It is not a technical term, but the word that many operators have used to some up their thoughts on the next 12 months is mental. Competition will continue to be fierce with all the on-going challenges that brings with it. It may be a cliché, but finding the best people and property in an increasingly crowded market place will provide the biggest challenges, alongside harnessing technology. It will also be a year when many of the established brands will have to reaffirm their credentials against a growing wave of younger, nimbler operators with national growth aspirations.
The past year saw a shake-up in the ownership at the “big boy end” of the restaurant sector, with eight of the top 20 brands in terms of size either changing hands or floating. The set up at multi-brand operators such as Gondola and Tragus changed considerably, and it will be interesting to see how the changes at the latter’s Café Rouge brand work out. Thankfully for the now Apollo-backed Tragus, the continued resurgence of Bella Italia will give it some breathing space on its turnaround of its sister brand.
The future of direction of Prezzo and its chief executive Jonathan Kaye will be clearer over the coming months. New owners TPG Capital are expected to beef up what has always been a very streamlined head office and operational team. Many expect Kaye to move on after 11 years building up the c250-strong business.
It will also be a big year for Wagamama and YO! Sushi. The former has taken a bold step with its new format design at its Uxbridge site, which has been positively received so far. Flagship sites at Soho and Gatwick will also be unveiled this year, adding further to the momentum that has returned to the brand over the last six to 12 months under David Campbell.
The latter is planning 10 openings in the UK this year, including its first YO! to Go unit in Charing Cross this February. It could be a game changer for the Vanessa Hall-led brand and could push Wagamama to also move into the category. Signs of success in the US with it new franchise partner will also aid the group’s much mooted sale, now geared up for the latter part of the year.
Just outside the top 20, relative newcomers Bills, Cote, Byron, Itsu and Loungers will continue to grow their national presence, with at least two of them (maybe even three with Cote believed to be growing and performing ahead of expectations), due to come to the market over the next 12-18 months.
News last week that Byron and Wahaca were two of the first handful of brands to sign up to Southampton’s WestQuay Watermark development, shows how the landscape is changing in the regions and how the challenge for the more established brands is to stay relevant, especially with the next tier of concepts, such as Pho, MeatLiquor, Turtle Bay and CAU flexing their expansion muscles.
With the flight to the regions truly on, all eyes should be on Guildford, which has the best prospects for economic growth of any major UK destination outside London, according to Lambert Smith Hampton’s latest UK Vitality Index. The report also identifies Manchester, Northampton and Derby as the most significant improvers over the past 12 months. The town already has many of the major brands in situ, with Five Guys and Turtle Bay joining the scrum last year, with Giggling Bay soon to follow.
Talking of scrums, unlike its football cousin, there has been no great fanfare at the start of this year about the impact of the UK hosting the Rugby World Cup in September. With all of the Home Nations expected to do well, the event provides an excellent opportunity for pubs across the country. By that time we should have more of an idea of how the country’s biggest pub group, the newly Spirit-boosted Greene King will be configured. It should provide challenges and opportunities for both the group and the sector.
With Enterprise already well down the road of exploring different trading models, the spotlight will be on Punch and to a lesser extent Admiral Taverns, to see their reaction to the Parliament’s decision to introduce a market rent only option. And what now for the May Capital-backed Hawthorn Leisure? It’s goal to reach 1,000 sites may have to be recalibrated, while speculation persists that the newly created pub group’s initial performance hasn’t yet matched expectations.
Last week, Prime Minister David Cameron said fuel prices at the pumps should fall “further and faster” after a significant drop in oil prices, which will be music to the ears of leisure park operators and destination pubs, with the latter set to put more pressure on the former this year.
Finally, using a mixed rugby analogy, food-led pubs and the less established restaurant concepts have got a nudge on at the consumer-attracting scrum going into the next 12 months, but I expect the more established operators to do some much needed counter rucking as the year progresses.
