Pubs and restaurants enjoyed a sales boost in August compared with the previous year but the improvement in trade was almost exclusively in London.
That's the news from the latest Coffer Peach Business Tracker, which charts sales data from 25 leading restaurant and pub companies.
Like-for-like sales for August inside the M25 were up by 5%, but were a more modest 1% outside of London, according to the tracker. Those regional figures translated to a 2.1% like-for-like sales increase in the country as a whole.
"There were a number of factors at play - the bounce-back from last year's August riots, brighter weather for much of the month and, of course, the Olympics," said Peter Martin of Peach Factory, the business intelligence specialist that produces the sector tracker in partnership with Coffer Group, Baker Tilly and UBS.
"Across the country as a whole, the second week of the month, which coincided with the anniversary of the riots that severely hit areas of London and other major cities, saw the biggest increase against last year's trading, suggesting a real riot-related bounce-back," Martin explained.
"But what about the Olympics? While some operators saw their usual trade in London disrupted, as regular customers stayed at home, others have reported buoyant trading. It all seems to depend on where their sites were, particularly their proximity to the games action.
"London pubs seemed to benefit most from the August uplift, with like-for-like growth approaching 7%. While casual-dining chains in London may have been up only 2.8% against last August, it at least reversed a recent trend of falling like-for-likes inside the M25, where restaurant groups have been generally struggling against increasingly intense and diverse competition," Martin said.
"Gauging whether there was an overall Olympic bonus in the capital, or how big it was, is clouded by the riots effect. However, it is fair to say that the rest of the country did not receive a games dividend, with overall sales only marginally up on last year, despite the better weather.
"Nonetheless, the major pub and restaurant chains will not be too disappointed. An overall 2.1% like-for-like sales increase may not be scintillating, but it gets the market back in line with the underlying growth rate, and is an improvement of the 0.2% market decline in July and the modest 1.3% increase in June. The year-on-year like-for-like rate is currently running at around 2%," Martin added.
Total sales across the 25 companies in the tracker sample were up by 6.2% overall on last August, including a 10.5% increase inside the M25 and a 4.6% gain outside, reflecting the increasing market share that major chains are continuing to win in the domestic eating- and drinking-out market as they open more sites.
Mark Sheehan, managing director of Coffer Corporate Leisure, said: "The incredible worldwide coverage for London and the UK this summer is the real story. Some operators in the UK have suffered badly, but the long-term benefit to the hospitality sector nationally will be immense. London will be top of the must-visit list for many millions of people and the positive spirit within the UK may well help to get people spending again, which will take us out of recession. In total these like-for-likes are surprisingly positive, given the television coverage of the games this summer and the mass exodus after the Olympics."
Ali Aneizi, M&A and private equity partner at Baker Tilly, said: "It has been a choppy few months in the build-up to the Olympics, with like-for-likes up in June, then down in July, and uncertainty over how trading was going to unfold in August. The speculation is now over, we've had a bounce-back and a clear reversal of July's negative trend. What's not clear is how much of this reversal is due to an adrenaline shot from the Olympics and how much is due to last August's riots. The consensus is that it's probably a bit of both. It remains to be seen whether operators can translate the so-called feel-good factor and the hoped-for increase in visitor numbers into longer-lasting sustainable growth."
Jonathan Leinster, head of UBS European Leisure Research, said: "Sales growth saw a significant bias towards inside the M25, though to some degree this is a reversion to the ‘norm', as the Euro 2012 tournament appeared to cause a very strong but temporary increase in like-for-like sales outside the M25 during June. The past several months have seen a trend of pub-restaurants outperforming casual-dining chains. Whether it is because the series of sports events has led to increased social drinking, an improved ‘value' offering from the pubs or whether it is due to more intense competition among the casual-dining brands is not clear. However, it is likely that sporting events have at least had some impact over June to August."
By Neil Gerrard
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