With The Restaurant Group and Ed’s Easy Diner having said that they are to dispose of units, leading analyst Mark Brumby at Langton Capital says the pair are unlikely to be the last operators to trim their estates, with all operators set to suffer “as the cake is sliced more thinly.”

Brumby said: “Restaurant Group has said that it is taking ‘catch up action on underperforming sites’. It is to close 33 units. Ed’s has also said that it is to consolidate its position and exit three units. TRG and Ed’s are unlikely to be the last operators to trim their estates, but it’s one thing to announce an exit from (presumably underperforming) leasehold sites and quite another to achieve it. Having said that, having a tail of poor or shut sites didn’t do Spirit much harm in the end.”

If sites are available, better we have them than the competition:

Brumby said: “That (and cheap money) has got us where we are now. Operators may well have scrambled for sites that they would not otherwise have sought out. Retail parks with 8, 10 or 12 casual dining outlets arguably have too much cutlery on site. Poor operators (undifferentiated, entitled and/or lazy) will do least well but all operators will suffer as the cake is sliced more thinly.”

So what’s the answer?

Brumby said: “Here’s the thing with answers, there sometimes isn’t one. Macro and micro incentives may remain out of line for some time. The market may not have a braking mechanism. It may only have a crashing mechanism. Making the best of a bad job entails having a superlative and relevant offer, attractively priced. Ultimate takeaway may be to slow leases, buy freeholds. That’s what JD Wetherspoon and Marston’s are doing.”