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Hospitality continues slow start to 2024

Published:  14 March, 2024

Britain’s top hospitality groups achieved modest like-for-like sales growth of 1.4% in February, the latest CGA RSM Hospitality Business Tracker has revealed.

It continues a slow start to 2024 for the sector, following marginal growth of 0.1% in January in the wake of strong trading over Christmas. Patchy consumer confidence amid still-rising costs and economic and political uncertainty has resulted in cautious consumer spending.

The Tracker, produced by CGA by NIQ in partnership with RSM UK, shows restaurants were hospitality’s best-performing segment in February with a like-for-like growth of 2.2%, while pubs were only fractionally behind at 2.1%. However, bars suffered a 7.4% dip in sales, reflecting a squeeze on consumers’ late-night spending and a move towards earlier eating and drinking out. The ‘on-the-go’ segment (establishments with counter service and limited dine-in) was 0.5% behind in February 2023.

All segments performed slightly better in London than elsewhere in Britain. Groups’ February sales within the M25 were 1.9% ahead of last year, compared to 1.3% outside it.

Karl Chessell, director, of CGA by NIQ, said: “Subdued trading in February shows consumers remain watchful with their discretionary spending. With costs still rising for businesses as well as individuals, margins are under pressure and some operators remain fragile. 

“But while the short-term outlook for hospitality is uncertain, underlying demand is good, and as inflation and interest rates hopefully ease and the Budget’s reduction in National Insurance contributions kicks in, we can be cautiously optimistic that people will start to loosen their spending over the Spring and Summer.”

Paul Newman, head of leisure and hospitality at RSM UK, added: “A combination of bad weather and dwindling budgets put a dampener on Valentine’s celebrations, continuing a disappointingly slow start to the year. February’s weak sales underline current challenges in the hospitality sector at a time of rising wage bills, rents, and rates, with the recent Spring Budget doing little to ease the burden.”

There is some cause for optimism for the sector with inflation forecast to hit 2% in Q2 and interest rates predicted to fall from the summer. With major sports events and warmer weather on the horizon, managed groups will likely see sales increase further as the year progresses.