- UK restaurants have suffered from relatively stagnant demand and higher operational costs, while British pubs appear to be thriving.
- In the last six weeks of 2018, pubs have outperformed the restaurant sector with an increase of like-for-like (lfl) sales of 5.1% whereas restaurants have achieved 2.4% lfl sales.
- Pubs have had a “renaissance” partly driven by the craft beer and premium drinks boom and the experience economy, as well as more flexible operational costs.
Comments & Analysis
- On a macro basis there has been a clear trend toward consumers spending more on leisure and particularly on the experience economy.
- This however does not mean that just “investing in the theme” works. The UK restaurant industry has long suffered from “an excess of casual dining space” – with a considerable amount of “me too product”.
- By comparison, pubs, which although they have faced some tough headwinds over the last few years, have by & large had to work hard to differentiate themselves.
- Theme investing still needs bottom up stock analysis.