Restaurant chains edge ahead of pub groups

Pub operators' profit margins are being squeezed as they face increased cost pressures due mainly to hikes in business rates and higher food costs.

More than three quarters of operators have put prices up this year. However, it appears people continue to eat out and drink as much as they did last year despite talk of fragile consumer confidence, according to business insight consultancy CGA.

Like-for-likes sales were up 0.6% nationally against July 2016 with restaurants performing marginally better than pub chains based on the latest Coffer Peach Business Tracker figures produced by CGA in partnership with Coffer Group and RSM.

“It’s an essentially flat market out there, with the modest 0.6% growth rate – exactly the same as we saw in June,” said CGA vice-president Peter Martin.

There was little difference between trading inside and outside the M25, with London ahead 0.5%, compared to a 0.7% like-for-like increase for the rest of the country.

Restaurant chains just edged ahead of pub groups in performance, showing a collective 0.9% like-for-like growth rate against 0.4% for pub and bar operators.

Martin said: “Operators have been looking for efficiencies, but also increasing prices to mitigate rising costs.

“According to CGA’s latest Business Leaders Market Confidence Survey this summer, more than 80% of operators have introduced at least some price rises this year, with a third implementing them across the board.”

It remains a tough market, he added.

Total sales growth in July among the 37 companies tracked was 3.7%, reflecting the continuing, if more subdued, effect of new openings over the year.

The underlying annual sales trend shows sector like-for-likes running at 1.6% ahead for the 12 months to the end of July.