Like-for-like sales across the sector fell 0.4% in May with few bright spots highlighted by the Coffer Peach Tracker.
Groups trading in London did slightly better than their regional counterparts, with like-for-likes up 0.1% compared to a 0.6% drop outside the M25.
Restaurant groups saw flat like-for-likes compared to a 0.7% decline across managed pubs, with drink-led businesses generally doing better than food-led operations, mainly due to the weather.
“May’s numbers will be a disappointment for operators as they come after a 4.4% increase in April, but the truth is we are seeing an essentially flat market,” said Peter Martin, vice president of CGA Peach, which produces the Tracker in partnership with Coffer Group and RSM.
“Eating and drinking out has proved resilient, with the public continuing to go out even through the last downturn. Our BrandTrack consumer surveys show frequency of both eating and drinking out-of-home staying fairly constant over recent years.
“The problem hasn’t been so much consumer confidence but business confidence, with mounting cost pressures on operators from rising wages, business rates and food costs. The latest fall in sterling following the general election result will only add to that,” he said.
Total sales growth in May among the 35 companies in the Tracker cohort was 2.4%, reflecting the continuing if more subdued effect of new openings over the year. The underlying annual sales trend shows sector like-for-likes running at 1.3% ahead for the 12 months to the end of May.
Mark Sheehan, managing director of Coffer Corporate Leisure, said: “Like-for-likes in May were below inflation. Pre-election jitters will likely have weighed on consumer confidence. Worries over the uncertainty created by a hung parliament, a fraught Brexit process and fears surrounding terrorist attacks could deter some consumers, particularly from visiting city centre restaurants, although stay-cations may offset this in some parts of the country. A weak pound will also help. There are continued headwinds in the eating-out market and despite these numbers the pub sector is generally trading stronger.”
Paul Newman, head of leisure and hospitality at RSM, added: “While spending on eating and drinking out continues to be prioritised, the growth in pop-up dining and number of new concepts increases the need for established operators to refresh and innovate their offering just to maintain market share. With inflation continuing to rise and wage growth stagnating, consumers are starting to feel the pinch. We expect these factors to lead to more consolidation in the sector.”
Simon French, of Cenkos, said: “This is a disappointing performance given the positive London hotel data (May record Revpar performance) which showed demand up 5.0% and suggests weakening domestic confidence perhaps reflecting the decline in real household disposable income which started in April. As we wrote yesterday, passing on high CPI and National Living Wage linked price increases into a backdrop of declining real disposable income and faltering consumer demand will be infinitely more challenging than small increases into rising real disposable incomes over the last 12 months.”
