Trading Tough For UK Pubs, Restaurants - Study

Trading remains tough for pubs and restaurants across the U.K., as economic weakness, below-inflation pay rises and unemployment crimp consumer spending in the country, according a study released Tuesday.

The Coffer Peach Business Tracker reported that comparable sales in February fell 3.7%, a more rapid decline than the 2.1% fall recorded in January. The tracker monitors trends in the eating and drinking-out market by collecting monthly performance data from 23 companies, including Whitbread PLC (WTB.LN), Mitchells & Butlers PLC (MAB.LN), Spirit Pub Co. PLC (SPRT.LN) and Marston's PLC (MARS.LN).

Total sales rose a modest 0.6% from a year earlier, and 8.4% compared with the previous month.

Analyst Peter Martin of Peach Factory, a market intelligence group that produces the report in partnership with KPMG, UBS AG (UBS) and investment advisory service The Coffer Group, called the figures "disappointing."

"Over the past two years the informal eating and drinking-out market has generally kept its head above water despite everything the economy has thrown at it," he said.

The figures may indicate "a prolonged hangover after bumper trading over Christmas and the New Year," or the onset of a new spending squeeze, he said.

The tracker recorded comparable sales growth of 9.9% in December, with total sales up 14%.

"The market will do well to remain cautious, but also focused on giving customers, who may be looking for something new, a compelling reason to go out.

"We are still predicting another essentially flat trading year," Martin said.

Jonathan Leinster, European leisure research analyst at UBS, said: "Trading across the sector appears to have worsened, after a strong December."

"Concerns over U.K. consumer spending are not new, but are likely to linger given the weakness reported today."

-By Simon Zekaria, Dow Jones Newswires; [phone]; [e-mail]