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Wet October softens growth for hospitality

Published:  15 November, 2023

Britain’s leading hospitality groups saw year-on-year growth slow to 3.2% in October amid widespread poor weather, the new CGA RSM Hospitality Business Tracker reveals.

While this is the 13th consecutive month of like-for-like growth for managed restaurants, pubs and bars, it represents a slowdown from the 5.9% rise in September when brighter weather prompted consumers to eat and drink. By contrast, Storm Babet and the early stages of Storm Ciarán kept some diners and drinkers at home for periods in October.

However, as previously reported by Harpers, last month was a brighter month for pubs, with fans watching the Rugby World Cup helping to lift sales 5% above October 2022. Managed restaurants had a softer month with growth of only 2.7%, while the bar segment endured another difficult month, with sales down by 7.8%.

For the 18th month in a row, groups achieved better growth in London than the rest of the country – like-for-like sales within the M25 rose 4.8%, compared to 2.7% elsewhere.

Karl Chessell, director of hospitality operators and food, EMEA at CGA by NIQ, said: “Thirteen successive months of year-on-year growth amid a cost of living crisis is encouraging, but there is no escaping the fact that rises are being driven by price rises and remain below inflation. The weather made for challenging trading conditions in many parts of the country, offsetting boosts from occasions like the Rugby World Cup and Halloween. Consumer demand for hospitality remains high, but venues will have to be at the top of their game to achieve real-terms growth over the crucial run-in to Christmas.”

Paul Newman, head of leisure and hospitality at RSM UK, added: “With poor weather in October to blame for much of the slowdown in eating and drinking-out growth, the sector will be desperate to see an end to the wet weather that has continued to hamper sales in the first half of November. The lead-up to Christmas is a key trading period for hospitality but economic headwinds are dampening festive plans.

"Cuts to corporate-funded Christmas parties combined with consumers tightening purse strings, the continued threat of rail strikes and the looming end to business rates support in March will come together to create considerable financial strain on businesses in the months ahead. The Chancellor needs to step up and use the Autumn Statement to provide renewed support for the hospitality sector which could otherwise see a swath of jobs being lost in the New Year.”

Meanwhile, as the Office for National Statistics confirms the rate of inflation has fallen to 4.6%, UKHospitality is urging the chancellor to take action on business rates in the Autumn Statement to avoid an inflationary spike early next year.

UKHospitality has called for the business rates relief for hospitality to be extended for a further year, saving the sector £630 million, and for the business rates multiplier to be frozen, avoiding an inflation-linked rise of £234 million.

A recent survey of its members revealed that 61% would raise prices if business rates bills rise in April. It also showed that 66% would reduce investment, 61% would reduce staffing levels, 42% would reduce opening hours and 22% would close sites.

UKHospitality CEO Kate Nicholls said: “While this significant decrease in inflation is encouraging to see, all of that will be put at risk if the chancellor does not take action at the Autumn Statement to avert the looming business rates bill facing hospitality.

“Almost a billion pounds of extra cost will be set upon the sector in April if the current relief scheme ends and rates increase with inflation. We already know from our members that the direct impact of that will be almost two-thirds putting up their prices, as they simply cannot absorb any additional costs.

“The chancellor can ensure this doesn’t happen and that we avoid an inflationary spike early next year by extending business rates relief for a further year and freezing rates. The decisions hospitality businesses make can really drive or curb inflation and we would urge the chancellor to work with us to help deliver positive economic outcomes.”

Despite the overwhelming feeling of doom and gloom in the trade, a profitable Christmas period is very much on the cards. This is according to new figures from hospitality technology supplier Zonal, which shows reservations for the month of December are already up by over 40% on 2022 and that bookings for Christmas Day itself are up a whopping 59%.

With no-shows doubling in the last year, operators may need to curb those expectations slightly. The latest figures from Zonal reveals no-shows creeping up from 6% to 12% over the last 12-months – at a cost of £17.59bn a year to the industry in lost custom.