Trade remains tough for restaurants and pubs, February sales figures show

Collectively, like-for-like sales fell 3.7 per cent in February at 23 pub and high street restaurant companies, including Mitchells & Butlers, Marston's, Gondola, Tragus, TGI Fridays and Wagamama. 

Total sales for the month, which include the effect of new openings, were only marginally up on last year at 0.6 per cent while sales rose 8.4 per cent on January's. 

“These are disappointing figures, as over the past two years the informal eating and drinking-out market has generally kept its head above water despite everything the economy has thrown at it,” said Peter Martin of Peach Factory, who produces the report in partnership with KPMG, UBS and the Coffer Group.

“It might be a prolonged hangover after what was bumper trading over Christmas and the New Year, or it might signal a new tightening of consumer belts – certainly poor weather played it’s part. The market will do well to remain cautious, but also focused on giving customers, who may be looking for something new, a compelling reason to go out. We are still predicting another essentially flat trading year."

Discounting
 
Despite an unusually busy January for many , many high street restaurants are finding it hard to give up discounting to see them through the downturn.

“A major challenge for groups in the coming year will be how they handle the issue of discounting and vouchers, which have been important factors for many groups in attracting business over the past two years,” said Martin.

“Our recent survey of senior executives in the industry suggested that most wanted to either peg or reduce discounting and vouchering this year, although they doubted the rest of the market would follow suit. Most see more benefit in developing digital, especially mobile phone, marketing activities.”

However, Trevor Watson, director of valuations at Davis Coffer Lyons, said those operators who did break away from discounting may not suffer, particularly with two big events - the Diamond Jubilee and the Olympics happening later in the year. 

He said: "Value for consumers has never been better in the eating-out market, and as some operators look towards moving away from discounting there could be a small increase in spend per head later in the year.
 
“Operators continue to remain focused on margin preservation. Clearly London operators are looking to maximise the benefits of the Diamond Jubilee and the Olympics. These provide a fabulous opportunity, but will lead to some re-distribution of trade and some operational challenges.”