Britain’s pub and restaurant groups saw same-store sales slip in May, with collective like-for-like trading down 1.4% on the same month last year according to latest figures from the Coffer Peach Business Tracker.

The 1.4% like-for-like decline in sales represents the biggest one-month decrease in well over two years and follows an 0.8% drop in April.

Overall, casual dining chains suffered most, with collective like-for-likes down 5.6% on last May, while pub groups reported a 1% increase in same store sales for the month, driven mainly by drink-led outlets which were up 4.5%.

London had a better month than the rest of the country, with like-for-likes up 0.9%, and London pubs and bars up 3.8%, against a 2.2% drop in same-store sales outside the M25.

Paul Newman, head of leisure and hospitality at RSM, said: “In an ever more crowded market place, our conversations with operators are now shifting in focus from estate growth and rollout to driving gross margins and controlling cost inflation with major concerns around rent reviews, the NLW and next year’s rating revaluation.”

“The later school half-term break, which this year fell in June against May last year, appears to have been a major factor – demonstrating how important the family market still is to the sector,” said Peter Martin, vice president of CGA Peach.

“The distortion caused by the school holiday shift will work its way out next month, and operators will be encouraged by early indications of bumper sales in the first week of June, which also enjoyed good weather.

“However, there will be caution too, as May’s performance follows a drop in sales in April and a generally flat start to the year overall – and the underlying annual trend shows sector like-for-likes running at just 0.9% up for the 12 months to the end of May.”

Total sales for the month among the 31 companies in the Tracker cohort were up 2.2% on 2015, reflecting the fact that groups are still opening new sites, if at a slower rate than previously.

Mark Sheehan, managing director at Coffer Corporate Leisure, said: “The pub and restaurant sector has been dealt an undeniable blow by declining consumer confidence over the course of this year. For the most part, this has stemmed from general economic fears that have been worsened by the impending EU Referendum next week. With each of the home nations represented in Euro 2016, excepting Scotland, we hope to see an upturn in next month’s data, but overall, restaurant operators are undeniably struggling while pub companies are experiencing strong like-for-like growth.

“Looking further ahead, a ‘Remain’ vote in the referendum on 23 June would give a much needed boost of confidence for the sector while a ‘Leave’ vote would pile further pressure on the pound and is likely to exacerbate the weaknesses in consumer behaviour seen already this year. Notwithstanding this, a Brexit would also create a negative impact on hospitality businesses’ employment, commercial contracts and our tourism levels.”

Jarrod Castle, leisure analyst at UBS Investment Research, noted that the 12-month moving average like-for-like growth rate was falling, coming in at 0.8% in May, compared to 1.0% in April and 1.2% in March. “The moving average inside the M25 ended at 1.1% while outside it fell to 0.7%,” he added.