Praying for sunshine

The inclement British summer is prompting serious trading concerns for parts of the eating and drinking-out market. Senior executives at pub companies have intimated that the unseasonably wet conditions is having a far more significant impact on trading than any initial fallout from the recently imposed smoking bans in England and Wales. The impact is compounded by tough year-on-year sales comparisons, given last year’s hot weather and World Cup. Businesses that fair well in the winter months and in poor weather, and tend to report quieter trading at this time of year have reported strong sales. Both Domino’s Pizza UK & Ireland and Luminar Leisure have reported double-digit like-for-like sales growth. The suburban and community pub market – and clearly pubs geared towards summer, with large outside space – are most exposed. One leading leisure analyst told M&C: “It’s a really tricky one. People never want to identify the weather as a factor when things are going well, because it diminishes the efforts of the management, but it is the first reason when things are not so great. “The current weather is certainly unhelpful to the pub market, where a smoking ban has just been introduced and top-line sales growth is slowing.” A string of pub companies, such as JD Wetherspoon, Fuller’s and Young’s, have recently reported slowing like-for-like sales growth. At its recent results announcement, Greene King reported current like-for-like growth of just 1%, described by analysts as a very credible performance. Analysts suggest that if the undesirable weather conditions continue, a string of downbeat trading statements will ensue, possibly accompanied by profit downgrades. The restaurant market is aided by the soft comparisons to last year, when the World Cup and hot snap had a neutral-to-negative impact on eating out. Graham Turner, CEO of Tragus Holdings, says: “It’s helpful for some restaurants, but not for others. We have many that do well in the rain but we also have lots with outside terraces. “The psychology of the feel-good factor is important. When the sun is shining, people tend to feel better and spend more. In its totality, bad weather is not good.” Shares in Enterprise Inns, M&B and Wetherspoon have come under pressure in recent weeks due to concerns over smoking and the weather. There are also concerns over rising interest rates and a mid-market squeeze among consumers that M&B recently spoke of. Wetherspoon will be one of the first to update the market when it releases a trading statement on 7 September, and it could be the first in a string of subdued statements. Let’s hope the sun appears soon, we could really use that feel-good factor.