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Morning Briefing for pub, restaurant and food wervice operators

Wed 21st Sep 2022 - Managed groups’ August sales up from pre-covid levels but inflation wipes out growth
Managed groups’ August sales up from pre-covid levels but inflation wipes out growth: Like-for-like sales at Britain’s managed restaurant, pub and bar groups in August were 2.0% ahead of the pre-covid-19 levels of 2019, the new edition of the Coffer CGA Business Tracker has shown. 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, groups’ sales remain well below the levels of three years ago in real terms. For the fifth successive month, restaurants were the strongest performer of the tracker’s three hospitality segments in August, with like-for-like sales growth of 2.8%. Pubs’ sales were up by 2.1% on 2019, while bars’ sales were down by 3.5%. Trading in London remains well behind many other parts of the country, with like-for-like sales within the M25 down by 2.0% in August, compared with 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 highlighted 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 some consumers are now ordering meals in rather than eating out. Karl Chessell, director – hospitality operators and food, EMEA at CGA, said: “It’s been pleasing to see managed groups’ sales beating pre-covid-19 levels for most of 2022 – but the stark reality is after adjusting for inflation, trading is lagging significantly behind. 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. With a difficult autumn and winter ahead, the sector needs urgent and bold help from government on energy and taxes to help protect businesses.” Mark Sheehan, managing director at Coffer Corporate Leisure, added: “Flat sales against the backdrop of record inflation means for many that just getting through this period is all that matters for many hospitality businesses.”

Tourism and recreation sector sees fastest fall in demand as consumers rein in spending: The tourism and recreation sector, which includes pubs and restaurants, saw the fastest fall in demand in August, as consumers continued to rein in discretionary spending. The industry posted a reading of 38.0 on the Lloyds Bank UK Sector Tracker input cost index versus 42.3 in July. A reading above 50 on the tracker indicates expansion on an index, while a reading below 50 indicates contraction. Of the 14 sectors monitored by the tracker, 11 saw demand, as represented by new orders, fall – one more than in July and the highest number since June 2020. Elsewhere, the tracker showed slower rises in material and logistics costs helped bring overall input cost inflation down to its slowest pace since September 2021 (76.6 versus 78.4 in July). However, reports of energy and salary cost inflation remained close to record highs. In addition, supply constraints continued to ease in August with companies reporting supplier shipping delays falling to their lowest level since October 2020. Scott Barton, managing director of Lloyds Bank corporate and institutional banking, said: “The cost of doing business remains extremely high, and firms continue to face into a significant period of uncertainty.”

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