Collective like-for-like sales were down 1.8% against the same month in 2018, the Coffer Peach Tracker has revealed.
The tracker collects sales figures from 49 companies across the hospitality industry, including pub groups such as Mitchells & Butlers, Stonegate, Marston’s, Fuller’s and Young’s.
Karl Chessell, director of CGA, which produces the tracker with Coffee Group and RSM, said it was no surprise the first month of the year was quiet.
He added: “After strong trading over the festive season, which saw sector like-for-like sales 4.1% up on 2017, operators will be disappointed there has been no follow through into January – even though the weather and, in particular, the lack of snow early in the month, was better than last year.
“However, it is worth remembering that January is always a relatively quiet month. The first big test of the year for the market is the February half-term holidays then Easter, although this year, Brexit is bringing more anxiety for the industry.”
Negative sales
Pub and restaurant operators saw a negative sales rise during January although pubs did marginally better with collective like-for-like sales down by 1.4% against 2.5% for restaurant chains.
Overall like-for-like trading in London was similar to the rest of the country, down by 1.9% compared to 1.7% outside of the M25.
Outside of the capital, the difference in performance was less stark, with pubs’ like-for-like sales down 1.6% and restaurants by 2%.
Chessell added: “Branded restaurant operators continue to have a tougher time than pubs, despite many closing underperforming sites in the past year, and that is most marked inside the M25 where competition is more intense and consumers are more likely to look for and find somewhere new to eat.”
The future also looks bleak and sales are likely to be slow, according to Davis Coffer Lyons executive director of valuations Trevor Watson.
He said: “The figures are indicative of the malaise affecting consumers in the post-Christmas period. Trading prospects are likely to remain weak, which mirrors statistics for the wider UK economy where there is a clear indication of a slowdown.
“The strongest innovative operators who continue to exceed customer expectations in terms of service and value are trading well as indicated in Christmas trading statements.”
Drink sales
Chessell added: “Despite Dry January, drink sales in pubs held up better than food sales, down 0.7% compared to minus 2% , suggesting underlying food growth in pubs appears to be peaking, as competition and choice in the food-out-of-home increases generally and premiumisation of the drinks sector is stimulating alcohol sales.”
RSM head of leisure and hospitality Paul Newman blamed the downturn in sales on Brexit and diners eating less meat.
He added: “Even if consumers went out to eat and drink in similar numbers, the increased uptake of Veganuary compared to last year reduced spend per head as diners opted for cheaper vegetable/plant-based dishes over meat options.
“Wet-led operators were also hit by the growing influence of Dry January with much of December’s uplift being undone by these disappointing results.
“We expect discretionary spending on eating and drinking out to remain constrained as Brexit uncertainty continues to weigh on consumer sentiment.”