The comparison with April 2019 means the Tracker — produced by CGA in partnership with The Coffer Group and RSM and featuring sales figures collected directly from 61 leading companies — is in growth for the third month in a row, following increases of 3% and 4% in February and March.
However, with compound inflation since early 2019 far exceeding 2%, managed groups’ real-terms sales are still well below pre-Covid levels.
“A third successive month of like-for-like sales growth shows managed restaurants, pubs and bars continue to build back after a very tough two years,” says Karl Chessell, director - hospitality operators and food, EMEA at CGA.
“However, any modest rises at the moment are being swallowed up by high inflation, and the Tracker’s dip from March to April suggests soaring prices might be starting to squeeze consumers’ spending. The worst of COVID-19 may be behind us now, but cost issues are going to put intense pressure on hospitality’s sales and margins for the foreseeable future.”
Restaurants performed the strongest of the Tracker’s three sectors in April, with like-for-like sales growth of 5% from April 2019. Bars were close behind at 4% while pubs were exactly flat.
Continuing the pattern seen since hospitality reopened after lockdown one year ago, trading in London lagged well behind the rest of the country in April. The Coffer CGA Business Tracker shows managed groups’ like-for-like sales inside the M25 were down by 2% on 2019 while regions beyond the M25 recorded growth of 3%.
Reviewing the latest figures, David Coffer, chairman at Coffer Corporate Leisure, warns that the major challenges for hospitality are yet to come.
“Pressure to repay commercial banking debt and statutory debt including rates, NIC, PAYE and VAT will be unsurmountable for many businesses, many of whom may disappear,” he says.
“Our sector and indeed many others are in desperate need of further Governmental support. The allure of London is being severely weakened by cost of visits and traffic access. Hopefully an increasing tourist population will alleviate some of the problem.”
Paul Newman, head of leisure and hospitality at RSM, adds that whilst operators might ordinarily welcome an increase in like-for-like sales, much of this is being driven by menu price rises and therefore masks some early signs of falling demand resulting from the cost of living crisis.
“As more customers are forced to cut back on discretionary spending, the industry faces a double whammy of lower income and higher costs,” he says.
“Innovative operators with a forensic eye for cost control will be working hard to protect profit margins and we remain confident in the sector’s resilience after two years of unprecedented disruption.”