Food-led pubs and restaurants find opportunities to expand

Numbers of branded food pubs and restaurants have continued to grow despite fierce headwinds, the latest Market Growth Monitor from AlixPartners and CGA Peach reveals.

Numbers of branded food pubs and restaurants have continued to grow despite fierce headwinds, the latest Market Growth Monitor from AlixPartners and CGA Peach reveals.

It shows that casual dining operators had another strong year of growth in 2016—and by the end of December the country had 20.9% more restaurants than it did at the end of 2011. The number of branded food pubs also expanded significantly, as major pub groups continued programmes to turn flagging drinking pubs in destination food-led ones.

The AlixPartners CGA Peach Market Growth Monitor confirms that ambitious food-focused businesses remain firmly in expansion mode. It follows figures from the latest Coffer Peach Business Tracker showing like for like sales growth of 1.7% for managed pub and restaurant groups in February 2017, building on modest but consistent increases through 2016.

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The upbeat news comes amid mounting challenges to the eating and drinking out sector. Rising rates, food costs and wage bills are all increasing the pressure on businesses at the moment, exacerbated by uncertainty around the effect of Brexit on staffing and exchange rates.

The success of branded pub and restaurant sectors contrasts with evidence from the Market Growth Monitor of a small decline of 1.3% in Britain’s overall number of licensed premises last year—equivalent to 1,600 net closures. Drink-led local pubs and independent restaurants accounted for the bulk of that figure.

The Monitor uncovers many notable bright spots in the eating out market, including the suburbs, where the number of food-led licensed premises increased by 1.2% in 2016; and the north east, where they rose 3.8%. Regional cities continue to be a key focus for expanding operators too, with the number of licensed premises in British cities up by 7.6% in the last five years.

“Restaurants and pubs face significant cost challenges at the moment, many of them not of their own making. So it is no surprise to find that the licensed sector contracted slightly in 2016—but that should not distract from the success of food-led operations in recent years. It is a story of dynamic economic growth and job creation that deserves more recognition and support from government.”

— Peter Martin, Vice President, CGA

AlixPartners managing director Paul Hemming said: “We are continuing to see strong trading performances from many companies in the branded casual dining sector, especially those who have had the resources to invest in their sites over recent years. Sales for these operators have been positive in the early part of 2017, but this benefit has been offset by strong cost pressures. The drivers for like-for-like sales growth now include price rises, which operators are introducing as they juggle the complex interplay of pricing versus covers. Menu engineering is also at the forefront as operators look to drive efficiency to maintain or improve profitability.

“The pressure on independent operators and smaller groups is intense. Faced with fewer cost saving options, less operational experience and often cash constraints, the future looks tough. Despite this, new offerings are coming to the market, and investor appetite for 4-to-5 site businesses remains strong, as the recent Piper investment in Flat Iron confirms. The growth of food led pubs in itself is unsurprising but the speed of this growth should send a further warning to the restaurant market. The public still has an affinity with the pub and many of the new offerings deliver great value for money and good food.

“The sector is clearly not for the faint hearted but this type of environment simply drives a more marked divide between the winners and losers.”

About the AlixPartners CGA Peach Market Growth Monitor

The AlixPartners CGA Peach Market Growth Monitor is produced quarterly and is drawn from CGA’s Outlet Index, a comprehensive and continually updated database of all licensed premises in Great Britain.

For more information about the Market Growth Monitor, data or more granular analyses, please contact CGA Peach account director Jamie Campbell at

 For more information about AlixPartners and its global financial advisory services, contact managing director Paul Hemming at

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