Scotland’s on-trade is showing signs of recovery with 49% of respondents reporting growth in their business – versus 39% in the last survey – and 74% either stable or in growth versus the previous figure of 58%.
The figures are revealed in the SLTA’s Summer 2018 On-trade Market Review, sponsored by KPMG UK and containing key insights on Scotland’s burgeoning food and drink sector.
Colin Wilkinson, managing director of the SLTA, said: “Our survey is an indicator of the key challenges facing the wide range of small-to-large businesses which trade within the wider hospitality sector, covering pubs, clubs and hotel groups.”
While welcoming the findings, Wilkinson pointed to concerns, particularly in rural outlets, where pubs are often vital to the community, and/or key employers. “Within rural/countryside pubs, over a third (36%) are still in decline,” he said.
“Government legislation is still a big concern, whether this is national or local legislation, with 63% highlighting these areas as big concerns, alongside business rates and increasing labour costs.”
Alistair McAlinden, head of Hospitality & Leisure for KPMG in Scotland, commented: “It is positive to see that almost 50% of respondents have reported growth during 2018 – an improvement on the prior year.
“While out-of-town trading conditions remain challenging, declining performance for rural operators appears to be abating. Operators of multiple outlets are being afforded enhanced protection against the headwinds which continue to affect the sector, albeit food-led businesses are faring less well.
“This is perhaps unsurprising against the backdrop of well-publicised challenges continuing to affect the casual dining market across the UK. Consumer tastes remain critical to this disruption, with cash-conscious customers shunning more familiar fare in what remains an extremely busy sub-sector.”
National and local legislation, specifically around rates, McAlinden added, remain key concerns for all operators, together with labour costs.
“While certain locations and sub-sectors are faring better than others, it is clear that cautious optimism is building within the sector,” he pointed out. “With the realities of Brexit unknown, cost control, flexibility and relevance are crucial if operators are to further capitalise on the more positive trends experienced over recent months.”
According to the report, the long-term outlook is “reasonably optimistic” with 83% expecting growth or stability for the rest of the year versus actual year to date growth/stability of 74%.
It stated: “As we may anticipate, rural operators are less optimistic, but the trends are becoming more positive and 71% expect moderate growth or stability.”
The report is based upon quantitative research from 600 retailers covering the length and breadth of the country, and is supported by many of the major chains and the SLTA’s partners in the Scottish Bartenders Network.
Wilkinson added: “The SLTA has been the voice of the licensed trade in Scotland since 1880, and this report demonstrates our ambition for retailers to work with manufacturers and brand owners by sharing the frontline key insights which our retailers are uniquely able to provide to manufacturers and wholesalers.”