The casual dining crisis: Pressures mount for high street restaurant chains

10th April 2018 (Last Updated April 23rd, 2018 15:26)

The rising costs of running a casual dining chain, combined with a failure to keep up with changing consumer habits has led to a decline in the popularity of many once thriving high street restaurants. This pattern is likely to continue throughout 2018, as restaurants attempt to restructure and stay afloat.

The casual dining crisis: Pressures mount for high street restaurant chains
Credit: Jay Wennington, Unsplash.

The rising costs of running a casual dining chain, combined with a failure to keep up with changing consumer habits has led to a decline in the popularity of many once thriving high street restaurants. This pattern is likely to continue throughout 2018, as restaurants attempt to restructure and stay afloat.

High street chains are struggling and closures are on the rise

Data collected by the accountancy firm UHY Hacker Young has found that 35 of the UK’s leading restaurant groups are making a loss. This number is expected to rise as a result of the increasingly competitive casual dining sector. In recent weeks, a number of restaurants have announced that they will be closing stores across the country. Prezzo has announced it will be closing 94 outlets, Jamie’s Italian is readying to close a third of its restaurants, while burger joint Byron has already begun the closure of 20 of its locations. Rapid expansion and sluggish sales has led to a substandard quality in many chains, which has driven consumers to look elsewhere for a better experience.

The costs of running a large chain has soared in recent years

One of the key challenges facing casual dining sector and the restaurant industry as a whole is the rising costs associated with running a high street chain; this alongside a fall in consumer confidence has created an incredibly challenging environment. ONS figures released on March 29 2018 that consumer spending on hotels and restaurants fell by 3.5% between 2016 and 2017. The introduction of the National Living Wage, rising food prices and soaring business rates have driven up the cost of running a restaurant chain.

Casual dining restaurants have failed to adapt to changing consumer habits

Consumers have a plethora of options when it comes to eating out; this in addition to a lack of brand loyalty and a demand for alternative cuisine has damaged the popularity of leading chains. The introduction of mobile application delivery platforms such as Uber Eats and Deliveroo has created a viable substitute to casual dining, as a growing number of consumers prefer to enjoy restaurant-quality meals at home. Although some have embraced these platforms and have joined the online food delivery revolution, the abundance of unique, independent food options available has made it difficult for casual dining chains to stand out amongst the crowd. Consumers are more comfortable than ever with shopping online and enjoy the convenience and choice that comes with ordering food for delivery.

However, despite the troubles faced by many leading companies, it is likely that the industry will continue to attract hopefuls, as it remains a highly lucrative opportunity for those that get it right. It is important that companies that wish to survive make operational changes to improve efficiency, as well as adapting to consumer habits to offer a more unique and authentic experience.