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Hospitality sales flat in January as consumer spending squeezed

Published:  15 February, 2024

Britain’s leading hospitality groups generated like-for-like sales growth of just 0.1% in January according to CGA.

The flat start to the year indicates pressure on consumers’ spending after a bumper festive season that saw the sales finish 8.8% ahead in December 2023. Trading was further constrained by Dry January, poor weather and more rail strikes.

The figures revealed a like-for-like sales growth of 0.9% for restaurants in January, while pubs’ trading finished 1.5% ahead. After strong growth in December, bars suffered a 13.6% drop in January sales, while the on-the-go segment was 1.1% behind.

Trading patterns were even across the country – sales within the M25 in January were 0.7% up on last year, while sales outside were flat (0%).

Karl Chessell, director of hospitality operators and food, EMEA at CGA by NIQ, said: “After spending freely in the run-up to Christmas, consumers were clearly watching their outgoings very carefully in January. 

“It is a reminder that while people remain eager to eat and drink out when they can, rising costs continue to limit discretionary spending. With hospitality operators’ margins also still squeezed by inflation, the sector needs sustained government support on taxes and other issues if it is to unleash its full potential to invest and create jobs.”

The news comes as the UK finally tipped into recession. According to the Office for National Statistics (ONS), gross domestic product (GDP) fell by 0.3% in the fourth quarter, following a decline of 0.1% in the previous three months.

It means that the economy entered a technical recession, as defined by two or more quarters in a row of falling GDP. Not since the first half of 2020 has the UK been in recession, when the economy plunged during the Covid lockdown.

Kate Nicholls, chief executive of UKHospitality, said: “The economy officially entering a technical recession is hugely concerning. Consumer confidence has already taken a huge hit over the past year as the cost-of-living crisis bites and today’s news will dent it even further.

“That will be a big worry for hospitality businesses up and down the country, as they need support from consumers more than ever. 

“As we head towards the Budget, I’d urge the chancellor to look to hospitality as a sector that has a proven track record of driving growth and stimulating demand in the economy.”