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Encouraging
figures from Britain's leading restaurant and pub operators show
that sales are generally holding up against last year despite the
squeeze on consumer spending and increased competition from supermarkets.
Aggregated
figures from 12 major groups show that like-for-like sales in May
were ahead 0.6%, with month-on-month out-of-home sales ahead 3.7%
compared to April.
The data
comes from the Coffer Peach Business Tracker, run by Peach Factory in
partnership with KPMG, UBS bank and Coffer Group. The Business
Tracker collects and collates sales data on a monthly basis to
provide a unique picture of the health of the UK eating and drinking
out-of-home market.
Peter Martin,
founder of the Peach Factory consultancy, said: "Other
research might suggest that there is contraction in overall eating
and drinking out, but these figures demonstrate that managed, and
largely branded, groups are in general bucking the trend and
continuing to attract customers through their doors. If anyone is
being squeezed, it seems to be the independent sector.
"There
are undoubtedly variations from group to group, but the underlying
trend in like-for-likes for most of 2009 has been steady against
2008, and that is some performance. The May +0.6% figure is in-line
with that pattern.
"It
is hard to say if this is down to increased promotional activity,
more sophisticated marketing, better value, consistent quality and
service, the reassuring strength of brands or even an increase in
consumer confidence about going out. The bottom-line is that these
established restaurant and pub groups are working harder and
continuing to maintain custom."
Jonathan
Leinster, head of European leisure and tobacco research, at UBS
Investment Bank, added: "The increase in total sales of 3.7%
suggests a sustained improvement in trading even after Easter. This
is in line with recent comments from other operators (eg Marston's)
which have suggested that consumer expenditure has been holding up
better than expected.
"It
suggests that managed and branded groups have continued to grow
despite what appears to be a contraction in the overall out-of-home
market place and despite strong retail competition. The performance
of the branded operators varies but the key to success appears to be
a consistent value offering of which promotional activity is
certainly a point. However, increased discounting and promotions have
been at the expense of margins and we would expect promotional
activity to continue going into the summer season."
Trevor
Watson, Director of Davis Coffer Lyons, part of The Coffer Group, a
specialist in the valuation of restaurants and bars, said: "Whilst
these positive like for like figures are very encouraging, no one
should be under any illusions as to how difficult trading conditions
are. The combined effect of discounting, the forthcoming impact of
increases in the National Minimum Wage and the treatment of service
charges, higher oil prices, and VAT increases will continue to put a
lot of pressure on profit conversion for most operators over the
next12 months."
Richard
Hathaway, Head of Travel, Leisure and Tourism at KPMG, commented: "These
positive results are reflective of the sales momentum that larger
branded groups have been able to maintain through the downturn so
far, largely due to continued successful promotional activity.
"Despite
these relatively health top line numbers for the bigger players,
inevitably there are winners and losers across the industry and our
experiences of working with the independent sector, illustrates that
there is a different story for some.
"We
are seeing smaller players struggling more as they can't command the
same economies of scale to support significant discounting. They are
also more vulnerable to the impacts of factors such as their
location, less brand recognition and pressures of financing,
particularly if they own their own property. We have already had
experience of insolvencies in this part of the sector and are likely
to see more.
"It
remains to be seen how the industry performs over the coming summer
months, but hopefully a spell of warm weather will go some way
towards extending the sales levels we have seen in the tracker,
across the whole of the sector."
Peter Martin added:"Contrary
to what the major supermarkets are saying about eating and
drinking-out, it is still alive and well. There is a consistent line
from the major food retailers that they are gaining food sales at the
expense of pubs and restaurants. These figures would challenge that.
What consumers actually want is a good deal wherever they can find it."
Added David
Coffer, Chairman The Coffer Group: "We are immensely proud to
be associated with this ground-breaking Business Tracker initiative.
This research will provide a crucial insight into how the leisure
sector is performing during a period of unprecedented pressures. An
understanding how the UK restaurant and bar market is performing will
be invaluable to all sections of the industry- from operator and
landlord, to banker and private equity investor.
"The
Coffer Group is at the vanguard of the leisure industry and has
worked closely with Peter Martin for nearly two decades. We are very
pleased with the outcome of our latest association with him and
believe the Tracker is something the industry has needed for a long
time. I and my directors look forward to playing our part."
Companies
participating in Peach Business Tracker include Mitchells &
Butlers, Whitbread Restaurants (including Beefeater, Brewers Fayre
and Table Table), Punch Pub Company (formerly Spirit Group), Gondola
(owner of Pizza Express, Zizzi and ASK), Tragus Group (operator of
Bella Italia, Strada and Café Rouge), TGI Fridays, Barracuda
Group (including Smith & Jones and Varsity), Wagamama,
Carluccio's, Paramount Restaurants (owner of Chez Gerard, Bertorellis
and Caffe Uno), Novus Leisure (operator of Tiger Tiger) and Gaucho Grill.
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