Pubs and Restaurants Reel as January Spending Slump Bites

In a stark reversal of December’s festive buoyancy, Britain’s pubs, bars, and restaurants faced a sobering start to 2025. Like-for-like sales across these establishments plummeted by 1.3% in January compared to the previous year as cautious consumers reined in their discretionary spending following the excesses of the holiday season. The findings, drawn from the CGA RSM Hospitality Business Tracker’s analysis of 113 prominent hospitality businesses—including household names such as Azzurri Group, Giggling Squid, Pizza Express, and San Carlo—paint a troubling picture of an industry struggling to maintain momentum.

The contrast with December’s performance could not be more striking. After a robust 3.2% growth in the final month of 2024, January marked only the second instance of negative trading since early 2022. Total sales edged up by a modest 0.6%, yet this figure languishes well below the UK’s inflation rate of 3%, underscoring the sector’s inability to keep pace with rising costs. Pubs proved somewhat resilient, with like-for-like sales dipping by a mere 0.1%. Restaurants, however, saw a more pronounced decline of 1.1%, while bars bore the brunt of the downturn, suffering a staggering 10.2% drop. The on-the-go market segment, catering to hurried commuters and casual diners, also faltered, with sales falling 4.8%.

Geographically, London emerged as a particular sore spot. Within the M25, like-for-like sales slumped by 1.9% year-on-year, outpacing the 1.1% decline recorded beyond the capital. This disparity suggests that urban consumers, perhaps more exposed to economic headwinds, are tightening their purse strings with greater resolve.

Karl Chessell, Director of Hospitality Operators and Food for EMEA at CGA by NIQ, offered a candid assessment of the situation. “After a happy Christmas for hospitality groups and their suppliers, trading came back down to earth with a bump in January,” he remarked. He pointed to persistent consumer hesitancy as a key driver, noting that while inflation has softened in some areas, the sector continues to grapple with crippling business costs. With energy prices set to rise and the government’s planned adjustments to National Insurance thresholds and rates looming, Chessell warned that the timing could scarcely be worse. “Hospitality’s outlook is positive in the long run,” he conceded, “but it deserves much better support than it is currently getting.”

Saxon Moseley, Head of Leisure and Hospitality at RSM UK, echoed these concerns, highlighting the realisation of fears that consumers would curb discretionary spending. “Negative like-for-like sales across almost all segments of the market, particularly pronounced in London, will sadly be another nail in the coffin for some,” he said. Rising energy and food costs and an impending spike in payroll expenses from April threaten to push already strained operators to the brink. Yet, amidst the gloom, Moseley struck a note of cautious optimism. With real wage growth at its highest in years and interest rates poised to decline further in 2025, he suggested that those businesses able to endure the immediate challenges could find themselves well-placed to capitalise on a more hospitable trading landscape later in the year.

The January slump serves as a stark reminder of the fragility of Britain’s hospitality sector. As consumers retreat from the discretionary indulgences that buoyed December, questions linger over whether the industry can weather the storm—or whether government intervention is needed to prevent a deeper crisis. For now, the clink of glasses has been replaced by the sound of alarm bells ringing out across a sector at a crossroads.