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Pubs and restaurants hit by January slump

Published:  18 February, 2019

Strong Christmas trading gave way to a slump in January for UK pubs and restaurants, according to the Coffer Peach Business Tracker.

It said collective like-for-like sales were down 1.8% against the same month last year.

“After strong trading over the festive season, which saw sector like-for-like sales 4.1% up on 2017, operators will be disappointed that there has been no follow-through into January – even though the weather, and in particular the lack of snow early in the month, was better than last year,” said Karl Chessell, director of CGA, which produces the tracker alongside the Coffer Group and RSM.

“However, it is worth remembering that January is always a relatively quiet month,” he added. “The first big test of the year for the market is the February half-term holidays, then Easter – although this year Brexit is bringing more anxiety for the industry.”

RSM’s head of leisure and hospitality, Paul Newman, pinned the blame on ‘Dry January’ and 'Veganuary’.

“Even if consumers went out to eat and drink in similar numbers, the increased uptake of Veganuary compared to last year reduced spend per head as diners opted for cheaper vegetable or plant-based dishes over meat options,” he said. “Wet-led operators were also hit by the growing influence of Dry January with much of December’s uplift being undone by these disappointing results. We expect discretionary spending on eating and drinking out to remain constrained as Brexit uncertainty continues to weigh on consumer sentiment.”

Both pub and restaurants saw a negative sales increase during the month, though pubs did marginally better with collective like-for-likes down 1.4% against 2.5% for restaurant chains. Overall like-for-like trading in London was broadly in line with the rest of the country, down 1.9% compared to minus 1.7% outside the M25.

The biggest contrast was between the performance of managed pubs and group-owned restaurants in London, with managed pubs down 0.5% compared to a 4.1% sales decline for restaurants.

Outside the M25 the difference in performance was less stark, with pub like-for-likes down 1.6% and restaurants down 2.0%.

“Branded restaurant operators continue to have a tougher time than pubs, despite many closing under performing sites in the last year,” said Chessell. “It is most marked inside the M25 where competition is more intense and consumers are more likely to look for, and find, somewhere new to try out.”

Trevor Watson, executive director, valuations at Davis Coffer Lyons, said the figures are “indicative of the malaise affecting consumers in the post-Christmas period. Trading prospects are likely to remain weak, which mirrors statistics for the wider UK economy where there is a clear indication of a slowdown. The strongest innovative operators who continue to exceed customer expectations in terms of service and value are trading well as indicated in Christmas trading statements."

Total sales across the 49 companies in the Tracker, which include the effect of net new openings since this time last year, were ahead 0.4% compared to last January.

Underlying like-for-like growth for the Tracker cohort, which represents both large and small groups, was running at 1.2% for the 12 months to the end of January.