Pubs and restaurants are in the “sweet spot” for future growth, with value conscious consumers increasingly favouring affordable treats, according to Deutsche Bank analyst Geof Collyer.

However, he said key concerns for the sector included the race for space with supply growth at its highest for six years. Collyer said the impact of the National Living Wage remained a concern there were several mitigating factors including the drop in corporation tax, price rises and improved retention rates.

He said: “We believe pubs and restaurants are poised for structural long-term growth as they cash in on increasing consumer spending trends.”

He said the sector’s freehold property bias meant less pressure on driving like-for-like growth and said there was significant scope for growth in the eating out market. He said most groups were current in their best shape – both financially and operationally – for 20 years.

In terms of sales growth, he said the Coffer Peach Business Tracker showed the year to date had seen new supply grow by 4 percentage points above like-for-like growth – the highest growth since the Tracker began in 2009.

He pointed out that trading remains seasonably volatile die to the sensitivity of the eating out market to swings in public and school holidays and special events. He said around one-third of like-for-like growth was still being driven by weather.

Collyer said half of the private groups in the Coffer Peach Tracker had been acquired and/or refinanced in the past year and it was these groups creating the space, alongside US Quick Service Restaurants starting up in the UK, and driving up rents.