Dry January hits bar sales hard

Poor weather, rail strikes and drinkers avoiding alcohol led to a double-digit sales drop for Britain’s bar chains last month.

The CGA RSM Hospitality Business Tracker reported that sales for Britain’s hospitality groups grew by just 0.6% last month, compared with January 2023.

Bar chains struggled the most as the only hospitality segment to see sales decline in January (down by 13.6%), following growth of 5.6% in December.

Pub groups reported a sales increase of 1.5%, while managed restaurants were up slightly by 0.8%.

Sales for Britain’s hospitality groups located within the M25 in January grew by 0.7%, while sales outside of the M25 were exactly flat.

The tracker also reported that on-the-go (takeaway) sales dropped by 1.1% in January.

CGA said sales were impacted by Dry January resolutions and train strikes, with UK Hospitality having previously predicted a loss of almost £350 million (US$442m) for the sector due to the industrial action.

Karl Chessell, director – hospitality operators and food, Europe, Middle East and Africa 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 CGA Tracker covered bar groups including Adventure Bars, Beds and Bars, Revolution, Simmons, Snug Bar, Rekom and The Alchemist.

Saxon Moseley, leisure and hospitality partner at RSM UK, noted consumers were seeking out experiences as they limited their spending.

“Given the impact of successive storms Henk, Isha and Jocelyn that left many Brits sheltering at home in January alongside acute competition for scarce discretionary spending, these results demonstrate the appetite of consumers who continue to favour experiences over ‘things’,” Moseley added.

“With ongoing cost pressures having already accounted for some recent high-profile restaurant closures, operators will be hoping that the continued fall in inflation, the prospect of interest rate cuts in the spring and the Six Nations rugby will tempt consumers to venture out and support their local establishments.”

The 10.1% spirits tax rise last August has been cited as a leading cause for higher-than-expected inflation in the UK in January.

Meanwhile, new data showed nearly a third of nightclubs have closed since March 2020.

Spirits sales lagged behind all other drinks categories in Britain’s on-trade in December.