With multiple-site chains experiencing increasingly high levels of activity – both in corporate and customer terms – M&C Report and sister publication Restaurant Magazine size up the sector and those who are part of this year’s R200 list. Will Drew and Mark Wingett examine the trends. Does size really matter? Or is it more about what you do with what you’ve got? The short answer, of course, is both. Restaurant businesses can benefit enormously from scale, but it also leaves them vulnerable to danger if they’re not operated efficiently. The process of listing the UK’s top 200 restaurant chains, ranked by number of sites, is not an exercise in celebrating size for its own sake, but merely a means of identifying who’s who in the market, who’s growing, who’s new – and which sub-sectors within the overall eating-out industry are turning consumers on. For the record, the R200 list comprises only companies not publicly listed on the Stock Market (though AIM-listed operators do meet the criteria) and those we believe can be considered restaurants or food-led pubs, rather than fast-food joints or ordinary pubs that also offer some kind of menu. Methodology aside, it’s been a year in which diners and restaurant operators have rekindled their affection for each other. But if they are not exactly riding off together into an untroubled and highly-profitable sunset, it’s down to a couple of fairly major caveats. The first is that while the London market appears to have returned with an enthusiasm bordering on passion, the story away from the capital is significantly more lukewarm. Not that this has stopped a host of big (London-based) players – Pizza Express, Carluccio’s, Wagamama, Jamie’s Italian et al – continuing to play the national expansion field at pretty rapid rates. The second elephant in the dining room is seemingly ever-rising food commodity prices, which represent the sort of pressure on costs that operators currently need like a particularly virulent outbreak of the norovirus. Buoyancy aids What’s perhaps surprising – given the negative combined weight of those two factors – is quite how buoyant the middle and upper end of the eating-out sector currently feels. Rays of optimism appear to be driven by a renewed sense of impending activity in the mergers and acquisitions market at the volume end; and also by a fresh focus on investment in next-generation concepts at the small-but-interesting entrepreneurial level. The stand-out volume players in the mid-market casual-dining space are also busy refurbishing and upgrading their estates and/or concepts: Gondola (number 1 on the R200 list), with Pizza Express and Zizzi in particular; Tragus (5) with Strada – and Café Rouge likely to follow; as well as YO! Sushi (14) and Giraffe (18), among others. But those featuring in the second half of the R200 are also attracting just as much attention at present. Scalable concepts with three or more sites, solid fundamentals, a perception of quality and sound operational experience are very much on the radar for private-equity firms, venture-capital funds and individual investors. While most are London-based, which reflects the capital’s reputation as a breeding ground for original eating-out concepts, there are still plenty of small regional operators demonstrating their own dynamism. Indeed, recent speculation surrounding approaches to the south-west based Loungers group (45) and Manchester-born Tampopo (122) support the fact that there’s plenty of restaurant life yet outside the smoke. What’s more, investors are likely to favour those who’ve had some exposure beyond the M25 rather than success solely within the London ‘bubble’. Fast steaks and posh cakes Closer inspection of this year’s R200 firms and their development plans reveals a wide-ranging acknowledgment of the need for speed. Faster service is now a clear favourite on diners’ – and therefore restaurateurs’ – menus. It can be seen most overtly in the spate of new express formats springing up. But it has also filtered upwards into the full-service and, on occasions, even fine-dining sectors via the rise of small plates, the return of plats rapides and an emphasis on table-turning and all-day-dining ventures. The premium end of the restaurant market continues to play down its ‘white tablecloth’ image, as the overall casualisation of dining embeds itself in the sector’s collective psyche. Interestingly, however, one of the most traditional and highest ticket items on many menus – the mighty steak – has reasserted its authority. Despite the deification of vegetables by many of the world’s leading chefs, the socio-cultural focus on healthy eating and the legislative input into calorie counting on menus, the red-meat merchants – led by Gaucho (49) and reinforced by mid-market mini-chains Black & Blue (116), Cattle Grid (187) and the forthcoming Cau – are attracting positive reviews and hefty revenues. Away from steaks and into cakes, the bakery-café-deli – with its infinite manifestations and hybrids – is an increasingly noisy presence in the R200. Bellwether investor Luke Johnson leads the way with his Patisserie Valerie, Druckers and Baker & Spice businesses (12), but the likes of Le Pain Quotidien (47), Paul (32), Apostrophe (54), Breakfast Club (164), Benugo (20) and Bill’s Produce (147) reflect the British middle classes’ seemingly unquenchable appetite for premium snacks, baked goods and deli-style produce. Finally, what of the long-troubled pub sector? While its travails are by no means over, the shakeout of recent years has been so far-reaching that arguably the surviving trade is re-emerging into the light. Certainly, a number of proper food-led pub groups are reaping the benefits of lessons learnt from the restaurant trade while retaining their unique style and atmosphere. And for a comprehensive reassessment of the much-maligned term ‘gastropub’ – what it means to be one, what to focus on as a food-led pub, and more – head to this month’s cover story, which kicks off on page 46. Meanwhile, if nothing else, remember this: Peruvian is the new Korean, which is the new Vietnamese, which is the new Mexican, which is the new south Indian… The full R200 report, with detailed information and profiles of each company, is available to buy on request. Contact Alan Totten on 01293 610334 or alan.totten@wrbm.com