924 restaurants have closed in Britain in the year to June 2019, with an average of 18 net closures per week, yet new figures have also revealed some “bright spots” in the industry.
According to the market growth monitor published by CGA and AlixPartners, British restaurants have diminished in number for the sixth quarter in a row.
The research states that independent restaurants have proven the most susceptible to closures, with group-owned sites proving “more resilient” despite some “major brand failures”, including the likes of Jamie Oliver’s restaurant empire which went into administration in May.
Isolating group-owned eateries, defined as businesses with more than one site, the analysts found that there were fewer closures (numbers were down 1.2%), reflecting the fact that new sites continue to open.
Over the past five years, the number of licensed sites, including restaurants, bars and pubs, has reduced by 5.3% to total 116,880 in June 2019. The report noted that the number of licensed closures was fairly even across England, Wales and Scotland, however, in terms of food-led businesses, the south of England witnessed a higher drop owing to “the saturation of restaurants”.
Italian, Indian and Chinese restaurants witnessed the most closures, however in the past five years, the number of Middle Eastern, Turkish and Caribbean venues has risen by over 60% while the quantity of vegetarian restaurants has increased by over a third in just a year.
Karl Chessell, business unit director for food and retail at CGA, said that the “more market contract could follow”.
Chessell added: “These are turbulent times for the restaurant, pub and bar sectors. As our new research shows, conditions are especially tough for independents, leased pubs and Italian restaurant operators. But while licensed sites are clearly in overall decline, things may not be quite as bleak as recent media commentary has suggested.
“You don’t have to look too far to find bright spots in the market. The emergence of dynamic young restaurant brands, the soaring popularity of certain cuisines and the revival of managed pubs in many parts of the country all provide grounds for optimism, and operators that can respond nimbly to shifting consumer tastes have a lot to look forward to.”
The number of drink-led pubs has decreased by a quarter in the five years to June 2019 to total just under 13,000 as many pub operators boost their food offerings and switch to managed sites.
Graeme Smith, managing director of AlixPartners, echoed his optimism.
“The rapid growth of restaurants focused on certain cuisine types highlights how they can quickly find favour in response to the fast-changing tastes of British diners.The Asian-led part of the restaurant market is of particular interest to investors. It is popular with consumers and there is a comparative lack of chains with national scale, making it ripe for further M&A activity”, he said.
“We would expect to see private equity be increasingly active in this segment of the market, in response to this consumer-led demand. However, overall market pressures can still result in valuations and terms falling short of sellers’ expectations. This was shown by the owners of Thai restaurant brand Giggling Squid choosing not to sell at the current time after its recent marketing process.”
High profile closures to hit London in the past year include Londrino, The Providores, Fera at Claridge’s, Gazelle and Social Wine and Tapas. However, restaurants continue to open with Jonny Lake, the former head chef of Heston Blumenthal’s The Fat Duck, and sommelier Isa Bal taking over the former Londrino site; Irish chef Richard Corrigan taking on the former site of Irish restaurant Nuala in London’s Old Street; and Gymkhana owners Jyotin, Karam and Sunaina Sethi opening a gastropub in Fitzrovia on the former site of The George on Great Portland Street.