Christie & Co’s team of specialist restaurant agents, valuers and consultants are highly active across the UK. Our corporate head office is based in London, and supported by a network of 15 regional offices throughout the UK, giving us an intimate knowledge of every local market.
Market overview - The high street
While the restaurant market featured heavily in the news during 2018, independent and smaller operators may have cause to be cautiously optimistic as we enter 2019. Nando’s and Wagamama are prime examples of operators who continue to succeed despite high street casualties, having established a unique signature offering that has withstood the test of time with its target audience. However, we expect at least three larger corporate operators will resort to CVAs in the first half of 2019, and this number could double during the rest of 2019 if consumer confidence does not improve. As operators are more cautious about entering or remaining in secondary and tertiary markets, independent and smaller operators are able to benefit from the emergence of better deals in the face of reduced competition.
The popularity of new concepts has seen street food markets, pop ups and box parks all grow. Funding for restaurants is still forthcoming despite the more negative headlines in 2018, especially from private investors, crowdfunding and emerging challenger banks, all eager to back the next trend. While street food is a great source of food innovation, changes on the high street are mainly driven by technology and customer experience, as the growing demand for “Grab & Go” illustrates. The rapid expansion of delivery services is causing concern amongst operators trying to maintain gross profit margins. Most operators have now embraced the web and technology, but utilisation of social media to attract customers and promote the business is still patchy.
Wage costs continue to rise, putting pressure on operators, although rents are set to stabilise, and may even reduce significantly in many areas. Operators continue to invest heavily in the fit out of their space, and operators will need to strike a balance between attempting to absorb costs, and passing costs on to the consumer.
Fourth Analytics reported in June 2018 that EU nationals compose 40% of the UK’s hospitality workforce, pressuring operators to become less dependent on key roles that tend to be filled by migrants, such as chefs, as the influx of labour from overseas slows. There has also been a drive to encourage UK residents into the sector, which could be achieved through increased wages, apprenticeship schemes, and clear career development. Inflation and import costs will depend on the deal that is (or is not) agreed, and could go either way.
Outlook for 2019
Further causalities of high street restaurant brands are expected in the first half of 2019, although we expect to see growth in the number of independent, multi-site operators as landlords seek alternative tenants to occupy vacant units. Competition in the delivery market will heat up, with increasing benefits for restaurants.
For further information on any aspect of the current casual dining and restaurant sector, including how to get the best price for your business, speak to a member of our restaurant team or contact Senior Director, Simon Chaplin or Jamie Harvie-Austin