Casual dining sector feels the pinch as like-for-like sales drop in October

Outside of London, like-for-like sales dropped 0.7%, reports the Business Tracker, however a stronger London trading, where sales rose by 0.9%, managed to offset some of the overall decline.

“People are still going out to eat and drink, but there is little or no growth in the market – and stronger London trading is making up for poorer sales outside the M25,” says Phil Tate, chief executive of CGA, the consultancy that produces the Tracker in partnership with Coffer Group and RSM.

The casual dining sector is continuing to struggle with overcapacity as well as rising costs, says CGA. “Restaurants saw volume sales, measured by covers, down 1.4% for the month – which is worrying, although spend has remained essentially static,” adds Tate.

“But the really big problem for the sector, and restaurant brands in particular, is continuing fierce competition, added to the burden of increasing business costs that are squeezing both margins and profits.”

Despite a large number of site closures from some of the big high street restaurant chains, the market remains crowded, according to Trevor Watson, executive director, valuations at Davis Coffer Lyons.

“Just because some weaker brands have closed some branches outside London is not leading to a reduction in capacity – these units are re-opening with better operators and concepts paying sustainable rents,” he says.

“These figures show the challenges faced by the industry.”

Pubs performed better during the same period. Managed pubs and bars across the UK saw overall like-for-like sales up 0.6% – with sales up 3.6% in London, compared with October 2017. However, sales declined outside the M25, by 0.4%.

“The pub market remains more resilient because it does not have the same over-capacity issue,” says Watson. “The ongoing relative strength of London is borne out by our own views of the London restaurant property market, which remains active.”