The latest CGA RSM Hospitality Business Tracker revealed firms saw 0.6% year-on-year sales growth in October, marking the fourth month of below-inflation figures and the lowest since April this year.
Figures released by the Office for National Statistics (ONS) today (Wednesday 20 November) revealed the headline rate of inflation hit 2.3% in the 12 months to October, up from 1.7% in September and marking the highest figure in six months.
Attributed to “fragile consumer confidence” amid ongoing cost pressures as well as poor weather for much of the month, the flattening figures raise “concerns” for trading over the crucial Christmas period on top of tax burdens as set out in the Budget, the CGA & RSM report said.
RSM head of leisure and hospitality Saxon Moseley added: “October’s disappointing results show the industry essentially stalled last month, with poor weather and concerns about potential tax rises in the autumn Budget putting consumers off from venturing out.
Fiscal challenges
“In hindsight, many of those fears were misplaced, as the Budget did not directly increase taxes on consumers.
“However, the proposed fiscal changes are expected to have a severe impact on the hospitality industry, with increases in National Minimum Wage, employers’ NIC and business rates all set to reduce margins and push some businesses into the red.
“Looking ahead, operators will have little choice but to raise prices, although without a significant boost in consumer confidence, there is little guarantee this will translate into positive like-for-like sales.”
October sales were “mitigated” to some extent by Halloween, the data showed. However, as it fell on a Thursday this year, many celebrations took place the following weekend, contributing to a bright start for firms in November.
Total sales growth in October, including new venues opened during the last 12 month, was slightly better at 2.4%.
Meanwhile managed pubs achieved like-for-like growth of 1.5%, but it was a challenging month for restaurants, where sales were clipped by 0.1%. Bar sales fell 4.2% below October 2023.
Little encouragement
On-the-go groups performed best of the major segments with 4.3% growth—possibly the result of some consumers trading down their spending from meals out.
For the third month in a row, growth in London lagged the rest of the country. Managed groups’ sales inside the M25 were down by 0.1% year-on-year, while venues further afield achieved 0.9% growth.
CGA by NIQ director of hospitality operators and food EMEA Karl Chessell said: “It’s clearly been a tough autumn for many restaurants, pubs and bars, and real-terms growth remains elusive.
“Conditions haven’t been helped by the Budget, which is imposing significant new costs on businesses via National Insurance contributions while giving consumers little encouragement on spending.
“It is going to be a make-or-break Christmas for some operators, and while underlying demand for hospitality remains good, trading conditions are likely to remain very difficult well into 2025.”
