Costs crisis wipes out hospitality’s growth

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October sales at Britain’s top managed restaurant, pub and bar groups were 1.5% ahead of the levels of October 2021, the latest edition of the Coffer CGA Business Tracker reveals.

The Tracker — produced by CGA by NielsenIQ in partnership with TheCoffer Group and RSM UK — also shows growth of 4.3% from October 2019, meaning sales have beaten pre-pandemic comparatives for nine months in a row. However, with inflation now in double digits, sales are significantly behind 2021 and 2019 in real terms.

Pubs performed the strongest in October, with year-on-year sales growth of 6.4%. Restaurants endured a tough month with like-for-like sales down by 3.6% on October 2021, while bars’ sales slipped 12.7%.

London’s hospitality sector continued its recent rebound from more than two years of Covid-related upheaval, as tourists and workers steadily returned to the capital. Groups’ October sales within the M25 finished 6.4% ahead year-on-year — in sharp contrast to regions beyond the M25, where like-for-likes were up by only 0.3% from October 2021.

Karl Chessell, director – hospitality operators and food, EMEA at CGA, said: “It’s been encouraging to see hospitality sales running ahead of pre-Covid levels for nearly all of 2022.

“But after adjusting for the effect of higher prices it’s clear that footfall is down, and inflation means sales are even further behind in real terms. Sustained increases in energy, food, property and other costs are putting a very tight squeeze on both consumers’ discretionary spending and operators’ profits, especially in restaurants. The sector must now pin hopes on a strong festive season to make up some of the growth that has been lost over a variety of unprecedented challenges.”

Paul Newman, head of leisure and hospitality at RSM UK, said: “October’s shift to a pint and a bite in a pub over a more expensive restaurant meal is a clear signal that demand for out-of-home socialising remains strong, but that belts are being tightened in response to the cost-of-living crisis. With any uplift in sales cannibalised by rising costs, margins are being squeezed and the entire industry is now geared towards maximising Christmas trade. With last year’s festivities severely impacted by Omicron, 2022 needs to deliver if the sector is to avoid a swathe of closures in the New Year.”

CGA collected sales figures directly from 75 leading companies for the latest edition of the Coffer CGA Business Tracker.

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