MCA’s market insight director Steve Gotham delves into data from the Office for National Statistics to gauge where opportunities lie for growth in each of the eating out market channels, across the regions. 

Would you sooner open a restaurant or a pub in London? Yes, I know it depends on a host of factors, not least location, market positioning and available funds, but on the simplistic basis of relative weight of competition, the answer has to be a pub.

You might not be surprised to discover that London has far more restaurants than any other UK region, but when it comes to pubs the capital is far less strongly represented. Using data supplied by the Office for National Statistics, it is a fascinating exercise to review the geographical distribution of outlets within different foodservice channels across the UK and understand areas of relative over- and under-supply – and some possible market gaps and opportunities.

London has 14% of the UK population, but it has a sizeable 24% of the stock of licensed restaurants. As befits a capital with substantial commuter numbers and tourist appeal, it also strongly over-indexes in fast food restaurants and café businesses. Yet when it comes to pubs, with just a 9% share, you could be excused for thinking the market supply might just have contracted too far. Indeed, pub numbers of 3,500 in London are some way behind the comparative counts in the South West, the North West and particularly, the South East, which has 5,300.

But if pubs are your thing, the UK region where the pub share of the total provision of foodservice operations is highest is the East Midlands. Compared with a UK average share of 22%, pubs here account for 28%, with this at least in part influenced by the strong brewing associations with this part of the country. By contrast, the make-weight element here is licenced restaurants, highlighting some prospective additional food-led opportunities for local pubs and for pub brands to serve roles as quasi-casual restaurant chains.

In terms of licensed restaurant shares, the regions with the lowest existing supply are the North East and Yorkshire & Humberside. To an extent this will be influenced by some lower relative affluence, but there are also cultural factors at work, with indications of this in the over-indexing shares of licensed clubs and take-aways in these regions.

Focusing closer attention on take-aways and fast food, then Northern Ireland stands out with the highest relative shares. By contrast, take-away customers are relatively poorly served in the South West. Lower levels of urbanisation will be a factor here, as will reduced popularity among a population skewed towards more mature ages. However, this will of course, support the strong relative showing for pubs.

Event caterers will naturally find greater business development opportunities within larger conurbation areas and hence over-index in London and the West Midlands. At the other end of the spectrum, there might be considered business development opportunities with the relatively reduced competition in Northern Ireland, Yorkshire & Humberside and to an extent, South Wales.

I readily accept the limitations of any desk-top analysis based around secondary regional data that includes no recognition of qualitative considerations, and only uses a basic quantification. However, the more important point is that whether you are a business start-up or an established multi-site operator, it is imperative to learn as much as possible about the factors influencing trading potential and the reasons behind the differentials in outlet trading performance. The nature of present competition, and the legacy of past competition, both direct and indirect, are hugely important considerations here.