Pubs and restaurants report March slowdown
Pub and restaurant groups reported a slowdown in like-for-like sales in March, but the eating-out market continued to outperform the retail sector.
The latest Coffer Peach Business Tracker, which monitors the performance of 19 major pub and restaurant groups including Mitchells & Butlers, Whitbread and Gondola, found like-for-like sales increased slightly by 0.9% last month, against a 3.1% rise in February.
The rise in February like-for-likes come against a 1.3% increase during the same period in 2010.
Total sales, including new openings, were up 3.4% on 2010, and up 22.3% on February levels, although March was a five-week month compared to four-week February.
Despite the slowdown, the eat-out market outperformed the retail sector, with the British Retail Consortium reporting March sales down 1.9% overall, and down 3.5% on a like-for-like basis.
Jonathan Leinster, head of European leisure and tobacco research, at UBS Investment Bank, said: "March data included Good Friday through Easter Sunday last year which made this year a difficult comparison. With that in mind, and considering the retail backdrop, we believe nearly 1% growth should be viewed as a good result.
"We believe all of March's gain was price and mix. Growth is likely to have been mostly in menu pricing. In the first quarter, we believe, like-for-like sales growth excluding VAT and duty grew 5%.
"This compares favourably to +1% at Sainsbury's excluding fuel, but including VAT, and to the general malaise in the retail sector.
"There was some pent-up demand early in the year for going out following December's weather-related cancellations, and January 2011 had an easy comparison, but the continued divergence of results is curious.
"Perhaps lower restaurant meal inflation compared to general food inflation creates a perception of better relative value that can explain some of the difference in growth."
Tax change
Will Hawkley, director in leisure at KPMG, said: "It will be interesting to see what impact the recent many tax changes have on consumer spending in April, set against the back drop of the upcoming spate of bank holidays and the recent good weather especially as households seem to be focussing on paying down mortgage balances. Can the sector continue to grow as real income for many households declines?"
Mark Sheehan, managing director at Coffer Corporate Leisure, said: "Although trading remains tough, there is a strong sense of optimism in the market, backed up by canny investors such as Duke Street Capital and Lyceum Capital who have recently invested in the sector with their acquisitions of Wagamama and Eat respectively."
