The rise of branded casual dining restaurants has been the big driver of the out-of-home market growth over the last decade. Numbers jumped by a startling 27.3% in the five years to December 2018—equivalent to 1,241 net new openings, or more than 20 every month. But the tide now appears to have turned.
The latest edition of the Market Growth Monitor from CGA and AlixPartners suggests that casual dining may now have peaked, and the perceived over-capacity which has been blamed for several high-profile casual dining brand closures may be beginning to ease – if slowly.
Numbers of managed restaurants fell 0.1% in the 12 months to the end of 2018 – a small shift, but the first negative movement since 2005.
It reflects a challenging 2018 when managed restaurant groups were hit by mounting people, property and food costs, and several high-profile names began closure programmes or underwent CVAs. At first, many of the units they vacated were promptly snapped up by ambitious small and medium-sized brands, and that helped to keep overall numbers up. Now, though, the supply of managed restaurant space appears to be outstripping operator demand. And with Brexit uncertainty further denting the confidence of big groups, we can expect to see numbers decline further as 2019 goes on.
As the data shows, the pattern of managed restaurant numbers is far from even across the country. Outside the M25, there was a 0.9% drop in the total in the year to December 2018—but inside there was a 1.5% rise. London’s relative affluence and density of population have left it better insulated against casual dining’s downturn – although it is generally newer brands, rather than older established names, that are supporting the market in the capital.
There was a modest increase in managed restaurants in some other regions, like Central (1.5% up) and Yorkshire (1.7% up). Others though, like Anglia (1.6% down) and Tyne Tees (3.2% down), saw a drop in supply.
Around two-thirds of all managed restaurants are on high streets, CGA data shows—and by December 2018 there were 30.2% more sites there than five years earlier. And this pace of new openings on high streets has been comfortably faster than in suburban areas (26.4%) and rural areas (8.0%) over those five years.
The number of managed restaurants on high streets fell by 1.1% in the 12 months to December, against small increases in the suburbs (2.2%) 
and rural areas (1.2%). This suggests that some high streets have reached saturation point, and that casual dining brands are being forced to retreat.
The surge in managed restaurants in recent years has been remarkable, and for focused, differentiated and good value brands, there is still plenty of headroom to open new sites—especially as property becomes available at more reasonable cost. But for weaker or complacent casual dining names, further contraction in numbers seems certain.
The quarterly Market Growth Monitor from CGA and AlixPartners provides many more insights into restaurant, pub, and bar openings and closures. All data from the Monitor is drawn from CGA’s Outlet Index, a comprehensive and continually updated database of all licensed premises in Britain.
