High inflation dents margins for hospitality trade despite strong February

High inflation is denting margins for the recovering hospitality industry, the latest Coffer CGA Business Tracker has warned, even as restaurants saw impressive growth on pre-pandemic levels.

The lifting of Covid restrictions has undoubtedly helped Britain’s managed restaurant, pub and bar groups to raise sales above pre-pandemic levels in February, with saw like-for-like sales for managed restaurant up 9% on February 2019, while bars saw like-for-like sales of 7%. Although delivery and late night bars were buoyant, pubs had a tough month, finishing 1% on the pre-COVID-19 levels of February 2019.

Trading is also struggling in London, with managed groups’ like-for-like sales inside the M25 in February down 4% below February 2019, compared to growth of 6% outside the M25 – although the return of overseas tourists would hopefully have a “marked and positive effect”, David Coffer of the Coffer Group said.

“The market is striving to surge ahead but is held back by external pressures,” he said.

The CGA tracker noted that although momentum had built from January, when comparative sales were 1% down, and a very challenging December (down 11% on December 2019) due to the emergence of the Omicron variant, high inflation continued to make real-terms growth “elusive”.

Inflationary pressures – which the Consumer Price Index has running at 5% to 6% – was depressing the numbers, it said.

Karl Chessell. director of hospitality operators and food, EMEA at CGA noted that in addition to fast-rising costs, the cost-of-living crisis was likely to dent consumer spending as the year goes on. “Some businesses remain extremely vulnerable, and there’s a powerful case for government support on tax and other issues to help them fuel the UK’s post-COVID-19 economic recovery,” he said.