Nimble operators, a shift toward quality and a renaissance in burgers and quality fast food is giving the M&A market the confidence to invest in the UK’s restaurant and bars sector a trend which will continue into next year, according to advisory firm BDO.
The firm’s latest ‘Restaurant and Bars Report’, says that with successful brands like brasserie Côte and burger specialist Byron predicted to change hands for more than £100m, it will show that vendors still expect to achieve healthy multiples for high quality concepts and businesses despite the current economic climate.
In addition, it highlights that with private equity dependent on exit as well as investment opportunities, the number of PE-backed concepts in the sector lends weight to the argument that there will continue to be a healthy level of deal activity.
BDO said that while still some way from the deal flow of 10 years ago, strong concepts such as ‘fast casual’ dining and revamped buffet outlets – particularly in London or the South East – are attracting trade interest as well as debt and equity investors.
The company also forecasts modest growth encouraged by improving demand and easing restriction of consumer spending; less mass discounting, such as ‘two for one’ offers; growth in ‘fast casual’ outlets and concepts; and more flexible formats.
David Campbell, head of BDO’s restaurants and bars team, said, “Four years of recession have seen people focus on value for money, but that doesn’t mean they won’t pay a premium price for a quality product. Gourmet versions of authentic street food classics like burgers, hot dogs and chicken, and concepts like artisanal bakeries have sprung up in the teeth of a recession and people still queue around the block.
“Investors see a clever idea backed by strong, entrepreneurial management teams and they know they won’t be the only suitor. There are plenty of reasons to be optimistic about the M&A in this sector next year.”
