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 - good opportunities for sustainable growth
The restaurant sector is a victim of its own success. Over the past three years an estimated 3,000 new businesses have opened their doors, driven by excellent growth in the number of diners, particularly millennials, who are comfortable spending a larger share of their disposable income on eating out. These consumers are more concerned with having a unique experience than maintaining loyalty to a particular brand, and eat out often, albeit spending less per visit. The effects of this can be seen through the number of newcomers present in the booming fast-casual and “grab and go” markets in particular.
Whilst the breadth of choice available for consumers is truly staggering, the enhanced level of competition has created challenges for some, and even led to the demise of a number of chains, resulting in a surge of sites coming to market, causing values to temporarily plateau.
At the same time, delivery services are proving a stubborn disruptor, with many restaurants now addicted to the additional sales that these channels provide. This is in spite of problems catering for the additional demand during peak times, or with fare that does not travel well. A number of businesses are now investing heavily in this area, including in the development of additional standalone kitchens exclusively to cater for delivery demand.
Innovation is critical in the sector. Technology certainly has its part to play, as does understanding consumer demand for specialist diets (including vegan and gluten free), healthier lifestyles and sustainability.
The most crucial ingredient, however, remains to be great food, served in a high-quality setting that places the customer at its centre. This will always keep diners coming back for more.
Outlook for 2018
We continue to see plenty of activity across the country, despite talk of saturation in some markets. In 2018 we are likely to see some estate rationalisation from the larger players, with further casualties amongst the small and medium sized brands and operators, particularly in the mid-market segment. We expect growth in the fast casual and high-end casual sectors to continue.
As such, there is plenty of opportunity for newcomers and smaller, agile operators to take up some of the prime sites left open by retreating groups and fill them with their own innovative concepts. With the heat starting to come out of the rental sector, this can increasingly be achieved at a sensible level of rent, as more and more landlords become anxious over the challenges posed by empty retail units and being keen to avoid contributing to business failure.