Shaping the post-covid landscape by Mark Wingett
Next month, the UK’s hospitality sector will begin its great reopening… again. In contrast to last year’s emergence out of the first lockdown, it will do so with hope emboldened by a successful vaccination programme that it will be starting out on a long, uninterrupted road to recovery. The resilience and robustness of the sector has never been challenged like this before but, in the majority, it has stood tall. This will be highlighted on Wednesday (31 March) when Propel unveils its updated multi-site operators’ database, which is available exclusively to Premium subscribers. The most comprehensive database of businesses available in the sector, which comprises 1,628 companies, it provides an exhaustive take on the current health of the industry, and those companies that will underpin and drive forward its rebirth.
The new database, which will be updated monthly, features companies overseeing 56,034 sites, up from 1,600 companies and 51,994 sites in March 2020, will show that despite the pain and swathe of company voluntary agreements (CVAs) and administration process, some operators have taken the chance reinvest in the existing businesses and to grow their estates. Many in the database will come through the crisis with restructured balance sheets and/or taken on external debt, many find themselves in a good position to take advantage of opportunities thrown up by the crisis. The updated Propel database provides the first clarity on how the crisis has shaped the sector’s landscape, for better or worse. Speaking of the aforementioned CVAs and administration process, the database also gives a good indication of the optimum size of estates and the geographical viability of businesses. It will reignite the debate on how big a brand should get.
In the debate on “winners and losers”, the short hand has been that the bigger brands, especially those from listed companies, will come out on top over the smaller independents. With more funding levers to pull, the sector’s listed fraternity should indeed find themselves in better positions than most post-pandemic. However, like most things, this is not a black and white situation, especially as the sector’s property dynamics have undergone a seismic change – in many cases, creating growth opportunities for smaller companies. Looking through Propel’s updated multi-site operators’ database, one of the stand-outs is the number of new entries of smaller, regional operators, who have taken the opportunity to either secure new funding, new sites or both. When it comes to which sites they have secured, many have taken the opportunities provided from the restructuring of their larger, branded counterparts. Earlier this month, Turquoise Kitchen, the Turkish concept, revealed it had added five sites, all formerly operated by national restaurant brands to its estate. Last month, The Bok Shop, the Brighton-based premium fried chicken concept, secured £1.2m of new funding as it looks to add ten new sites to its existing three-strong business, over the next two years.
The database also highlights the category’s continued strength in categories such as burgers, Asian, poke, experiential and pizza. There isn’t a week that goes by without an article being written about how experiential concepts will, in part, take the place of traditional high street brands that have fallen by the wayside due to the pandemic. This is highlighted in the updated multi-site operators’ database, with many experiential concepts showing confidence in the sector’s recovery by setting out further growth plans. Operators such as the Imbiba-backed arcade games concept NQ64, Lane7 and Sixes, the cricket-based competitive socialising concept from the founders of Mac & Wild, are among many experiential-focused operators new to the list this year. All have set out expansion plans for the next 12 to 18 months, including a further three openings for NQ64, and Lane7 having a pipeline of at least four new sites for openings this year. In terms of burgers, the aforementioned Five Guys, Honest Burgers and new entry Neat Burger have continued to add sites to their respective pipelines, as have pizza operators Franco Manca, Pizza Pilgrims and Yard Sales Pizza. Equally, chicken-led concepts have also taken the opportunity to spread their wings (sorry) further, with Slim Chickens, Wingstop, Thunderbird and Wing Shack all adding to their estates. Both the UK’s burger and chicken concepts will also have to keep an eye over their shoulders this year, as two US giants look to enter the market in Wendy’s (re-enter) and Popeyes, both looking to take advantage of the new property landscape. Much talk has been made of the “wall of money” circling the sector, especially the pubs sector but, at the moment, it is still unclear who exactly is looking to be the seller in that story yet that hasn’t stopped smaller, regional players from adding to their estates during the past few months. The likes of The Inn Collection Group, Prospect Pubs & Bars, and Brucan Pubs have all grown while, earlier this year, Red Mist Leisure secured a new backer and a further site with the promise of more to come.
Sadly, there is much “pain still in the post”, with the third and fourth quarters of this year likely to see further restructurings and business failures as debts will be called in and costs rise, on top of the fact that, at some point, the eviction and rent moratoria will have to end and there is still no solution in sight on that big cloud hanging over the sector. There is no short-term end in sight for the continued state of flux the sector finds itself in, and with that in mind, the Propel database will now be updated every month to provide an up-to-date snapshot of the continued evolution of the market. Sadly, as it gets updated, more companies will shrink or fall away but, at the same time, it is hoped as the year progresses it will increasingly highlight the concepts that have managed to grow their footprint and those newcomers looking to play their part in driving the sector’s recovery forward and its ongoing evolution. Make sure your name is on the list.
Mark Wingett is Propel insights editor
Being a Propel Premium subscriber not only entitles you to the most comprehensive database of businesses in the sector today; those signed up also receive their morning newsletter 11 hours early, at 7pm the evening before our 6am send-out, regular video content, and regular exclusive columns from Propel insights editor Mark Wingett. An annual premium subscription costs £395 plus VAT for operators and £495 plus VAT for suppliers. Email email@example.com to sign up.