A 1.3% sales slump was recorded in January, compared to the same month in 2024 – according to the latest CGA RSM Hospitality Business Tracker.
The figure is the lowest in the tracker since April 2024 and only the second month of negative trading since early 2022.
Dry January, a squeeze on consumer spending alongside Storm Eowyn all had an impact in the drop in sales last month.
However, pubs performed the best of the major hospitality sectors in the tracker with like-for-like sales down 0.1% compared to restaurants, which saw a 1.1% decrease.
Spending hesitation
Bars briefly returned to growth in December but January saw sales fall away to finish 10.2% behind the same month in 2024 while the on-the-go segment dropped by 4.8%.
The tracker also looked at the capital and found London had a tougher first month of the year than other parts of the country, showing sales inside the M25 down 1.9% year on year while venues outside of the motorway were 1.1% behind.
CGA by NIQ director of hospitality operators and food EMEA Karl Chessell said: “After a happy Christmas for hospitality groups and their suppliers, trading came back down to earth with a bump in January.
“It shows many consumers remain hesitant about their spending and while inflation has eased in some areas, business costs remain very high across the sector and energy price rises and the Government’s planned changes to national insurance thresholds and rates could hardly be coming at a worse time.
“Hospitality’s outlook is positive in the long run but it deserves much better support than it is currently getting.”
Nail in the coffin
The sales drop particularly in the capital was highlighted by RSM UK head of leisure and hospitality Saxon Moseley.
He said: “Concerns about consumers cutting back on discretionary hospitality spending were realised in January with negative like-for-like sales across almost all segments of the market and particularly pronounced in London.
“Against a backdrop of rising energy and food costs and with payroll outgoings set to increase significantly for operators in April, these results will sadly be another nail in the coffin for some.
“However, the medium-term forecast offers cause for cautious optimism. Real wage growth is at its highest in years and interest rates are set to fall further in 2025.
“Operators that can weather the next few months will be well positioned to recover lost ground and take advantage of a more favourable trading environment in the year ahead.”
