Pub and restaurants outperform retail sector

Published: 14 March, 2011

Pubs and restaurants are outperforming the retail sector, as February sales showed a 3.1% increase, against a backdrop of a 0.4% drop in overall retail sales.

Like-for-likes at 19 major pub and restaurant groups, surveyed by the Coffer Peach business tracker, were up 3.1% on the same month last year, while total sales, including new site openings, were ahead 5.1% on 2010, and up 9.3% against January 2011.

"Consumers may be cutting back on big ticket purchases, but they are still willing to go out to eat and drink," said Peach Factory's Peter Martin.
He said the half-term school holiday also boosted February's figures, "half term week this time saw a double digit spike in sales against the same week last year."

Jonathan Leinster, head of European leisure and tobacco research at UBS Investment Bank, said: "A year ago like-for-like sales were +1.3% in February, so this should be viewed as a strong result. Like-for-likes covering February were +3.1% at Whitbread, +2.8% at Wetherspoon, and +3% for The Restaurant Group. Our forecasts are for pub-restaurant like-for-like sales growth to slow very modestly in March, then to rise in April due to the extra bank holiday.

"We believe most of the like-for-like growth is in food sales, and mostly on price with only a small increase in volume. Operators have noted that while the VAT rise affected drink sales in 2010, the impact has been negligible this year, even at the value end of the market. With input prices rising, particularly from utility costs and food costs, strong like-for-like sales growth is encouraging with respect to maintaining margins. At the low-priced end of the pub-restaurant market, customers seem to be able to continue to justify going out because of relative value."

The Tracker, produced by Peach Factory consultants in assocation wiht KPMG, UBS and the Coffer Group, records sales performance at 19 chains including Mitchells & Butlers (the Harvester and All-Bar-One owner), Whitbread restaurants, Pizza Hut, Tragus (Café Rouge and Bella Italia), and Wagamama.

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