Hospitality sector sees growth slow to 0.2% in May

London outperformed the rest of the country with like-for-like sales up 1.1%, although there was a mixed picture in the capital, with pub like-for-likes up 3% (+4% for drink-led businesses) and casual dining chain like-for-likes down 1.3%. The situation was reversed outside the M25, with pubs suffering and restaurant groups seeing a 1.9% rise in like-for-likes, according to the Coffer Peach Business Tracker.

It follows two months of strong like-for-likes overall, with growth of 4.6% in March and 4.4% in April. Total sales growth also slowed to 2.5% after increasing by 7.1% and 7% in March and April respectively. However, the expansion of branded casual dining chains outside London saw total sales in this segment rise 9.1% against May last year.

Year-on-year like-for-like sales were up 2.9% for the 12 months to the end of May, in line with the end of April, and with total sales running 5.4% ahead.

Jarrod Castle, leisure analyst at UBS Investment Research, said: “With like-for-like sales growth for May at 0.2%, down from 4.4% for April, this leaves the 12-month moving average growth rate at 2.3% for like-for-like sales. While the numbers are weak, we also note the tougher comps for May compared to April and March.”

Robust market​

David Coffer, chairman of the Coffer Group, said: “This month’s figures once again show that the leisure market remains robust. Although collective like-for-likes are only up slightly, they do follow two strong months of growth and it is understandable that the pace of growth will vary from month to month.

“The strength of the casual dining sector outside the M25 shows that the recovery, which is often considered to be London-centric, is now spreading to other parts of the country and, as we move into the summer, I imagine the regional pubs market will see a change in fortunes.”

Paul Newman, head of leisure and hospitality at chartered accountants Baker Tilly, said: “This month’s UK-wide like-for-like figures were again supported by a strong London eating and drinking out market. On the other hand, total year on year sales growth outside the M25 was higher than inside the M25 implying a greater intensity of new site openings outside of the capital.

“Signals from the Bank of England that interest rates could rise this year may cause mortgage-indebted Londoners to rethink their spending habits. If this is the case, operators would be wise to continue this trend and prioritise growth away from an increasingly competitive London market.”