Medium sized restaurant brands – those with 10 to 25 sites – are expected to emerge as the winners as the restaurant market reopens and recovers in 2021 and beyond. Whilst many large leading restaurant brands (with 25 sites or more) have had to rationalise their estates in recent years due to over-expansion, medium sized brands are expected to gain share and outperform the market in 2021, taking advantage of empty sites and the greater potential for rent negotiation.

According to the Lumina Intelligence UK Restaurant Market Report 2020/21, the success of medium-sized operators was already evident in 2020, with five players in this size category making it into the top 10 branded restaurants ranked by outlet growth for 2020. Whilst outlet expansion was extremely limited in 2020, with the highest being Wagamama at five outlets; Bar + Block Steakhouse and Rosa’s Thai Café each increased their estates by four outlets in 2020. Meanwhile, Pizza Pilgrims, The Real Greek and Ego all added two outlets. This continues a trend observed in recent years, whereby medium sized brands including Pizza Pilgrims and Rosa’s Thai have seen strong outlet growth with more differentiated concepts that are aligned with consumer trends around authenticity and affordability.

Looking forward to 2021, the success of medium sized operators is set to continue, with seven out of the top 10 restaurant brands by outlet growth for 2021F being players with 10-25 sites. These include neighbourhood café Megan’s and Australian all-day dining chain Daisy Green, each anticipated to add two sites, continuing their slow but steady growth trajectory of recent years. In total, medium sized sites are expected to increase by +3.2% in terms of number of outlets, with an expectation that these nimble operators will snap up some of the attractive sites previously held by larger brands.

As a result, medium sized brands will account for 15.9% of all branded restaurants in 2021, an increase of +4.2pp vs. 2016. Conversely, sites operated by large chains (25+ sites) will fall from 78.7% (2016) to 73.2% (2021F). The equivalent of 14 branded restaurant sites permanently closed every week of 2020 – a combination of rationalisation following the casual dinning ‘space race’ of the early 2010’s together with an unsustainable mix of unaffordable rents, higher business rates and lower footfall due to the pandemic. As a result, over 20 restaurant brands went into administration or entered CVA’s, resulting in the closure of hundreds of unviable sites.

Mid-sized brands have been able to demonstrate their agility through the pandemic with strong innovation coming in the form of at-home ‘makeaway’ offerings. One of the first operators to offer an at-home restaurant kit at the start of the pandemic was Pizza Pilgrims. With a London-centric estate, this additional revenue stream was crucial as footfall in the capital tailed off. Another operator offering ‘makeaway’ kits is premium burger operator Patty & Bun. The fast-casual focused operator took its offering one step further partnering with Inception Group’s Cahoots cocktail bar to offer consumers ready-made canned cocktails to pair with its DIY burgers.

These examples evidence the agility of the mid-sized operators: with only 10-25 sites, it’s a lot easier to pivot or try something new quickly. It is also doesn’t represent a lack of ambition, rather further evidence that slow and steady will win the long-term race.