Trading announcements suggest some of the best known names in the eating-out and pub sector are making headway, despite the economic climate. Chris Druce reports.
The global recession may finally be behind us and despite anaemic economic growth and massive public sector cuts expected to be unveiled by the chancellor next month, the mood amongst hospitality operators has been one of the glass being half-full.
A succession of trading announcements and updates from some of the best known names in the eating-out and pub sector suggests that, not only are operators getting on with it, but those with a developed, strong brand are making headway in terms of recovery.
While there's still talk of double-dip recession, stubbornly high unemployment and general uncertainty, it seems consumers are, for now, still eating out - perhaps enjoying comfort food or drowning their sorrows.
Those that are having a better time of it at present are developed brands with a clear offer. Last week, pub operator JD Wetherspoon revealed "record" results in a sector largely believed to be on its knees. This has to be due to its continuing bravery to innovate, most recently demonstrated by the decision to open its pubs from 7am to corner the breakfast market. This has seen a 40% increase in volume since March with Wetherspoon serving 400,000 breakfasts and 600,000 coffees each week.
Greene King's managed pubs have enjoyed good recent trading, with like-for-like sales up 4.4% in the 18 weeks to 5 September, and like-for-like food sales 8.6% ahead of the same period a year ago.
Rival Marston's reported good summer trading last month and Punch Taverns more recently said earnings for the full year would be "marginally ahead of expectations".
Whitbread, the owner of Premier Inn, Costa and Beefeater, continues to reap the benefits of well-established "value" brands, and saw like-for-like sales for the first 24 weeks to August 2010 increase 7.9%, with total sales up 14%.
Italian restaurant chain Prezzo added 11 former Paramount sites to its estate and revealed an 18% hike in profits to £6m at the start of this month, while Frankie & Benny's owner the Restaurant Group saw pre-tax profits rise 10% to £24.6m in the 27 weeks to 4 July.
Big deals are also being done in the sector, which is always an indicator of positive long-term sentiment. Carluccio's looks set to go to Middle East group Landmark in a £90m deal, while American fast-food chain Burger King has attracted a £2.6b offer from private equity firm 3G Capital.
However, before we get carried away there are, of course, losers, with many independents being squeezed out by the marketing muscle of the chains and many high-end operations going to the wall, such as Bjorn Van der Horst's Eastside Inn and Paul Heathcote's recent closures.
It's exactly at times like this that the chains have an advantage over independents, with Piccolino owner Individual Restaurant Company putting "in-house trainers" in at each of its 33 restaurants in a bid to improve customer service and PizzaExpress continuing to blanket consumers with profit-eroding discount vouchers.
Gourmet Burger Kitchen owner Clapham House warned of enduring "volatility" in the eating-out market recently, which perfectly sums up operators' and commentators' indecision on what's next.
Peter Backman, managing director of market analysts Horizons, says that while chains in general have performed well, many of the trading figures currently being published are flattering as operators were having a torrid time of it deep in the depths of the recession during this period in 2009.
"Coming up in the next six to 12 months, the eating-out market faces unemployment, or fear of, amongst consumers, public spending cuts and VAT rising to 20% on 4 January," said Backman. "I think that ultimately, as it often does, it will be those restaurant operators running good operations that will succeed."
Stephen Broome, assistant director at PricewaterhouseCooper's hospitality and leisure department, says that while consumer confidence will naturally dip as cuts and job uncertainty take hold in coming months, the sector is unlikely to fall off a cliff. "Realistically I think we'll see a slow, low level of growth overall for the next 18 months".
So, for now, it appears hospitality's recovery will avoid the rocks, and barring major mishap, remain steady as she goes.
DINING OUT IN THE RECESSION
The latest data from Horizons suggests the eating-out sector has risen in both market volume and value in the past year, despite the recession. The value of the eating-out market is up 2.6% year-on-year at £32.2b, while the total number of meals eaten out has risen 3.2% to 2.93 billion.
However, consumers are eating out on average slightly less now at 1.4 times a week rather than 1.6 last year. For those operators lucky enough to win their custom, diners seem to be spending more when they do head out, with spend per head up 14.3% to £11.53.