A host of expert speakers shared insights into finance in the eating and drinking out world at CGA Peach’s exclusive seminar on Thursday (23 June). Here are just ten of the lessons we learned.
1. It’s a market share game
People are still eating out regularly, CGA Peach director Jamie Campbell said in an overview of the market that set the tone for the seminar—but growth is starting to slow. The Coffer Peach Business Tracker shows that like for like sales increased by just 0.9% in the year to May, against a total sales rise of 4.9%. It proves that the bulk of growth is coming from new openings, which is leading to intense competition. “We’re seeing a relative finite amount of spend from consumers—it’s a market share game,” said Campbell. “We’re still in a positive market, but levels of optimism might be dropping.”
2. Investment is strong
Several seminar speakers pointed out that restaurants remains a very lively sector for investments. Barclays relationship manager Bob Silk said businesses had good access to funding now. “Liquidity to entrepreneurs has improved since the financial crash—it’s increasingly a borrower’s market rather than a lender’s one.” Coffer Corporate Leisure managing director Mark Sheehan added: “Leisure is very popular for property investors right now.” But sizeable growth was still challenging for start-ups, added RSM UK associate director Adam Spencer. “We’re still seeing great optimism for entrepreneurs to launch new concepts… but the challenge is moving beyond four or five sites.”
3. Good brands start with good people
Living Ventures co-founder Jeremy Roberts gave a case study of his company’s growth, steered in large part by his fellow founder, the late and sadly missed Tim Bacon. Living Ventures adopts a ‘hub and spoke’ approach, using a strong core to incubate new brands—and great staff and managers are key to that. “Living Ventures has always been a vision that at its heart backs people,” Roberts said. “Finding people who buy into the culture is so important… Recruitment and development are always the big challenges.”
4. The industry needs a strong voice
Kate Nicholls, chief executive of the Association of Licensed Multiple Retailers, ran through the many ways in which the organisation has been speaking up for the industry in government. The ALMR’s members now have some 23,000 licensed outlets, she said. “The weight of [member] numbers we represent gives us a voice and purpose—to help you make more money.” She said the EU Referendum had dominated the government’s agenda this year, to the exclusion of issues the industry would like to see tackled—and the aftershocks of the Brexit vote mean they won’t get a look in for a while longer.
5. Delivery is a big deal
For both consumers and operators, delivery is a fast growing concern. CGA Peach data suggests around 6.7m consumers have food delivered at least once a week, and Nick Green, head of sales at Deliveroo, told the seminar that his company was now working in 40 UK cities and towns, with 24 more to be added soon. “We offer a great way to sweat your assets,” he told operators. “We’ve become a big chunk of people’s revenues in a short space of time.” The anticipated arrival of Uber into the delivery space is only going to increase the market further. “Delivery is a big disruptor… it’s here to stay,” agreed Sarah Fox, head of speciality licensing at Hammersons. “Landlords have to sit up and work out how they’re going to meet the challenge.”
6. Developers want a blend of brands
“It’s becoming a more sophisticated eating out market,” commented Camilla Topham, director of development and London Estates leasing at Davis Coffer Lyons in a panel session on growth. Millennials in particular are looking for a rich variety of choice, and that is leading developers and landlords to seek out the right balance of edgy independents and established brands, Fox said—and the two can sit happily alongside each other.
7. Contactless is at tipping point
Barclaycard’s director of innovation and strategic initiatives James McDonald said consumer spending via contactless methods topped £7bn in 2015, with one in eight transactions now done this way. “We’re at critical mass now.” Pay-by-mobile will be among the big trends of the next couple of years, he predicted. “Within the next year most people in the UK will be able to use their mobile phone to pay by contactless.” In-app payments, tablet-based POS, cloud-based applications and biometrics are among the other big trends to watch.