Weather puts dampener on November sales

The figures come from the monthly Coffer Peach Business Tracker, run in partnership with KPMG, UBS and the Coffer Group, which monitors performance across the UK eating and drinking-out sector.

“It looks like the blame rests squarely with that old enemy, the weather. It was the wettest November since 1914, according to the Met Office,” said Peter Martin of Peach Factory, which produces the Business Tracker.

The good news, he said, was that like-for-likes still stayed in positive territory – making November the 8th consecutive month of positive like-for-likes for the Business Tracker group.

The Tracker collects and collates sales data from 15 major companies to provide an aggregated market figure. Operators involved include leading managed pub chains Mitchells & Butlers, Whitbread and Punch Pub Co and leading casual dining restaurant groups Gondola, Pizza Hut and Tragus.

Added Martin: “It is a reminder of the impact that adverse weather across the country can have on the eating and drinking-out market, particularly in the current fragile climate.”

Overall, month-on-month sales were down –7.4% against the previous month of October, which had seen a +5.5% increase on September. According to the Met Office, almost all parts of Britain recorded well above average rainfall in November, with many having well over twice the normal amount. Southern England as well as the North West and southern Scotland were worst affected.

”Despite the positive signs in October, November proves that the market can’t take anything for granted and has to keep working hard at attracting customers out of their homes,” said Martin.

The big, and largely branded, groups continue to grow total sales, underlining the fact that they have been cementing their position in the marketplace. Total year-on-year sales for the sample as a whole were up +3.5%, on the back of a +5.7% increase in October and +5.2% in September.

The aggregated results for November 2009 are:
Like-for-like sales change (against same month last year): +1.3%
Total year-on-year sales change: +3.5%
Monthly sales change (against October 2009): -7.4%

Richard Hathaway, head of Travel, Leisure and Tourism at KPMG, commented: "While it could simply be a pre-Christmas lull, November’s fall in sales illustrates even the larger branded outlets are not immune to the impacts of poor weather and reduced consumer footfall.

"No doubt Christmas will provide a much needed boost for the whole sector, but it also heralds the return of the 17.5 percent VAT rate bringing its own dilemmas - whether to pass on the increase to customers or absorb the cost to keep prices lower.

"While all restaurants and bars will be relieved that the Chancellor did not announce a further VAT increase in the pre-budget report this week, it could be a temporary reprieve. Further increases cannot be ruled out, as a way of reducing the budget deficit regardless of which party wins the upcoming election."

David Coffer, chairman of the Coffer Group, said: “These like for like sales figures are against relatively weak comparables last year. They demonstrate that the hospitality sector in common with the rest of the economy is struggling to recover. Although most expect to see an extremely slow recovery in trading there is a ‘feel-good’ factor at the ‘coal face’ of the industry which may well prove the cynics wrong.”

Jonathan Leinster, head of European leisure and tobacco research, at UBS Investment Bank, added: “We agree that much of the slower growth can be explained by the weather: September and October were markedly warmer and sunnier than the year before, but then the weather became much rainier part way through November.

“The November results are not inconsistent with what has already been announced by managed pub operators. In some respects the recent spate of poor weather has taken the shine off trading that has compared well against a very weak run-up to Christmas in 2008. We do have concerns about profit growth from January when VAT will increase, and about sales growth once the comparisons become more difficult, generally from March onward.”

The Coffer Peach Business Tracker is powered by Demographix.