School break drives June sales pick-up

The main boost came mainly from the school half-term break, which fell in May last year and June this. As a result, the 16 major pub and restaurant groups participating in the Business Tracker had seen like-for-likes slip -1.2% in May, before recovering last month. Total sales, which include those from new openings, were ahead +2.7% on June 2009.

”Both pubs and restaurants benefited from extra trade during that first school holiday week. But, the subsequent effect of the World Cup later in the month and the continuing sunny weather had a more mixed impact,” said Peach Factory’s Peter Martin.  “While pubs in general saw an upside, restaurants generally suffered sales drops. Big sporting events and the weather, as ever, are a mixed blessing.”

The monthlyTracker figures are produced by Peach Factory in partnership with KPMG, UBS and the Coffer Group and monitor performance across 16 leading pub and restaurant operators. Companies taking part in the survey include Mitchells & Butlers, Whitbread, Pizza Hut, Punch Pub Co, Gondola and Tragus.

Month-on-month, figures were unchanged against May. June’s result compares with a 0.4% increase in like-for-likes in the same month last year.

Trevor Watson, director of Davis Coffer Lyons, part of the Coffer Group, said: “The like-for-like sales growth during June is slightly less than headline inflation, however it reflects a very strong trading performance from the major multiple operators in the sector. The results are particularly favourable bearing in mind that many of the casual dining brands have been competing against World Cup football for trade and universally good weather.”

Richard Hathaway, head of Travel, Leisure and Tourism at KPMG commented: "Overall, the figures for 2010 have remained pretty flat - albeit with the seasonal peaks and troughs that we see every year.  Consumer confidence still has some way to go before the industry can feel the pressure ease off. Pubs and restaurants need to continue to compete and find innovative ways to attract customers. 

“Furthermore, with the recently announced VAT increases, the sector should start thinking now about the implications that a 20% VAT rate will have on their profit margins.  Careful planning on pricing and marketing strategies today will go a long way in helping mitigate the impact this will have on them in the new year”.

Jonathan Leinster, head of European leisure and tobacco research, at UBS Investment Bank, said: “Over the last four years managed pubs have become more like fast-casual dining restaurants. so we suspect that most of this month’s positive number occurred because of the inclusion of half term. The World Cup favours drinks oriented pubs rather than pub restaurants and in 2006 Mitchells & Butlers noted that it took nearly three months for its restaurant business to return to what it considered to be normal growth following that year’s competiton.

Leinster also believes that higher VAT could be an opportunity for the sector: “We expect that when new menus are introduced in the autumn, operators will engineer their food menus to incorporate price rises. That means that like last year, sales growth could appear to be strong in the autumn months. When higher VAT is introduced in January, it is even possible since a rise will be widely expected, that food prices go up again along with drink prices. Conversely, if food prices are held in January, an operator could present this as a value proposition for customers.”

Peter Martin concluded: ”Like-for-like figures have been up-and-down since the start of the year, and although the particular circumstances at play this last month makes it difficult to draw too many conclusions, June’s results fall into that same pattern indicating that overall trading is essentially flat against 2009, and remains tough,”