The UK restaurant industry has been undergoing a period of transformation, driven by pre-Covid overexpansion, challenging trading conditions, and changing consumer habits, resulting in a -5.3% drop in Christie & Co’s restaurant price index.
The specialist property advisor launched its Business Outlook 2024 report last week, which reflects on the key market activity, trends, and challenges of 2023, noting that the post-pandemic trading climate significantly shaped the sector landscape and transactional activity over the year.
Christie & Co sold a total of £6.75m worth of restaurants in 2023, with 85% of the sales being leases.
In addition, the franchise market experienced increased activity, and the team assisted several key domestic and international market players with both franchisor disposals and franchisee searches.
These include Sushi Shop and Chozen Noodles as well as international brands Carl’s Jr, Paulaner, and Bonchon, who are looking to enter the UK market.
The report also outlines Christie & Co’s market predictions for the year ahead, which forecast mid-market casual dining will continue to struggle for real growth.
The advisor further predicts some return to profitability as inflationary pressures reduce, along with continued expansion for franchise brands with greater variety.
While an uptick in insolvencies is expected due to ongoing headwinds, this will attract new entrants seeking opportunity as confidence returns, according to Christie & Co.
The report also forecasts a drop in new site openings as operators look to make better use of existing sites.
Simon Chaplin, senior director of Pubs, Restaurants & Franchise at Christie & Co, commented, “In a year when closures reached a peak of five a day in Q1 2023, and over 2,000 businesses closed during a 12-month period, it’s clear to see it was a difficult year for restaurants. However, this may have represented a catch-up year from a tide that started in 2018.
“Such adversity often sees the best look to innovate and we are already seeing operators, large and small, review their business, tighten up on costs and fine-tune their audience. This is most evident in the QSR (quick service restaurant) market, where we have seen sustained growth since covid, as new and exciting franchise brands bring their offer to the UK market. As a result, the consumer will benefit which will keep them coming out for more, breathing life back into the industry.”
