The latest edition of the Market Growth Monitor from AlixPartners and CGA shows ambitious casual dining operators are keeping big names on their toes.
Amid a broadly flat market for both new openings and sales, CGA’s latest research shows that small restaurant groups—those with fewer than 25 sites—have achieved a 32.0% increase in premises over the last three years—more than four times the 7.6% growth rate of large companies with more than 100 sites. Medium-sized groups—those with between 25 and 99 sites—have increased their numbers by 47.7%—more than six times the rate of large operators.
The figures are proof of the number of fresh and dynamic brands now hitting the mainstream in casual dining. Wahaca, Honest Burgers and Pho are among those expanding fast in the small-operator category, while brands growing in the medium-sized sector include Franco Manca and Las Iguanas. While some big operators including Nando’s and Wagamama have also continued to roll out around Britain, some others have been scaling back on their new openings programmes lately.
The Market Growth Monitor shows how the disparity between new and established brands is particularly apparent in London. Here, medium-sized operators have increased their number of licensed premises by 67.8% in the last three years, while large operators have seen a 4.3% fall.
Overall, the Market Growth Monitor reveals that Britain had just over 123,000 licensed premises at June 2017—0.3% fewer than in June 2016. The bulk of the net closures have been of drink-led pubs and independent, one-site restaurants.
All operators seeking to grow in casual dining have faced a host of challenges in 2017, including rising food and property costs, weak consumer confidence and uncertainty around Brexit. Separate CGA research, from the Coffer Peach Business Tracker, reveals that sales have also been largely flat, with leading managed groups recording like for like sales growth of just 0.6% in both June and July.
CGA vice president Peter Martin said: “Our latest Market Growth Monitor reveals a casual dining sector in flux. Britain has a better and wider range of eating out options than ever before, and dynamic new entrants to the market are simultaneously adding to the diversity and making life tougher for longer established operators. Consumers still enjoy their big brands, but the emergence of so many disruptive concepts are making it harder and harder to secure their loyalty.”
AlixPartners managing director Paul Hemming said: “The last twelve months have left the industry battling unprecedented levels of competition, unrelenting price pressures and an evolving retail market. As a result, casual dining chains have seen relatively little new investment activity, with many operators instead focusing on trimming tail sites from their estates. But despite these negative headwinds, small and growing innovative businesses continue to thrive across the country. Tired offerings that fail to evolve will have a limited shelf life, but for emerging operators with a differentiated, consistent product, there will still be ample room to blossom."