months trading overall, with collective like-for-like sales up 4.3 per cent nationally, and 5.3 per cent outside of London.

Total sales for the branded casual dining groups were up 12.5 per cent on May last year, underlining the continuing fast pace of new site openings

Pubs​

Managed pub groups reported a modest 1.1 per cent growth nationally, falling to 0.9 per cent outside of the M25.

“The pub market away from London remains essentially flat, and what growth there is in the market is coming almost exclusively from food sales. Nationally food sales in pubs were up 4.5 per cent in May, against a 0.9 per cent decline in drink sales,” said Martin.

BigHospitality recently reported that fewer than one in ten pub visits were now solely drink occasions​, with operators increasingly offering drinks promotions to bring in food-led repeat business.

Expert comment​

David Coffer, chairman of the Coffer Group, cited the high operating costs of London sites as contributing to the boom in openings outside the capital.

He said: “The growth in total sales outside the M25 is 50 per cent greater than central London, which is indicative of the trend that is beginning to dominate acquisitions in all sectors.

“Currently, the cost of London sites, in terms of both rents and premiums, has reached such a high level many operators are looking at expansion elsewhere in the UK - hopefully at a lesser cost. This is a trend we have seen in previous eras when the capital's market becomes over inflated. However, operators should be wary that when the market inevitably cools the provinces and suburbs decline at a far greater rate than central London and they need to be careful of over-exposure.”

According to Paul Newman, head of leisure & hospitality at Baker Tilly, the rapid growth had contributed to a rise in funding requests in the foodservice sector.

“These results underline why the eating and drinking-out market continues to see such a huge increase in demand for funding. This funding is driving fierce supply growth, particularly amongst branded, casual dining operators - although we don’t see why this growth won’t continue given the UK consumer’s unprecedented interest in food and eating out,” he said.

Consumer spending on eating and drinking-out reached a record 13 month high in May​, which Barclaycard attributed to returning consumer confidence following a ‘clear’ general election result.

CGA Peach collects sales data from 30 operating groups, including Mitchells & Butlers, Wagamama, YO! Sushi, Whitbread and Casual Dining Group.