Inflation wipes out August growth for hospitality groups
The result from the Tracker — produced by CGA by NielsenIQ in partnership with The Coffer Group and RSM UK — means like-for-like sales have now been ahead of or level with pre-pandemic comparatives for seven months in a row.
However, with compound inflation since 2019 in double digits, group sales remain well below the levels of three years ago in real terms.
For the fifth successive month, restaurants were the strongest performing of the Tracker’s three hospitality segments in August, with like-for-like sales growth of 2.8%. Pub sales were up by 2.1% on 2019, while bar sales were down by 3.5%.
“It’s been pleasing to see managed groups’ sales beating pre-Covid levels for most of 2022 — but the stark reality is that after adjusting for inflation, trading is lagging significantly behind,” says Karl Chessell, director - hospitality operators and food, EMEA at CGA.
“Hospitality is feeling the effects of the cost-of-living crisis as consumers watch their spending, and is facing soaring costs of its own across fuel, food, labour and other key inputs.”
As has been the case in most months since the start of the pandemic, trading in London was well behind many other parts of the country. The Tracker shows like-for-like sales within the M25 were down by 2% in August, compared to 3.2% growth beyond the M25.
Venues in London continue to be affected by a dip in office workers and visitors since the start of the pandemic, and rail strikes have further reduced footfall.
The Tracker also highlights the increased demand for deliveries and takeaways since the start of Covid-19 restrictions. Despite their overall growth of 2.8% in August, restaurants’ dine-in only sales were 2.1% below those of August 2019 — a sign that some consumers are now ordering meals in rather than eating out.
Paul Newman, head of leisure and hospitality at RSM UK, warns that the need for long term Government support for the UK eating and drinking out sector is becoming desperate.
“Many exceptional operators may be forced to take difficult decisions over the future of their business if the Government doesn’t confront the issues facing the hospitality industry,” he says.
“Whilst recently announced support for households should help shore up consumer demand, the assistance offered to businesses is less generous, with the period of support uncertain and with further clarity not expected for months.
“This is a lifetime away for a sector only just recovering from the last economic storm, and therefore we urge the Government to outline further support now so that businesses can trade confidently going into 2023.”
