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Intelligence > Beverages

April pub and restaurant sales up, but analysts urge caution

By Lorraine Heller , 18-May-2011

Related topics: Business, Trends & Reports, Restaurant Trends, Pub Trends, Restaurants, Pubs & Bars, Food, Beverages

The Royal Wedding, Easter Holidays and record sunshine all contributed to higher sales in pubs and restaurants this year, but market analysts warn that they also created new challenges for the hospitality sector, which did not trade as well as it could have.

Double-edged sword: hot weather encourages home BBQs

Double-edged sword: hot weather encourages home BBQs

The latest data from Coffer Peach’s Business Tracker found that like-for-like sales across 21 major pub and restaurant groups increased by almost 4 per cent in April this year, boosted by the holidays, celebrations and hot weather in the month.

However, these same factors also prompted more people to stay at home: the unexpected sunshine brought out the home barbeques, while many people chose to stay home to watch the Royal Wedding on their TVs, said Peter Martin of Peach Factory, which creates the Tracker report together with KPMG, UBS and the Coffer Group.

In addition, trading over Easter was actually lower than last year, with sales dipping almost 7 per cent over the four days of Easter compared to 2010. One main reason for this was that Easter did not coincide with all school holidays this year, as some children had returned to school before Easter; and according to the Peach Factory, school holidays may have a bigger positive impact on sales than bank holidays.

Hidden challenges

“The extra holiday for the Royal Wedding, Easter being later, how school holidays fell and the sunny weather all played a role, but not always as might have been expected,” said Martin.

“The challenge for pubs and restaurants has been to convince people to go out rather than stay at home and watch the Royal Wedding on their own TV, for example, or enjoy the sun around their own or friends’ barbecues. So to grow sales over the month is good news, with the run up to the Easter weekend particularly strong,” he added.

“Hot weather, as we had this year, generally tends to favour pubs, especially those with outside areas, rather than restaurants. Last year, it rained over Easter and many people went shopping especially to malls, and to inside entertainment like the cinema, benefiting restaurants in those locations. Good weather can be a double-edged sword.”

Cautious growth

Overall, although April’s trading results showed continued steady growth in the pub and restaurant sector, the results have also prompted a degree of caution.

Trevor Watson of Davis Coffer Lyons, part of the Coffer Group, said: “Although the Royal Wedding was good for family related leisure businesses, some venues found the succession of long weekends disruptive to trading patterns. Around the country, people are now beginning to feel the impact of tax rises, and underlying inflation. Consumer spending nationwide is likely to remain under continued pressure over the next few months.”

Richard Hathaway, head of Travel, Leisure and Tourism at KPMG in the UK, added: "Further pressures from the recent VAT increase, low consumer confidence and falling disposable incomes will apply additional strain on operators. To add to the burden, mounting fuel and utility costs and an uncertain jobs market is making many businesses nervous about the rest of 2011.”

Jonathan Leinster, head of UBS European Leisure Research, said: “We estimate that price and mix have contributed most of the like-for-like growth so far this year, but in April we estimate that just short of 2 per cent of the 3.8 per cent growth came from higher volumes.

“Current trading reports in upcoming results could be tricky. Marston’s, Greene King, and Enterprise Inns are all reporting their first half results this week. Calendar effects will make trends difficult to read, but we expect trading following the Royal Wedding will have slowed on a like-for-like basis.

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