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UK restaurant numbers dip for first time in nine years

Published:  25 February, 2019

The number of “casual dining” restaurants has dropped for the first time in nine years as the pressures facing the sector take their toll.

The latest Market Growth Monitor from CGA and AlixPartners says the UK had 5,780 managed restaurants in December 2018, a 27.3% hike on 2013. But the numbers slipped 0.1% from December 2017. It said over-capacity, pressures on property, people and food costs and Brexit were to blame.

“The boom in managed restaurants has been one of the British economy’s great success stories of the past decade,” said CGA vice president Peter Martin. “But after a string of closures and CVAs in the casual dining sector in the last 12 months, the sector is now in net decline—albeit a very modest one. We can expect to see further contraction in numbers over the course of 2019.”

He added that “many casual dining brands continue to thrive, and we are seeing continued strong growth for small and medium sized groups in particular. Operators that have a distinctive offer, execute it brilliantly and select the right sites have a lot to look forward to—but for bigger brands that fail to keep pace with changing consumer habits and demands, the next few years may be a lot more challenging.”

Pubs and bars are doing better according to the report. It said closures of drink-led pubs and bars averaged 3.6 a day in the last five years, but in the last 12 months that rate slowed to 2.2 a day, largely thanks to the heatwave, the World Cup and the “rising popularity” of craft beer, cocktails and artisan spirits.

“The last decade has seen a relentless decline in Britain’s number of pubs and bars, but there are welcome signs that the clear-out of unsustainable sites is starting to ease,” said Martin. “With consumers’ drinking trends working in the sector’s favour, and food-led pub operators facing the same challenges as managed restaurants, the outlook for drinkers’ pubs is better than it has been for a long time.”

AlixPartners managing director Graeme Smith said: “The more positive outlook for pubs and bars is reflective of the buoyant M&A activity in the sector. Trade and private equity buyers are turning their gaze to pub and bar assets. This reflects not only the saturation of certain parts of the restaurant market, but also the combination of reduced supply and the continued rise of quality wet-led pub and bar operators. These factors have been driving strong performance in a challenging environment.”