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Morning Briefing for pub, restaurant and food wervice operators

Tue 31st May 2016 - CGA/AlixPartners – 21.3% rise in restaurants in past five years
Opening of food-driven businesses offsetting pub number decline: Latest figures from Market Growth Monitor, the quarterly measure of GB pub, bar and restaurant openings and closures produced by AlixPartners and CGA Peach, show that growth in entrepreneurial food-driven businesses – as well as the continued conversion of drink-led pubs to food establishments by major pub groups – is helping to offset the ongoing decline in marginal sites, in particular community pubs. The latest Monitor shows a slight dip in overall numbers. As of March this year the country had 123,732 licensed premises – 0.5% fewer than the same time last year, but 4.4% fewer than five years ago. “This is a relatively small year-on-year fall, and may only be a blip, as it contrasts with the last three quarterly reports, all of which showed the country’s stock of licensed premises in net growth over the previous 12 months. But it does reflect a general slowing down in the eating out sector on both the business and consumer side over the last six months or so,” said CGA Peach’s vice-president Peter Martin. Britain’s stock of pubs and bars fell by 2.7% in the last year, and by 9.9% over the last five years. Net closures totalled 5,778 over those five years. Restaurants have made up much of this shortfall, and there are now 0.6% more than there were a year ago, and 21.3% more than five years ago. The trend is even larger in the food-led branded pub sector, where stock is up by 17.1% over the 12 months to March, and by 46.6% in the past five years. A lot of these additions have been conversions of drink-led locals into eating-focused pubs. “Although the last quarter may have seen a tightening of market conditions both in terms of site numbers and sales growth, this does not appear to have dampened the flow of new entrants to the market,” added Martin. “There is no let up at the smaller chain end of the market.” Over the past three years, restaurant groups with between five and 25 sites have grown site numbers by 39%, or about a net 500 new openings, while growth among established brands with more than 100 sites was a more modest 13%, or just under 300 net new openings. “Perhaps unsurprisingly net site supply in the pub and restaurant market is now trending more in line with the movement in demand – which has proved relatively flat so far in 2016,” said AlixPartners managing director Paul Hemming. “This is of course at the macro level. The overall picture masks a three-tier world. At the top we see strong performance being reported by both a selection of established operators and exciting newcomers. Businesses such as Wagamama, Las Iguanas and Blanc Brasserie or Red’s True Barbecue, The Botanist and Leon are showing there is plenty of growth for well-run offers that fit a target market. We then see the bulk of the market producing flat-to-plus-three like-for-like sales, with a tail of offerings, including the likes of Frankie & Benny’s, finding the current competitive market conditions challenging after years of success. As the competitive nature of the market becomes more pronounced, so are the experiences of the winning concepts versus the rest.” Martin added: “The figures illustrate the incredible success story of casual dining in this country over the last few years – and the spread of new restaurants around the country has been fairly even. With consumers being given more choice than ever, competition will only increase, sales growth is going to be hard-won.”

Cardiff, Leeds and Liverpool lead table of regional openings: London remains the undisputed hotbed of eating and drinking out in the UK, but more and more restaurant and bar operators are putting their focus on the nation’s other big cities for their openings. Latest figures from Market Growth Monitor, the quarterly measure of GB pub, bar and restaurant openings and closures produced by AlixPartners and CGA Peach, show that food-led sites in the capital increased by 13.4% over the five years to March, but by 22.4% in other big British cities. Cardiff, Leeds and Liverpool have all seen their supply of licensed premises increase by more than a fifth over the past five years, with the likes of York, Newcastle and Manchester not far behind. London does not even make the top ten, although its stock of licensed premises is still greater than the rest of the cities on the list put together. “Growth in regional cities is in part a consequence of the toughness of the London market. With competition so fierce and property costs so high, established operators have been looking well beyond the capital for their growth opportunities,” said CGA Peach director Jamie Campbell. But another underlying trend is big cities playing catch-up. While places like Manchester, Birmingham, Leeds and Cardiff have always been well stocked with pubs and bars, their range of restaurants has, per capita, been way below that of London. “With so many chains flocking in, the choice and quality of eating in these and many other cities is unrecognisable now from as recently as a decade ago,” added Campbell. “And with increasing numbers of people preferring to eat out than drink out, there is plenty of scope for this trend to continue. Regional cities will never have the same intense concentrations of restaurants as London, but there is no doubt that they are narrowing the gap with the capital.” Big cities are catching up with London in another way too – with the rise of small, dynamic operators. The London scene is dominated by independents and emerging groups, with 64% of restaurants are operated by groups with fewer than 25 sites, up substantially from 51% five years ago. And this change is also now evident in other big cities, where small operators account for 40% of restaurants, up from 34% five years ago. “This shows that for all the talk of identikit high streets, the majority of new restaurants are being opened by fledgling multi-site operators and indies,” said Campbell. “London still leads on this front and its diversity is unparalleled. But numerous exciting new operators have been born in the regional cities and are thriving there, Red’s True Barbecue, San Carlo, Thaikhun and Living Ventures to name just four.” 

CGA and AlixPartners reveal changing face of London foodservice: The diversity of London’s restaurants and bars makes it one of the world’s greatest cities for eating and drinking out – but it is the growth in food-led establishments, at the expense of drinking venues, that is changing the shape of the market and leading the expansion into new areas. Latest figures from Market Growth Monitor, the quarterly measure of GB pub, bar and restaurant openings and closures produced by AlixPartners and CGA Peach, show just how unique a market, and different from the rest of Britain, London has become. In its centre, 58% of licensed premises now are food-led – up from 53% in 2011. Many drink-focused pubs and bars still do excellent trade, not least in the City, with those specialising in cocktails or craft beer particularly strong. But by and large, drink-led sites that have closed in the last few years have tended to be replaced by food-led pubs or restaurants rather than new drinkers’ venues, the research shows. This 58% proportion of food-led premises contrasts sharply with other big city centres beyond the M25, where only 45% of venues are food-led. Here, there are just as many venues (45%) that are drink-led, many of them circuit bars and locals. It is a reminder that people’s frequency of eating out is far higher in London than anywhere else in the country – although as the Monitor shows, other big city centres are starting to catch up. It is no surprise to find that London’s restaurants, bars and pubs are most heavily concentrated in the West End. The W1 postcode alone has 1,201 licensed premises, and WC2 another 505. The City is another hotbed, with 321 and 285 premises in E1 and EC1 respectively. EC postcodes account for four of the 13 highest concentrations of premises, and the Canary Wharf area of E14 is not far behind. In these and nearly all other central London postcodes, the number of premises has increased substantially over the past five years. W1 has 70 more sites than it did in 2011, for instance, and SE1 has 59 more. “Growth has been most spectacular in E1, a district that as well as City redoubts like Aldgate and Bishopsgate also includes Shoreditch, where so many hip new restaurant and bar concepts have emerged lately,” said CGA Peach director Jamie Campbell. “Again, it is restaurant openings  – from both casual dining chains and independents – that have fuelled the boom. That E1 postcode now has 31% more food-led premises than it did five years ago, and W2 has 10% more.” The list of new growth postcodes for restaurants and bars is centred around the north and east of the capital, where spots such as Stoke Newington and Shoreditch have been setting the fashion for eating and drinking out, although the south west also has its star areas.

Five postcodes with booming openings:


Zero licensed premises in 2011 – 51 now

For years E20 was the fictional postcode of the EastEnders soap opera – but after the London Olympics it was adopted as the address of the Olympic Park and Athletes’ Village. The district known as East Village is now one of London’s most desirable postcodes, and home to a crop of edgy independents. More importantly it takes in Westfield Stratford, to which several dozen brands have flocked since its opening in late 2011.


80 licensed premises in 2011 – 115 now

A postcode that includes the burgeoning district of Stoke Newington, it has increased its number of licensed premises by more than half in the last five years. Independent restaurants and neighbourhood bars dominate here, with chains relatively thin on the ground.


76 licensed premises in 2011 – 105 now

South of Stoke Newington, this slice of London includes Dalston, Hackney and London Fields, and more of the capital’s coolest hang-outs. Late-night bars and clubs are strong, as are artisan coffee shops and pop-ups. Its potential is shown most vividly at Dalston Yard, the Street Feast collective that houses several dozen street food and bar concepts and that is hugely popular among millennials in particular.


24 licensed premises in 2011 – 33 now

A triangle of land that spans from the Thames down through Mortlake and East Sheen to Richmond Park, this is a popular part of London for young professional families. PizzaExpress, Kerbisher & Malt and many coffee shops are among the big brands rubbing shoulders with independents here.


62 licensed premises in 2011 – 80 now

Another postcode that has contributed to the rising popularity of the better-connected southern fringes of London, it incorporates parts of Stockwell, Clapham and, most significantly, Brixton. This has been one of the London areas most transformed over the last few years, with the buzzy Brixton Market a place where fast-growing brands including Franco Manca and Honest Burgers have cut their teeth.

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