​Robust Festive Growth in UK Hospitality Sector Amid Economic Challenges

​Robust Festive Growth in UK Hospitality Sector Amid Economic Challenges

Posted by Emma on 18th Jan 2024

In December 2023, the UK hospitality sector, comprising pubs, bars, and restaurants, witnessed a substantial year-on-year sales growth of 8.8%. This finding, from the latest CGA RSM Hospitality Business Tracker, underscores a robust performance during the festive season despite the broader economic challenges.

Consistent Growth Across the Year

The CGA RSM Hospitality Business Tracker collated data from approximately 100 leading managed groups, including Greene King, Giggling Squid, and Prezzo, indicating consistent like-for-like growth throughout 2023. December's performance marked a significant increase from the 4% growth in November, with pubs leading the surge at 9.6%.

Sector-Wide Uplift

The uplift was sector-wide: restaurants reported an 8.3% increase, while bars, recovering from previous negative trends, registered a 5.6% growth. London's hospitality businesses outperformed, achieving an 11.2% increase in sales, continuing their dominance in the UK market.

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The Bigger Picture: Economic and Operational Challenges

Karl Chessell, Director of Hospitality Operators and Food, EMEA at CGA by NIQ, highlighted the festive season's appeal but cautioned about ongoing cost and labour challenges. Paul Newman, Head of Leisure and Hospitality at RSM UK, echoed this sentiment, pointing out that the festive boom does not mitigate the sector's broader struggles. Smaller independents face particular difficulties with rising borrowing costs, energy bills, and ingredient prices.

A Critical First Quarter

The year's first quarter is particularly challenging for the hospitality sector, with lower footfall, quarterly rent payments, and higher VAT receipts. These factors have been implicated in the recent closure of several notable restaurants.

Outlook for 2024

As the sector moves into 2024, focusing on fundamental aspects of hospitality is crucial for sustained real-terms growth. The impending increases in national living wages and business rates starting in April compound the challenges, potentially making some businesses unviable.

Conclusion - The UK hospitality sector's strong performance in December 2023 is a testament to its resilience and the enduring appeal of pubs, bars, and restaurants. However, the industry faces complex economic and operational challenges that demand strategic focus and adaptability.

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