San Carlo Group managing director Marcello Distefano has told MCA that London-based operators escaping high rents in the capital underestimate the challenges of thriving in the regions.
The 17-strong group will launch its fourth London restaurant next month – the capital’s first Fumo, in St Martin’s Lane – and already successfully operates in cities such as Leeds, Bristol, Liverpool and Birmingham.
Distefano told MCA: “Rents in London are almost at a tipping point now because they can only rise so far until no-one – no matter how good your operation is and how many bums you get on seats – can make a return on their investment.
“Because of that, you have seen London operators branching out of the capital because of those rents but then finding life very tough in the rest of the country.
“When something is a success in London you can get carried away with it and assume it’s going to be a success everywhere. London is such a different market to anywhere else. The concentration of people means you come to expect that as the norm. In the prvinces you really have to fight for trade and a lot of it comes down to value. It’s also about recognition and I think a lot of people mistakenly think that because they’ve been well received in London everyone will know who they are. That isn’t necessarily the case.”
Distefano said San Carlo is keen to grow and is eyeing further sites in London and across the UK, with a particular focus on Liverpool.
The group is also in talks to open franchised sites in Turkey, Saudi Arabia and India.
Distefano said trade had been solid so far this year but that Brexit was already impacting on the business, which sources everything from ingredients to furniture from Europe.
He said: “We’re starting to see the effects of it now. We import a huge amount of our products from Italy. Suppliers have tried to hold off those price increases but they are coming through now because of the weakness of the pound.
“The big question for us and for the rest of the industry is about the workforce. Our industry is held up by Europeans and has been for a long time.”
Distefano said the group remains creative and would consider adding to its current collection of brands.
He said: “The way the market has moved has forced people to become more creative. To constantly stay on top you need to be constantly reinventing yourself. There’s a couple of things we have put together but it’s about finding the right site and location.”