Our restaurants team works across the breadth of businesses within the industry; from independent through to branded chains and high-end dining, we're able to provide you with an in-depth view of the entire market.
As the economy improves and more discretionary spend is available, the overall value of the restaurant industry continues to grow - underpinned by an increased frequency of eating out. It's estimated that on average in the UK, 40% of an individual's leisure spend is on eating out and 31% of people do so at least once a week. Due to the variety of dining options available, restaurant operators need to compete for every penny.
Consumers demand quality, but they also crave diversity and value, which means there are opportunities for every type of business to increase their market share. Individual asset sales continue at a steady pace; some 82% of Christie & Co’s restaurant sales are on behalf of private vendors and activity has remained steady in 2015. Of the 23,500 restaurants in the UK, 73% are independently operated - most of these independents have survived by adapting their offer to suit the local market and offering a more personal service, and many not be burdened by the high overheads of being located in prime locations, competing with branded restaurants.
The success of regional expansion driven by brands such as Byron and Côte, helped the industry to attract private equity investment in 2013 and an even larger number of private equity players during 2014. The most notable transactions last year saw the break up of two of the largest restaurant groups, Gondola & Tragus. This saw 790 sites change hands for £1.19 billion and involved well known names such as Pizza Express, acquired by new entrants Hony Capital from China, Strada, Zizzi and ASK. This trend continued in 2015 when the successful Las Iguanas chain of 41 sites was bought by the Apollo backed Casual Dining Group for £85m, with further buyers circling brands such as La Tasca and Yo Sushi.
We predict that British brands will continue to target international expansion and we will also see some overseas brands entering the UK market. The complexity and costs added by new EU allergen regulations, requiring restaurateurs to disclose ingredients and provide allergen information to customers, may cause a few headaches. We can expect to see continued private equity interest in the restaurant sector, as well as increasing pressure on margins as a result of red tape, rising “high street” rents and increases in the minimum wage. There will also be potential for consolidation, as a number of brands falter due to these factors.
The ALMR Christie & CO Benchmarking Report
The ALMR Christie & Co Benchmarking Report, the most comprehensive study of its kind in licensed hospitalit, has been launched and benchmarks operating costs, market trends and sector performance.
This is the tenth edition of the report and shows the average costs associated with running a pub at a seven-year high - with payroll costs accounting for almost 30% of turnover. It also underlines the continued evolution of the licensed hospitality sector with food sales now accounting for 32% of revenue.
To view highlights from the report, please use the button below to download the pdf. If you would like to purchase the full report, please contact the ALMR - you can link through to their website using this logo.