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Flaming June offers some respite for hospitality

Published:  26 July, 2023

A scorching June helped Britain's managed restaurant, pub and bar groups achieve a ninth successive month of year-on-year sales growth, according to the latest Coffer CGA Business Tracker.

The Tracker, produced by The Coffer Group, RSM UK and CGA by NIQ, revealed that total like-for-like sales rose 6.7% in June with pubs seeing a 10.8% hike, particularly those offering outside space, while restaurant sales were only 3.2% ahead and bars saw an 8.4% decline.

However, some of this growth came at the expense of restaurants, where sales finished 3.2% ahead year-on-year. The bars segment completed a difficult first half of 2023 with an 8.4% drop in sales. Combined sales growth remains just below the level of inflation, though the gap between the two has closed over the first half of this year.

Growth was even across the country in June, the Tracker indicates. Managed groups’ like-for-like sales growth within the M25 was 8.1% as London continued its post-Covid recovery – just ahead of the level of 6.7% beyond the M25.

Karl Chessell, director of hospitality operators and food, EMEA at CGA by NIQ, said: “These numbers highlight the impressive resilience of managed hospitality groups despite rising costs for businesses and consumers. People remain eager to visit pubs, bars and restaurants when they can, especially during warm weather, and pub operators and suppliers will hope for more high temperatures as the summer holiday season begins – though it’s important to remember that sunshine isn’t so positive for indoor-only restaurants. More interest rate rises may dampen consumers’ confidence and cost pressures remain for operators, but the long-term outlook for the sector remains good.”

Despite nine months of successive growth and a strong June, licensed premises continue to close up and down the country. According to CGA by NIQ and AlixPartners, Britain has lost around one in 18 of its licensed premises in the last 12 months – a total of 5,736 pubs, hotels, restaurants, bars and cafes.

Since March 2020, close to 15,000 outlets have been forced to close, equating to 5% of the market annually.

In the latest quarterly analysis, Britain’s number of licensed premises dipped by 1.1% (in the three months from April 2023 to June 2023). The drop represents 1,139 net closures in the second quarter – equivalent to 12.5 per day. It follows relentlessly high costs for businesses and consumers alike, which have sent many venues that were already weakened by Covid to the brink.

Chessell added: “It’s been another tough quarter for hospitality, with soaring energy, food and labour costs squeezing businesses’ margins and inflation and interest rate rises sapping consumer confidence. Against that backdrop, managed groups have been impressively resilient in many segments and areas, and there are welcome signs that city centres in particular are back to their pre-Covid vibrancy. More venue closures are sadly inevitable while costs remain so high, but the outlook for well-resourced, distinctive and customer-focused groups remains good."