Q3 hospitality industry results
As usual, we’re back with a round-up of the last three months of restaurant sales trends! To compile these results we look at several hundred locations in London and the South-East of England to compare like-for-like sales, transactions and average transaction value (ATV) versus last year.
A summer of sport
Sales in July and August were given a boost by the sports calendar which saw the Euros and the Olympics fall this summer. Sales during the Olympic weeks were up across the board as we all suddenly became experts in powerlifting, handball and track cycling.
Questionable weather alternating between heatwaves and autumnal put a damper on what could have been though, with July transactions falling by 2.5% versus last year and sales only increasing by 1.6%. Thankfully, August and its Bank Holiday weekend fared well with transactions up 1.5% and sales increasing by 2.7%.
ATV
Average transaction value in July outpaced CPI (2.8% vs 2.2%) but didn’t quite keep up with FPI (3.1%). Businesses will be feeling the strain even more as August’s ATV only saw an increase of 1.3% vs last year, much lower than both CPI (2.2%) and FPI (2.8%). September at least saw good ATV growth at 2.7% .
A less-than-ideal September
September saw our first drop in like-for-like sales in a long time. Transactions were also down. Poor weather and constricted wallets after a big summer of events could be to blame. There is general optimism in the industry though that Q4 will see some of the best results since Covid.
Looking ahead
The Tips Act
The Employment (Allocation of Tips) Act came into effect on October 1st. Staff must now be given 100% of tips. Previously, tips were handled at the business’s discretion with many removing the cost of processing from the tip pool.
Now, businesses will have to eat that cost themselves shortly after the National Living Wage was raised. While this bill is fantastic for clarity and for those working in the industry, prices will likely need to go up and margins will need to grow to cover these new costs.
The Budget
The Autumn Budget is the topic on everyone’s mind at the moment. Business rates relief is set to end at the end of March 2025 which will have an outsize impact on hospitality businesses that already take on a disproportionate share of the total rates.
With the increase to the National Living Wage in April and another suspected hike next tax year – businesses will be hoping for a reduction in employer National Insurance contributions.
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