Number of licensed premises falls by 2%
The latest Market Growth Monitor quarterly survey from CGA and AlixPartners, recorded about 116,500 pubs, bars, restaurants and other licensed premises were in operation in September.
The 2% drop is the ninth successive quarter of year-on-year decline but the rate of closures is the lowest since mid-2018.
The research showed the nation’s restaurant numbers decreased by 2.4% in the year to September, to just more than 26,000 – a net closure rate of 12 per week.
However, the majority of closures were of independents, with group-run restaurants – managed sites from operators with more than one location – marginally up by 0.3%.
This net growth comes despite many major casual-dining chains either closing restaurants or falling into administration in 2019 but the research from CGA showed many of these sites have been swiftly reopened, often by small and medium-sized restaurant groups.
Huge churn
CGA business unit director for food and retail Karl Chessell said: “Our Market Growth Monitor data shows a huge amount of churn in the restaurant market.
“There’s no doubt some leading casual-dining names have had a tough 2019, but one brand’s difficulty is another’s opportunity.
“With capacity having eased in recent months, there is still a lot of opportunity for growth in casual but only if the offer, execution and price are all spot on.”
The report also outlined similar news in the pub sector as while Britain’s number of leased pubs has fallen by more than 5,000 since September 2014, managed pub operators have added almost 1,000 new sites, thanks in part to a move towards more food-orientated offers.
It also showed that while drink-led pubs have dropped by 15.9% in five years, food-led sites have risen by 1.5%.
Downward trend
AlixPartners managing director Graeme Smith said: “While the overall number of restaurants has dipped further, the situation is not quite as gloomy as it seems, with a number of smaller restaurant groups continuing to expand site numbers.
“In addition, many major cities are reporting increases in the numbers of licensed premises, despite an overall downward trend.
“In the pub sector, the evolution of operating formats and offer continues. While drink-led sites are declining and food-led outlets have grown to have a greater share of overall site numbers, there still holds a place in the market for wet-led operators that deliver a differentiated experience to customers.
“This is demonstrated by the success of high-quality operators, such as the likes of Arc Inspirations through its Box and Manahatta concepts.”
Smith also highlighted operators from the restaurant sector that have grown over the past 12 months.
He said: “From a mergers and acquisitions perspective, there remains high interest in concepts with growth potential and that tap into consumer trends.
“This is evidenced by Social Entertainment Ventures, the operator of various experiential leisure concepts in the UK and US that recently secured a $20m (£15.2) fund to aid expansion plans in the UK and internationally, and Richard Caring securing a £200m investment from Hamad bin Jassim bin Jaber Al Thani for a 25% stake in Caprice Holdings, the operator of The Ivy, Annabel’s and Sexy Fish.”
