Costs crisis wipes out hospitality growth despite October sales rise
London’s hospitality sector continued its growth with sales up 6.4%.
Sales in October 2022 for restaurants, pubs and bars rose by 1.5% when compared with October 2022, according to the latest data from CGA.
Sales were also 4.3% higher than October 2019. This is the ninth month in a row that sales have been higher than pre-Covid comparatives. However, with inflation now over 11% real terms sales are significantly behind 2021 and 2019.
Pubs were the strongest of the three sectors with year-on-year sales growth of 6.4%. On the other hand like for like sales were down in both restaurants and bars by 3.6% and 12.7% respectively when compared with October 2021.
London’s hospitality sector continued its growth with sales up 6.4%. CGA puts this down to an increase of tourism and workers steadily returning. In contrast sales outside of the capital were only up 0.3%
Karl Chessell, director – hospitality operators and food, EMEA at CGA, said: “It’s been encouraging to see hospitality sales running ahead of pre-COVID levels for nearly all of 2022. But after adjusting for the effect of higher prices it’s clear that footfall is down, and inflation means sales are even further behind in real terms.
Chessell added: “Sustained increases in energy, food, property and other costs are putting a very tight squeeze on both consumers’ discretionary spending and operators’ profits, especially in restaurants. The sector must now pin hopes on a strong festive season to make up some of the growth that has been lost over a variety of unprecedented challenges.”
Paul Newman, head of leisure and hospitality at RSM UK, said: “October’s shift to a pint and a bite in a pub over a more expensive restaurant meal is a clear signal that demand for out-of-home socialising remains strong, but that belts are being tightened in response to the cost-of-living crisis.
Newman added: “With any uplift in sales cannibalised by rising costs, margins are being squeezed and the entire industry is now geared towards maximising Christmas trade. With last year’s festivities severely impacted by Omicron, 2022 needs to deliver if the sector is to avoid a swathe of closures in the New Year.”
