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Restaurant numbers fall 2% in a year

Published:  06 December, 2018

UK restaurants are on the slide, according to the new edition of the Market Growth Monitor from CGA and AlixPartners.

It says 10 restaurants are closing every week, equivalent to 2%, over the year to September 2018.

Family-owned Chinese, Indian and Italian restaurants have taken the biggest hit, though some multi-site groups, particularly small and medium-sized, continue to grow.

Pubs and bars have been closing faster than restaurants, with numbers tumbling 11.3% in the past five years - the equivalent of 24 every week. The rate of closure is higher in rural areas of Britain (3.6%) than on high streets (2.6%). The North of England fared better than the South, experiencing a 2.8% fall in licensed premises compared with a decline of 4.0% in the south.

However, the research also shows pubs and bars with a strong drinks offer received a boost thanks to the heatwave and England’s progress during the World Cup.

“The eating out sector has been one of the UK economy’s biggest success stories of the past decade, with casual-dining brands growing at a phenomenal rate,” said CGA vice president Peter Martin. "But as our latest Market Growth Monitor shows, there are clearly limits to the country’s capacity. We have seen a steady flow of pub and bar closures for many years now, but the restaurant sector is now going through its own clear out.”

He added the “bulk of closures are from independents, while managed groups remain in growth and this trend is welcome news for some of them, since it eases over-capacity and frees up more property. But these figures are a reminder that all restaurant brands need a well-defined and brilliantly executed offer if they are to succeed in a survival of the fittest in 2019.”

AlixPartners managing director Graeme Smith said: “The figures in this edition of the Market Growth Monitor again illustrate that space remains for ambitious and innovative businesses to expand in areas outside of London. Pockets of growth are still to be found for businesses with a highly differentiated offer and strong focus on the guest experience.”

“As ever, for operators to succeed, they need to show a deep understanding of their local communities and what will work for their customer base. Those who fail to meet these expectations will inevitably fall by the wayside. But for businesses in the sector looking to grow, there remain a multitude of options across both equity and debt and investors continue to see attractive opportunities.”