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Pub and restaurants shrug off VAT rise as February sales climb

14 March 2011 by

The pub and casual dining market appears to have shrugged off Janaury's VAT hike, with February like-for-like sales rising 3.1% on the same month last year.

Meanwhile, total sales including the effects of new site openings were up 5.1 on 2010 and up 9.3% month-on-month compared to January 2010.

Those are the figures from the latest monthly Coffer Peach Business Tracker - produced by industry consultancy Peach Factory in partnership with KPMG, UBS and the Coffer Group.

The Tracker records sales performance across 19 major pub and restaurant operators, including Mitchells & Butlers (the Harvester, Toby and All-Bar-One owner), Whitbread restaurants, Pizza Hut, Punch Pub Co, Gondola (owner of PizzaExpress), Tragus (Café Rouge and Bella Italia), Wagamama and TGI Fridays.

"Consumers may be cutting back on big ticket purchases, but they are still willing to go out to eat and drink," said Peach Factory's Peter Martin. "People may tell researchers they intend cutting-back on pubs and restaurants, but these figures tell a different story."

Martin added that one of the factors behind the February boost was the impact of the school half-term holiday. "We've seen over the last year, that families increasingly seem to be going out to eat when schools are out. School breaks are good for business. Half term week this time saw a double digit spike in sales against the same week last year."

Trevor Watson, director at Davis Coffer Lyons, part of the Coffer Group, said: "It is evident that the sector has shrugged off the VAT increase. The cumulative effect of positive like for like performance across the sector's major corporate operators is most encouraging. The forthcoming extended holiday periods in April should assist in sustaining momentum through Q2. "

David Coffer, chairman of the Coffer Group, added that the figures were reassuring and warming against the chill of January trading: "However, it is important not to place too much confidence on this as the public continue to have fickle dining out habits and it is anticipated that there may be a considerable amount of fluctuation in the months ahead."

Jonathan Leinster, head of European leisure and tobacco research at UBS Investment Bank, said: "We believe most of the like-for-like growth is in food sales, and mostly on price with only a small increase in volume. Operators have noted that while the VAT rise affected drink sales in 2010, the impact has been negligible this year, even at the value end of the market. With input prices rising, particularly from utility costs and food costs, strong like-for-like sales growth is encouraging with respect to maintaining margins. At the low-priced end of the pub- restaurant market, customers seem to be able to continue to justify going out because of relative value."

January brings relief for pub and restaurant operators >>

Snow hits December trading at major pubs and restaurants >>

Pub and restaurant like-for-likes up for fifth month in a row >>

By Neil Gerrard

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