UK restaurants battle against 4.8% drop in sales

The UK’s July heatwave saw punters pour into pubs up and down the country, leading to a 2.7% hike in sales, but restaurants struggled to compete, suffering a 4.8% drop in trade, according to the latest figures from the Coffer Peach Business Tracker.

Carluccio’s has been among the restaurants struggling against financial difficulties this year

Compared to July 2017, pubs saw like-for-like sales rise by 2.7%, as World Cup Fever took hold and temperatures soared to 37 degrees in some places.

London in particular performed strongly, with like-for-like pub sales up 6.1%, buoyed by England’s unexpected progression at the World Cup. In comparison, pubs outside of London saw a 1.7% increase, despite the football.

“Continued sunshine and England’s longer than expected participation in the World Cup meant July followed a similar pattern to the previous month of June, when pubs were up 2.8 per cent, except that restaurants were hit even harder,” said Peter Martin, vice president of CGA, the business insight consultancy that produces the Tracker, in partnership with Coffer Group and RSM. “The fall of 1.8 per cent in trading in June just got worse in July,”

“Drink-led pubs and bars performed by far the strongest with like-for-likes up more than restaurants were down. Food-led pubs also suffered in the sun with negative like-for-likes, although not as dramatically as the restaurant operators,” said Martin.

“It seems people just wanted to go out for a drink. Across managed pubs and bars drink sales were up 6.6% for the month, with food down -3.0 per cent.”

‘No surprise that restaurant groups continue to struggle’

However it was restaurants that bore the brunt of the heatwave, with like-for-like sales across restaurant groups down a substantial 4.8%. Outside of London, like-for-like sales fell 5.6%, compared with 2.8% in London. 

It follows a tough 2018 for the restaurant sector, which has seen several groups fall into administration, and consolidate their portfolios by shutting under-performing venues.

High-end streak restaurant Gaucho went into administration last month, and is currently on the hunt for a buyer with the aim of continuing. While the financial difficulties of Carluccio’s, founded by the late Antonio Carluccios, signed a Company Voluntary Agreement (CVA) in June in a bid to restructure its business and stay afloat while fending off debts. It warned that 30 sites could close as a result.

The CVA affects 34 of the chain’s 103 restaurants, whose landlords have agreed to cut rent bills by a third for six months, however these sites will close at the end of that period unless a new, reduced rent deal can be agreed.

Other high-profile closures in London include several Jamie’s Italians and Byron Burgers venues, Soho institution The Gay Hussar and 28°-50° Fetter Lane, the wine-focused restaurant founded by chef Agnar Sverrisson and Xavier Rousset, which has been sold to Cliffords Restaurant Limited.

“It comes as no surprise that restaurant groups continue to struggle, albeit a sales drop of 4.8% year-on-year will be particularly painful on top of ongoing cost pressures,” added Paul Newman, head of leisure and hospitality at RSM.

“The long hot summer could not have come at a worse time for food-led operators and time will tell whether the more moderate temperatures we’ve experienced in August will provide some much-needed respite.”

In June, it was reported that the number of restaurants in the UK had fallen for the first time in eight years, according to new figures. Around two restaurants per week have closed over the past year to March, according to CGA’s market report, which predicts the number of sites across the UK will continue to fall throughout 2018.

Ultimately, the “differing fortunes of pub and restaurant businesses cancelled each other out”, said Coffer, with the combined managed pub, bar and restaurant sector seeing like-for-likes flat in July, recording exactly 0 per cent growth.

The Coffer Peach Tracker industry sales monitor for the UK pub, bar and restaurant sector collects and analyses performance data from 47 operating groups, with a combined turnover of over £9bn.

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