The continued closure of wet-led pubs coupled with an increase in restaurant openings has led to a steady state for overall numbers of licensed premises.
The number of sites in Britain stood at 122,783 for the year to September 2017, similar to the figure of just under 123,000 for the previous quarter, according to the December edition of the AlixPartners CGA Market Growth Monitor.
The number of wet-led pubs has fallen by 2.3% in the past year, while restaurants increased by 1.6% over the same period, driven by the success of start-ups and medium-sized casual dining operators.
In fact, new openings for small and medium-sized managed restaurant groups rose by huge 75% and 94%, respectively, in London, in the past five years.
But while the report said the figures were a “sign of confidence” in the licensed sector, the data revealed a stark contrast between operators in central and greater London.
The number of licensed premises in the centre of the capital has continued to increase, however operators further out are retrenching slightly - restaurant numbers in inner London have risen by 3.1% in the 12 months to September, but declined by 0.3% in outer London.
Peter Martin, vice president at CGA, told MCA that while there are a lot of businesses entering the market, we are not seeing a lot of organic growth. “We are definitely in a market share game at the moment. You can’t just open and expect people to come, you have to got to be different – it is about gaining share in a static market, so it is about a battle of the operators that stand out from the crowd,” he said.
Martin added that CGA was seeing more people who are coming into the market in central London trying to create a small group of restaurants, rather than one-off restaurants, which he viewed as a proxy for other cities such as Manchester and Leeds.
“I think there is quite a bit of caution in the market where there is investment, but overall we have a fairly stable market in terms of the overall numbers,” he added.
Graeme Smith, managing director at AlixPartners, said that in terms of site expansion, the prevalent macro trends continued: “a contracting pub market and the measured growth of food-led outlets”.
“Although the market’s long-term fundamentals - including consumer demand - remain robust, the sector’s immediate trading performance is what positive operators are politely calling ‘soft’,” he added.
“Many parts of the market are currently under pressure, and like-for-like sales growth has slowed in a competitive environment. When combined with the backdrop of sustained cost inflation, profit growth is becoming harder to come by.”