Eating out market edges ahead in April

18 May 2010
Eating out market edges ahead in April

Britain's eating-out market edged ahead in April with a 0.7% growth in like-for-like sales as trading conditions remained tough.

Total sales climbed 2% for the month on the same month in 2009, according to the monthly Coffer Peach Business Tracker, which follows the fortunes of 15 major pub and restaurant operators including Mitchells & Butlers, Whitbread, Punch, Gondola and Tragus.

The figures are an improvement on March's performance, when like-for-like sales fell back 0.4% and total sales were up just 1.0% on March 2009.

Commenting on the figures, Peach Factory's Peter Martin said: "Although positive, the results are a reminder that groups will have to stay on the top of their game, particularly with continued uncertainty about the economy ahead of the public-sector spending cuts promised by the new Government. It is going to be a long haul and there is no consumer cushion."

Richard Hathaway, head of Travel, Leisure and Tourism at KPMG, said: "While sales stayed fairly flat in April, month on month they held up well, particularly given the negative impact on trading the ash cloud no doubt brought with it, certainly in London. Longer term, the outlook for the sector is unpredictable - consumer confidence will be affected by a number of variables in the coming months.

"Among potential measures to tackle the deficit, the new coalition Government has made no secret of needing to make public-sector jobs cuts and VAT is already being rumoured to rise to 20%. This year the Budget is likely to be a watershed moment for the eating and drinking out sector, as we gain greater clarity around the cost cuts and tax changes which are likely to influence consumer confidence over the next 12 months," he added

Jonathan Leinster, head of European leisure and tobacco research at UBS Investment Bank, said: "Pub restaurant growth has been sluggish all year. Initially sales fell owing to the poor weather in January. Since then growth has averaged +0.5%, which is well below inflation. Comparisons are relatively easy until September, so we expect some better progress to be made until then with the proviso that the World Cup is likely to affect trading during the tournament. More food-orientated pubs and the restaurants may well lose trade to drinks-orientated venues.

"On one hand, the weather suited the pub-restaurant market during April, but on the other, uncertainty over the prospect of austerity packages from all the parties running for election and the rise in drinks duty could have been negative influences on sales. At UBS, we are forecasting that consumer expenditure turns positive this year, but progress will be slow. In that environment, like-for-like growth in pub-restaurants whose brands are strong enough to resist promotions and offer their customers everyday value, are likely to take share."

David Coffer, chairman of the Coffer Group, said: "These results bear out the feeling of general malaise the sector suffered throughout the first part of the year. It is hoped that there will be an upswing subsequent to the General Election and with the longer nights and warmer days of summer. Most operators' aspirations for the current year were to have sustained the same levels as last year and this seems generally to be the case. Customers are simply being far more cautious with their money."

Peter Martin concluded: "Staying largely in-line with last year is no disgrace, as the leading groups generally traded ahead of the market throughout most of 2009, recording nine consecutive months of steadily positive like-for-likes between Easter and January."

London reaps the benefit from Government's recession strategy>>

Cold snap drives down sales in pubs and restaurant sales>>

Pubs and restaurants bounced back in February after cold snap>>

By Neil Gerrard

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