Plummeting like-for-like sales at Britain's casual-dining chains could see companies rein in expansion plans, according to new research.
The latest figures from the Coffer Peach Business Tracker have revealed that collective like-for-like sales for the major casual-dining groups were down 5.6% in May, compared to the same month last year, marking the biggest fall in two years.
The tracker, which takes data from 31 major operators, showed same-store sales in May for all pub and restaurant groups fall by 1.4% on May.
Peter Martin, vice-president of CGA Peach, which produces the tracker in partnership with Coffer Group, RSM and UBS, said: "Overall, casual-dining chains suffered most, with collective like-for-likes down a hefty 5.6% on last May, while pub groups actually saw a 1% increase in same store sales for the month, driven mainly by drink-led outlets which were up 4.5%. It was definitely a tale of two markets last month."
London had a better month than the rest of the country, with like-for-like sales up 0.9%, and pubs and bars up 3.8%, against a 2.2% drop in same-store sales outside the M25.
Paul Newman, RSM head of leisure and hospitality, said a 1.4% like-for-like decline in sales represented "the biggest one-month decrease in well over two years and is clearly a worrying sign for operators and investors in the sector.
He added: "In an ever more crowded marketplace, our conversations with operators are now shifting in focus from estate growth and rollout to driving gross margins and controlling cost inflation with major concerns around rent reviews, the National Living Wage and next year's rating revaluation."
The delayed school half-term break, which fell in June this year, against May last year, was cited as a key factor.
"The distortion caused by the school holiday shift will work its way out next month, and operators will be encouraged by early indications of bumper sales in the first week of June, which enjoyed good weather," Martin said.
Mark Sheehan, managing director at Coffer Corporate Leisure, said uncertainty caused by the EU referendum was a contributing factor in the sales fall.
"Looking further ahead, a ‘Remain' vote in the referendum on 23 June would give a much needed boost of confidence for the sector, while a ‘Leave' vote would pile further pressure on the pound and is likely to exacerbate the weaknesses in consumer behaviour seen already this year.
"Notwithstanding this, Brexit would also create a negative impact on hospitality businesses' employment, commercial contract and our tourism levels," he warned.
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