Spending on eating out remains resilient as inflation crunch looms

In the normally quiet month for the pubs and restaurant sector, sales data for January was positive overall and showed casual dining chains enjoying a continued recovery.

Industry like-for-like sales grew 1.9% in January 2017 compared to 2016, according to the Coffer Peach Business Tracker, with restaurants up 3.3% and pubs 1%.

Taking into account new site openings, total sales from the cohort of 34 larger leisure chains, which includes Fuller’s, Greene King, Marston’s, Mitchells & Butlers, Restaurant Group, Whitbread and Young's, expanded 4.4% on the same month last year.

London's strong run continued, likely helped by rising tourism on the back of the weak pound, with LFL sales bubbling 2.2% higher, with restaurant groups within the capital up 3.8%, while the rest of UK advanced a still-solid 1.6%.

"After a busy Christmas and New Year period, when sector like-for-likes were up a healthy 2.2% on 2015, many expected January to be more muted – but consumers seem to have continued to go out to eat and drink, and in particular eat,” said Peter Martin, vice president of CGA Peach.

He added that as January is always a weak trading month, swings at this time of the year will not overly affect business fortunes, "but with latest figures showing inflation running at 1.8%, this is a level of the growth the market will need to maintain.”

Trevor Watson of Davis Coffer Lyons, which contributed to the research, said that consumer confidence seemed to be proving to be resilient in spite of a background of accelerating inflation, but that the industry had some tough times ahead.

"The next few months will see significant cost pressures for operators in both the pub and restaurant sectors, not least of which is the new rates assessments. Operators are likely to look to pass these costs on through higher menu prices. Some brands and businesses will be better placed than others to do so,” he said.

Over the Christmas and New Year period, pubs and restaurants enjoyed an equal uplift in trading, with a collective 2.2% increase in like-for-like sales over the six weeks to 8 January.

Restaurants sales began their bounce back with a 2.1% over the festive period, after a flat November and a decline of 0.7% in October.