Although the new report from Christie & Co suggests that continued growth is expected in the fast casual and high-end casual sectors.
According to the analysis, restaurants are currently a victim of their own success. Over the past three years, an estimated 3,000 new businesses have opened their doors, driven by an increasing number of diners, predominantly millennials and Generation X happy to use their disposable income on eating out.
This has provided a great opportunity for newcomers to grab an increasing slice of the market, leaving established brands fighting for market share and having to review their estates and brands. It has also led to the demise of a number of chains, resulting in a surge of sites coming to market, causing values to stall somewhat.
Under pressure is the £15-plus mid-market casual dining sector, populated by the burger and pizza brigade, while grab-and-go speed dining is booming. At the same time delivery is proving a stubborn disruptor with some restaurants now reporting that delivery accounts for more than 10% of sales. This is an area of the market that is problematic for restaurants struggling to cope with demand at busy times, or for those whose fare does not travel.
The study forecasted that those businesses that embrace technology, particularly social media and dining apps, will be those who perform best. Equally important is to understand consumer demand for healthier food and sustainability. Great food, environment, and service will always keep diners coming back for more.
It noted that only two of the 10 operators with more than 100 sites are still expanding their networks, therefore the sector can expect to see further closures within this group, however, any holes in the high street will be quickly filled by new, smaller brands coming into the market.
Niche brands are also likely to fare better next year with slight growth, whereas for the bulk of the market, just staying flat will be considered a result.
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