Pubs and restaurants see 1% rise in July
Despite unhelpful weather and the continuing squeeze on consumer spending, pub and restaurant groups reported a slight rise in like-for-like sales in July.
The latest Coffer Peach Business Tracker, which monitors the performance of 23 major pub and restaurant groups including Mitchells & Butlers, Whitbread and Gondola, found like-for-like sales climbed by 1% last month, after a 3.9% rise in June.
Total sales, including new openings, were up 3.1% on 2010, as operators continued to show reliance in the face of continued uncertainty in the global financial uncertainty, which continues to be a serious threat to consumer confidence in the medium term.
Pub and restaurant groups had reported the first fall in like-for-like sales this year in May, as they suffered a post-Easter and Royal Wedding hangover and felt the impact of the poorer weather.
The new figures also show that pubs and restaurants continued to out-perform the retail sector. According to the British Retail Consortium / KPMG Retail Sales Monitor total UK retail sales were up just 0.6% in July.
Adaptable
Richard Hathaway, head of Travel, Leisure and Tourism at KPMG in the UK, said: "While maintaining underlying growth in spite of the wider consumer and economic backdrop is encouraging, behind the headline figures operators continue to face significant challenges.
"Cost inflation continues to put pressure on margins, for example.
"Different consumers are being hit to varying degrees, with the impact on sales growth therefore very different depending on location and the demographic of operators' and their brands' customer base.
"Being adaptable and flexing brand and site portfolios (particularly new site roll-out plans) to take account of current and relevant specific customer trends is vital if out-performance of the general retail sector is to continue."
Value for money
Jonathan Leinster, head of UBS European Leisure Research, said: "JD Wetherspoon's lfl sales are running up 1.6%, Marston's 2.0% and M&B 2.8%. This is a reversal from last month when branded restaurants had benefited from easy World Cup comps.
"The numbers suggest there is still demand for dining out.
"Value for money will continue to be important into 2012, although we believe there is potential for household cash flow to stabilise. Accordingly, we have Buy ratings on JD Wetherspoon, Marston's and Greene King.
"Some investors have raised concerns about margin pressures as utility and food and beverage contracts are renewed. We are less concerned.
"Groups dealt well with much greater input cost pressures in 2008/2009, and labour and rent costs are much less of an issue now."
