The number of restaurants in Britain slipped by 2.0% over the year to September 2018, the new edition of the Market Growth Monitor from CGA and AlixPartners reveals—equivalent to more than ten closures a week.
The exclusive research shows that Britain had a total of 26,892 restaurants at September. The net fall of 539 restaurants marks an acceleration of closures since the start of 2018 when the restaurant sector was still in year on year growth.
The Market Growth Monitor uncovers a clear divide in the restaurant sector’s fortunes in 2018. Independently-owned restaurants fell in number by 2.6% in the year to September—but managed restaurants recorded a modest increase of 1.0%, despite news of closures and CVAs from some leading casual dining brands. Family-owned Chinese, Indian and Italian restaurants have borne the brunt of closures, while some multi-site groups—especially small and medium-sized ones—continue to grow despite challenging market conditions.
These groups have fuelled a 7.7% increase in Britain’s restaurant numbers since September 2013, the Monitor shows. But after several years of spectacular growth, supply is clearly now settling back to levels that more accurately reflect demand, at the end of a year characterised by rising food, property and people costs, fierce competition and signs of saturation in some areas.
Across all licensed premises, including pubs, bars, clubs and hotels as well as restaurants, Britain’s total stood at 118,905 at September 2018—a 3.2% fall year on year. Pubs and bars have closed at a faster pace than restaurants, with numbers tumbling 11.3% in the last five years—equivalent to around 24 closures a week. But CGA research also reveals evidence that pubs and bars with a strong drinks offer are now performing better than for some time, following a summer boosted by warm weather and the football World Cup.
The quarterly Market Growth Monitor from CGA and AlixPartners provides expert in-depth analysis of trends in restaurant, pub, and bar openings and closures. Its data is drawn from CGA’s Outlet Index, a comprehensive and continually updated database of all licensed premises in Britain. Other findings from the report include:
- The north of England has seen a 2.8% fall in licensed premises in the last year—significantly lower than the decline of 4.0% in the south
- The pace of closures over the year has been higher in rural areas of Britain (3.6%) than on high streets (2.6%)
- Some city centres continue to grow their numbers of restaurants, pubs and bars—including Birmingham, which added 25 in the year to September.
CGA vice president Peter Martin said: “The eating out sector has been of the UK economy’s biggest success stories of the last decade, with casual dining brands growing at a phenomenal rate. But as our latest Market Growth Monitor shows, there are clearly limits to the country’s capacity. We have seen a steady flow of pub and bar closures for many years now, but the restaurant sector is now going through its own clear out.”
He added: “The bulk of closures are from independents, while managed groups remain in growth—and this trend is welcome news for some of them, since it eases over-capacity and frees up more property. But these figures are a reminder that all restaurant brands need a well defined and brilliantly executed offer if they are to succeed in a survival of the fittest in 2019.”
AlixPartners managing director Graeme Smith said: “The figures in this edition of the Market Growth Monitor again illustrate that space remains for ambitious and innovative businesses to expand in areas outside of London. Pockets of growth are still to be found for businesses with a highly differentiated offer and strong focus on the guest experience.”
He added: “As ever, for operators to succeed, they need to show a deep understanding of their local communities and what will work for their customer base. Those who fail to meet these expectations will inevitably fall by the wayside. But for businesses in the sector looking to grow, there remain a multitude of options across both equity and debt and investors continue to see attractive opportunities.”