Spending at pubs and restaurants holds up despite consumer squeeze
Spending in at pubs and restaurants in July held firm at fairly subdued levels in July, according to new research published on Friday that indicates consumers are prioritising certain types of spending.
Like-for-like sales for managed pub and restaurant chains rose 0.6% in July compared to the same month last year, the same gain as seen in June.
Total sales from the 37 companies in the monthly CGA Peach Business Tracker was 3.7%, reflecting openings of new outlets, though this remained subdued.
The underlying annual sales trend shows sector like-for-likes running at 1.6% ahead for the 12 months to the end of July.
Restaurants enjoyed marginally better trading than pubs, with LFL sales at eating venues up 0.9% versus 0.4% for pub and bar chains.
There was little difference between trading in London, which was up 0.5% year-on-year, and the provinces, where LFL sales grew 0.7%.
“It’s an essentially flat market out there, with the modest 0.6% growth rate exactly the same as we saw in June,” said Peter Martin, vice president of CGA, which produces the Tracker in partnership with Coffer Group and RSM.
“Despite all the media talk of fragile consumer confidence, it appears that the British are continuing to go out to eat and drink much as they did last year – which is good news. However, the increased cost pressures that operators across the sector are facing this year, particularly from increases in business rates and food costs, mean that margins are being squeezed and businesses are feeling the pinch."
This ties in with recent research that showed while Brits have increasingly sought to change spending habits in order to cut down on household expenses over the second quarter of the year, by switching to cheaper grocery brands or cutting down on gas and electricity usage, very few people were willing to cut down on alcohol spending or purchase cheaper alcohol brands.
Companies have been looking to cut costs and increase prices to mitigate rising costs, with other research from CGA finding more than 80% of operators have introduced at least some price rises this year, with a third implementing them across the board.
“The good weather in July should have benefitted wet led venues which makes the relatively strong figures from the
restaurant sector encouraging,” said Trevor Watson at Davis Coffer Lyons.
Paul Newman, head of leisure and hospitality at RSM, added: “These latest figures will be greeted with a degree of relief by operators. Despite household budgets becoming increasingly stretched, consumers continue to indulge in eating and drinking out. We’ve seen businesses who develop exciting and affordable concepts outpacing competitors and attracting investors keen to support ambitious roll out plans."