Eating out in for 'long haul' to recovery

17-May-2010 - Last updated on 27-Aug-2011 at 07:39 GMT

All Bar One: one of M&B's brands, which takes part in the tracker survey

The threat of spending cuts, VAT rises and the economic uncertainty mean pubs and restaurants are in for a long haul to recovery. The warning comes...

The threat of spending cuts, VAT rises and the economic uncertainty mean pubs and restaurants are in for a long haul to recovery.

The warning comes from the latest Coffer Peach Business Tracker survey of 15 major pub and restaurant operators, including Mitchells & Butlers, Whitbread, Pizza Hut, Punch Pub Co, Gondola and Tragus.

Collective like-for-like sales growth of 0.7% in April on last year with total sales up 2%.

The latest figures are an improvement on March's performance, when like-for-like sales fell back 0.4% and total sales were up just 1% on March 2009.

But experts warn tough times lay ahead. "Although positive, the results are a reminder that groups will have to stay on the top of their game, particularly with continued uncertainty about the economy ahead of the public-sector spending cuts promised by the new Government," said Peach Factory's Peter Martin.

"It is going to be a long haul and there is no consumer cushion."

Richard Hathaway, head of Travel, Leisure and Tourism at KPMG said: "Among potential measures to tackle the deficit, the new coalition Government has made no secret of needing to make public sector jobs cuts and VAT is already being rumoured to rise to 20%.

"This year the Budget is likely to be a watershed moment for the eating and drinking out sector, as we gain greater clarity around the cost cuts and tax changes which are likely to influence consumer confidence over the next 12 months."

Jonathan Leinster, head of European leisure and tobacco research at UBS Investment, predicted that consumer expenditure would turn positive this year but that progress would be slow. "In that environment, like-for-like growth in pub-restaurants whose brands are strong enough to resist promotions and offer their customers everyday value, are likely to take share."

He also predicted that food-led pubs and restaurants would lose out to drink-led venues during the World Cup.

David Coffer, chairman of the Coffer Group, said he hoped for a post election "upswing" with the longer nights and warmer days of summer.

Martin added that in the current environment staying in line with last year was "no disgrace".