The latest CGA RSM Hospitality Business Tracker revealed managed restaurant, pub and bar groups delivered fractional like-for-like sales growth of just 0.1% in February.
Well below the current rate of inflation, the figure demonstrated a “challenging start” to 2025 for the sector, following a year-on-year drop of 1.3% in January.
In addition, the numbers indicated consumers continue to remain watchful of their disposable income.
With key costs still inflationary, including food, and ahead of April’s tax rises, margins in hospitality remain extremely tight.
CGA hospitality operators and food EMEA director Karl Chessell said: “After a flurry of spending over Christmas it’s clearly been a challenging start to 2025 for the hospitality sector.
Fragile growth
“Growth is very fragile, and hikes in National Insurance Contributions will pile even more pressure on managed groups.
“We remain optimistic that spending will start to loosen, and brighter weather and big occasions like St Patrick’s Day, Mother’s Day and Easter should help to rally sales. Nevertheless, real-terms growth will remain hard-earned for the foreseeable future.”
The tracker, produced by CGA by NIQ in partnership with audit and tax firm RSM UK, showed February delivered 2.5% growth in total sales, including all venues opened by groups in the last 12 months.
Sales figures for the report were collected from 113 managed groups for the tracker, including Arc Inspirations, Fuller’s, Stonegate, Star Pubs, Wells & Co and Young’s.
Pubs performed the best of the major hospitality channels in the tracker for the third month in a row. Like-for-like sales finished 1.7% ahead of February 2024, having been partly boosted by the start of the Six Nations rugby tournament.
As consumers limited meals out, restaurant groups’ sales fell by 0.6%. While February featured Valentine’s Day, this year it occurred on a Friday, a day that already sees higher on-premise visitation compared to other days of the week, and last year it fell on a Wednesday, resulting in a missed mid-week sales boost this year.
Bars continued a long-term drop in growth, with like-for-like sales down by 7.9% in February. The on-the-go segment of the market slipped 1.9%.
Global instability
Hospitality had a slightly tougher month in London than elsewhere last month, the tracker reported. Groups’ sales inside the M25 were down by 1.2% year-on-year, but beyond the M25 they recorded a marginal rise of 0.5%.
RSM UK head of leisure and hospitality Saxon Moseley added: “A second month of lacklustre trading results means that the hospitality sector remains in negative territory for the year to date.
“Consumers are opting to cut back on discretionary spending amidst growing apprehension about the UK economy and global instability.
“While the medium-term outlook appears more positive, the coming months will be critical for businesses grappling with both waning demand and rising costs.
“Next week’s Spring Statement represents a final opportunity for the government to support the sector through this challenging period, with a phased introduction of National Insurance increases and a delay to implementing the Employment Rights Act high on operators’ wish lists.”
