Britain’s number of licensed premises dropped 2.0% in the 12 months to September 2019, the latest Market Growth Monitor from CGA and AlixPartners reveals—but the success of dynamic new restaurant brands and the evolution of food-led pub groups have provided bright spots in a challenging market.
The quarterly survey recorded around 116,500 pubs, bars, restaurants and other licensed premises in September. The 2.0% fall is the ninth successive quarter of year-in-year decline, but the rate of closures is the lowest since mid-2018.
The exclusive research shows that Britain’s restaurant numbers fell by 2.4% in the year to September, to just over 26,000—a net closure rate of 12 a week. However, the bulk of closures were of independents, with group-run restaurants—managed sites from operators with more than one location—fractionally up by 0.3%. This net growth comes despite several major casual dining chains either closing restaurants or falling into administration in 2019—but CGA’s research shows many of these sites have been swiftly reopened, often by small and medium sized restaurant groups.
“Our Market Growth Monitor data shows a huge amount of churn in the restaurant market,” said Karl Chessell, business unit director for food and retail at CGA.
“There’s no doubt that some leading casual dining names have had a tough 2019, but one brand’s difficulty is another’s opportunity. With capacity having eased in recent months there is still a lot of opportunity for growth in casual dining—but only if the offer, execution and price are all spot on.”
“From an M&A perspective, there remains high interest in concepts with growth potential and which tap into consumer trends,” commented AlixPartners’ managing director Graeme Smith.
“This is evidenced by Social Entertainment Ventures, the operator of various experiential leisure concepts in the UK and US that recently secured a $20m fund raise to aid expansion plans in the UK and internationally, and Richard Caring securing a £200m investment from Hamad bin Jassim bin Jaber Al Thani for a 25% stake in Caprice Holdings, the operator of The Ivy, Annabel’s and Sexy Fish.”
The report highlights similar structural contrasts in the pub sector. Britain’s number of leased pubs has fallen by more than 5,000 since September 2014, while managed pub operators have added nearly 1,000 new sites, thanks in large part to a move towards more food-oriented offers. While drink-led pubs have tumbled by 15.9% in five years, food-led ones have increased by 1.5%, the Monitor shows.
These trends follow moves by leading pub groups to switch their emphasis to food. Businesses including Greene King, Mitchells & Butlers and Marston’s have all been investing heavily in pub-restaurant formats, alongside medium-sized groups like Young’s and Fuller’s.
“While the overall number of restaurants has dipped further, the situation is not quite as gloomy as it seems, with a number of smaller restaurant groups continuing to expand site numbers. In addition, many major cities are reporting increases in the numbers of licensed premises, despite an overall downward trend,” added Smith.
“In the pub sector, the evolution of operating formats and offer continues. Whilst drink-led sites are declining and food-led outlets have grown to have a greater share of overall site numbers, there still holds a place in the market for wet-led operators who deliver a differentiated experience to customers. This is demonstrated by the success of high-quality operators, such as the likes of Arc Inspirations through its BOX and Manahatta concepts.”
The quarterly Market Growth Monitor from CGA and AlixPartners provides many more insights into restaurant, pub, and bar openings and closures. The new edition contains further analysis of openings and closures from leading pub groups and trends in Britain’s major city centres, and is available now. All data from the Monitor is drawn from CGA’s Outlet Index, a comprehensive and continually updated database of all licensed premises in Britain.