The concept of covenant has gone “full circle” with landlords now often preferring smaller independent brands to big institutional restaurant groups, Imbiba’s Darell Connell has told the Global Restaurant Investment Forum (GRIF).

Connell said some landlords were discounting groups with more than three or four sites as the tide turned towards younger, more dynamic brands.

Meanwhile, the specialist sector investor said with a 25-site rollout plan no longer credible, international expansion was becoming increasingly important element to mapping a successful exit plan.

Speaking on the same panel at Bala Baya restaurant in Southwark Arches, Chris Miller of White Rabbit Fund said with the current challenges in the UK restaurant market, expansion to European cities was for more appealing than a regional rollout.

Connell said: “The days of covenant have gone full circle. Some major landlord don’t want big institutional restaurant groups. They want young dynamic independent restaurant groups.

“With a number of landlords you can’t even get in if you’ve got more than three or four venues. Its all moving it the direction for young and independent brands to grow and thrive, which is really exiting.”

Speaking about how brands could seek a successful exit from private equity backers, Connell said: “If your plan at exit is to open another 25 sites, it’s not just not credible anymore. The early internationalisation of brands is going to vital for us to exit

“That said, there’s a lot of risk. Going international means a lot of work, a lot of thought around the business model – whether that’s franchising or JVs.”

Miller agreed: “I’m much excited to go to Amsterdam to Exeter. I just think there’s huge opportunities.

“In private equity, you used to draw a chart of the UK, and open one in London, and then all he university towns in the UK.

“But now I’d much prefer to go to Paris or Berlin.”

Connell added: “If you’re going international a younger age, you have to be very cautious. It’s a big bet, and you could risk your company.

“It can’t be that relentless UK rollout. You might get an exit but you’re not going to get a multiple attached to profits that you want. That’s something we’re thinking a huge amount about with the companies we back.”

Miller added: “To sell a business, you have to sell it onto someone who then has to believe there’s a journey after that, that they can sell.”