Fledgling on-trend concepts are continuing to drive growth in a competitive eating and drinking out market, the latest Market Growth Monitor has shown.
The report from AlixPartners and CGA Peach highlights the continued importance for established chains of keeping a close eye on start-ups, whose relentless drive for growth is fuelling the sector.
Over the past three years, casual dining groups with between five and 25 sites have grown their numbers by 39%, while established brands with over 100 sites saw a more modest growth of 13%.
The report shows the familiar tale of drink-led bars giving way to food-centred pubs and indicates that in the face of fears over supply outstripping demand, restaurant operators are beginning to moderate their ambitions.
Key figures from the report:
As of March this year, the UK had 123,732 licensed premises. This is down 0.5% on the same period last year and -4.4% on 2011. It equates to a net loss of 679 licensed premises in the last year
Pub numbers fell by 2.7% over the last year and 9.9% over the last five years
Over the same periods food-led branded pubs grew 17.1% and 46.6%
Restaurant numbers were up 0.6% and 21.3% respectively
Peter Martin, vice president of CGA Peach, said: “Although the last quarter may have seen a tightening of market conditions both in terms of site numbers and sales growth, this does not appear to have dampened the flow of new entrants to the market. There is no let up at the smaller chain end of the market.
AlixPartners managing director Paul Hemming said: “Perhaps unsurprisingly net site supply in the pub and restaurant market is now trending more in line with the movement in demand – which has proved relatively flat so far in 2016.
“This is of course at the macro level. The overall picture masks a three-tier world. At the top we see strong performance being reported by both a selection of established operators and exciting newcomers. Businesses like Wagamama, Las Iguanas and Blanc Brasserie or Red’s True Barbecue, The Botanist and Leon are showing there is plenty of growth for well-run offers that fit a target market.”
The report also shows that Cardiff has seen the biggest percentage increase in licensed premises over the past five years with a 23% hike, followed by Leeds (22.3%), Liverpool (20.8%), York (19%) and Newcastle (17.9%).
The breakdown of increases in food-led and wet-led venues differed wildly among the growth hotspots. While Cardiff’s 45.8% increase in food-led venues dwarfed the 6.7% rise on wet-led sites, in Liverpool there was an even split of 17.1% each. In Norwich (number 10 on the list) wet-led sites grew faster than food-led by 16.7% compared to 9.7%.
Figures on share of the market based on size of operator also shows that regional cities are catching up with London in terms of being a testing bed for fledgling chains. In the capital 64% of all restaurants are managed by small operators, compared to 13% by medium-sized companies and 23% by large. In big regional cities, small operators now have a 40% market share with mediums taking 18% and large operators showing a slight lead with 41%. This compares to the situation in 2011 in big cities, when small operators had a 34% share and big operators 46%. In small cities, large operators still dominate with a 51% share compared to 23% for medium operators and 26% for small but in 2011 the figures were 57%, 26% and 17% respectively.
