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Morning Briefing for pub, restaurant and food wervice operators

Mon 18th Jun 2018 - Sector like-for-likes bounce back in May, Heineken makes record investment in UK pub estate
Sector like-for-likes bounce back in May as sun shines on pubs but not restaurants: Hot weather in May helped boost trade in Britain’s pubs but hit restaurant sales, according to the latest Coffer Peach Business Tracker. Overall, the country’s managed pub, bar and restaurant groups saw collective like-for-like sales up 1.4% compared with the previous year and bounced back following the 1.2% fall in April. While managed pubs saw like-for-likes jump 3.5% for the month, with drink-led outlets doing best, casual dining brands saw like-for-like sales drop 2.1% compared with the same period last year. “It’s a familiar story,” said Peter Martin, vice-president of CGA, the business insight consultancy that produces the tracker, in partnership with Coffer Group and RSM. “When the sun shines people head for the pub or, more precisely, the pub garden. In contrast, restaurants do better when it’s dull and damp. Weather remains the biggest factor when it comes to sales in the out-of-home market. That’s the way it is.” London did marginally better than the rest of the country, with like-for-like sales up 1.6% compared with 1.4% for outside the M25, with the difference between pubs and restaurants mirroring the national picture. “The effect of the royal wedding on trade is hard to judge but, if anything, it may have depressed sales with many people staying home to watch it on the television,” said Martin. “The good news is overall the sector saw an uplift in trading in May, which contrasts with the 1.2% fall in April. The public continues to go out to eat and drink and confidence among operators is also returning, if not yet to pre-Brexit levels.” Mark Sheehan, managing director of Coffer Corporate Leisure, added: “It’s always easy to blame the weather but it was a long wait until May, when the pub sector got the benefits of some sunshine. Better weather and a World Cup with a record 32 teams should see very strong trading for many pub businesses over the coming period. Restaurants and food-led pubs may have a tougher summer to add to the pressures they are under. In the longer term, we see competition for casual dining chains becoming a little less intense as poorer-performing units are closed.” Martin added: “The shake-out of sites in the casual dining sector seems to be helping by reducing the threat of oversupply and deals are also being done in the market, showing investors also want to be involved in pubs, bars and restaurants.” Underlying like-for-like growth for the 39 companies in the tracker cohort, which represents large and small groups, is still subdued, running at only 0.6% for the 12 months to the end of May but up from 0.4% at the end of April. Total sales growth across the cohort, which includes the effect of new openings, was 4.5% in May, reflecting continuing if slower brand roll-outs and running at 3.8% for the 12 months to the end of the month.

Heineken doubles investment in UK pub estate to record £44m, 1,000 jobs created: Heineken UK has revealed it will invest a record £44m in Star Pubs & Bars during 2018 and create 1,000 jobs. The investment is more than double last year’s figure of £20m and brings the company’s total expenditure on pubs to almost £140m during the past five years. About a quarter of Star’s 2,900 pubs will benefit from the investment programme, which includes 140 major capex projects with an average spend of £170,000 per site. The investments are being tailored to ensure each pub’s proposition is relevant to its community. Heineken UK managing director David Forde said: “We are passionate supporters of the Great British pub and believe well-invested pubs run by skilled and motivated operators will continue to prosper. We believe our commitment to investment and understanding of consumer trends will help our licensees’ businesses to keep growing and ensure the pub remains at the heart of British life for generations to come.” Secretary of state for business Greg Clark added: “Pubs are at the heart of communities and play a vital role in local economies. This record investment by Heineken and its creation of 1,000 British jobs is another significant vote of confidence in the UK economy.”

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