RESEARCH | Staff Reporter, UK

Britain's restaurant numbers drop for the sixth quarter in a row

Italian, Indian and Chinese sectors have recorded the most net closures in the last 12 months.

Britain’s restaurant numbers have fallen for the sixth quarter in a row, with independent operators having borne the brunt of the closures with group-owned restaurants proving more resilient despite some major brand failures, the latest Market Growth Monitor from CGA and AlixPartners has revealed.

The quarterly survey reported a 3.4% drop in restaurant numbers in the 12 months to June 2019, equivalent to an average of around 18 net closures a week. Reduction in numbers for group-owned restaurants was smaller at 1.2%, which they explain as “reflecting the fact that some groups, especially small to medium sized operations, continue to open new sites.”

Looking at cuisine types, the study revealed that the Italian, Indian and Chinese sectors have recorded the most net closures in the last 12 months. Group-owned restaurants specialising in Italian food fell by 3.2% after site closures and some high-profile business restructuring, with the collapse of Jamie’s Italian being “the most prominent casualty.”

“The trend suggests that more market contraction could follow,” CGA business unit director for food and retail Karl Chessell explained.

More vegetarian restaurants
By contrast, CGA research noted that Middle Eastern, Turkish and Caribbean sectors all have at least 60% more restaurants compared to five years ago, whilst number of vegetarian restaurants has increased by more than a third in 12 months.

“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,” AlixPartners managing director Graeme Smith 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.”

Drop in leased pub sites
Across the licensed sector, Britain’s number of premises dropped 2.4% in the 12 months to June 2019, to just under 117,000, with the rate of closures of pubs and bars lower than the market average at 2%. The report also indicates a further drop in leased pub sites, falling by 25% in the five years to June 2019, to under 13,000, which the companies say is a “reflection of moves by major pub companies to switch to directly managed sites and a switch to food.”

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