The number of managed restaurants in the UK fell for the first time in nine years in 2018, but there are more positive trends in pub and bar numbers, according to the latest edition of the Market Growth Monitor from CGA and AlixPartners.
There was a 27.3% increase in managed restaurants in the past five years with there being 5,680 managed restaurants in December 2018, but numbers slipped by 0.1% from December 2017 as part of a sustained decline in the wider licensed sector continued. According to the report, reasons for this include concerns about over-capacity in the restaurant sector, mounting pressures on property, people and food costs, and Brexit-related dents to businesses.
Outside of London, there was a 0.9% decrease in 2018, and managed restaurant numbers declined to 1.1% year-on-year while suburban areas recorded 2.2% growth.
CGA vice president Peter Martin said: “The boom in managed restaurants has been one of the British economy’s great success stories of the past decade. But after a string of closures and CVAs in the casual dining sector in the last 12 months, the sector is now in net decline – albeit a very modest one. We can expect to see further contraction in numbers over the course of 2019.
“Many casual dining brands continue to thrive, and we are seeing continued strong growth for small and medium-sized groups in particular. Operators that have a distinctive offer execute it brilliantly and select the right sites have a lot to look forward to – but for bigger brands that fail to keep pace with changing consumer habits and demands, the next few years may be a lot more challenging.”
AlixPartners managing director Graeme Smith said: “The more positive outlook for pubs and bars is reflective of the buoyant M&A activity in the sector. Trade and private equity buyers are turning their gaze to pub and bar assets. This reflects not only the saturation of certain parts of the restaurant market but also the combination of reduced supply and the continued rise of quality wet-led pub and bar operators. These factors have been driving strong performance in a challenging environment.”