Sometimes it can be tempting to focus too quickly on the excitement around the newness and plans for the year ahead, as opposed to taking sufficient stock of what the year just gone can tell us. Having recently completed our December 2019 outlet count updates (as well as preparing initial December 2020 forecasts) within the MCA Operator Data Index (ODI), it is timely to retrospectively review the risers and fallers across the Eating Out marketplace.

Modest overall growth

MCA’s ODI includes over 350 branded operators with five or more outlets at December 2019. These stretch across the full spectrum of the market, from bakery and cafés, across fast food to pubs and restaurants. In total terms, these accounted for close to 27,000 outlets, and claimed modest overall year on year growth of just under 1%.

The net outlet growth of 230 was led by 150 operators increasing their store portfolios, however, in the majority of cases this was by three or fewer sites. By contrast 109 operators reduced their estate size, while 94 operators did not register a change.

Greggs and franchising to the fore among leading growers

Greggs stands out for heading the estate growth league table, with a net increase of close to 100 and as such, single-handedly accounted for 41% of the total outlet growth. Clearly on a roll across an increasingly diverse set of in- and out-of-town location types, Greggs is seeking to capitalise on growing recognition of its food to-go strengths.

Beyond Greggs, Costa, Subway and Papa Johns were in the next leading growth cohort of 30-50 new sites. All of these operators benefit from franchised operations and relatively small footprints. Interestingly, Costa and Subway both also vie for the title of having the greatest number of outlets in the entire eating out market. At December 2019, Costa was narrowly in the lead with over 2,450, but it may well be the case that positions will be reversed come December 2020.

Slimmer tonics

Of the 109 slimmer chains, 70 reduced in size by 3 sites or less, meaning that of the continuously trading operators, the lion’s share of closures was generated from a relatively small number of just 18 players who saw a net decline of 10 or more outlets. Foremost amongst these was Patisserie Valerie, which following its change of ownership and fight for survival, saw 80 sites close and the business stabilised from a much-reduced portfolio of 70 outlets.

Sandwich chain, Eat, has also been the subject of a change of ownership and rationalisation, with 40 or so sites being converted to the Pret brand stable. Additional operators looking to capitalise on stronger performing brand alternatives included: The Restaurant Group, growing Wagamama at the expense of Frankie & Benny’s; Azzurri, expanding Coco di Mama out from the Pod estate; and Mitchell’s & Butlers, reassigning several former Sizzling Pubs.

Elsewhere, there are also several signs of unprofitable store tails being tended, not least with outlet off-loads from Carluccio’s and JD Wetherspoon.

In summary, while there is always ebb and flow among the players in any market, with concerns persisting around over-supply, there is going to be ever-closer scrutiny on maximising existing site returns ahead of opening new sites. Clearly for multi-brand operators, this means ensuring their stronger brand runners and management team riders are backed.