Download Market Growth Monitor - March 2020

Britain’s supply of restaurants, pubs, bars and other licensed premises fell by 1.8% in the 12 months to December 2019—the lowest rate of year-on-year decline for nearly two years.

That is the headline finding from the latest Market Growth Monitor from CGA and AlixPartners, the definitive survey of openings and closures in the out-of-home sector. It shows Britain had a total of 116,203 licensed premises at December 2019, which represents an average net closure rate of six sites a day over the last 12 months—but the pace of closures has now dropped to the lowest point since Market Growth Monitor data for March 2018.

The exclusive report indicates a 2.0% fall in Britain’s total pub and bar numbers, with food-led sites holding up better than community and drink-led locals, which have seen 4,297 net closures since December 2014. Meanwhile, there was a 1.6% drop in total restaurants—but group restaurants (managed sites of operators with more than one location) actually increased by 1.8% in the year to December—the second successive quarter of growth. This was powered in particular by small to medium-sized group restaurant and openings in Britain’s big regional cities, with Birmingham, Bristol, Edinburgh, Glasgow, Liverpool and Manchester all in net growth year-on-year.

“While the licensed sector continues to contract, our latest Market Growth Monitor also shows reasons to be optimistic about prospects for 2020,” said Karl Chessell, business unit director for food and retail at CGA. “We are still seeing unsustainable pubs close, but collectively the rate of net number of pub, bar and restaurants closing is slowing. Last year was not easy for some big restaurant brands, but smaller and medium-sized brands are bringing new concepts to the market and successfully scaling up. All our research shows that consumers are still eager to go out to eat and drink, and they’ve never had it better for choice.”

AlixPartners’ managing director Graeme Smith said: “Overall, the eating and drinking out market remains dynamic and attractive to investors, with this very much in evidence across last year where pubs and experiential businesses took up the slack in investment activity from the more subdued restaurant sector.

Reduced political uncertainty, more positive recent trading results and encouraging returns when investing in sites, provide a platform for increased M&A and investment activity in 2020 across both wet-led and food-led concepts. However, investors will be looking carefully at what the impact on trading will be from the recent coronavirus outbreak.”

The Market Growth Monitor from CGA and AlixPartners provides many more insights into openings and closures across the licensed sector. The latest edition includes in-depth analysis of trends in the country’s seaside towns, which saw a collective drop of 5.8% in the 12 months to December—more than three times the British average. Downward movement has been steepest in Blackpool, where 10.8% of licensed premises have shut in the last year. Other large towns including Scarborough, Great Yarmouth, Torquay and Newquay have also been in sustained decline.

But the Market Growth Monitor outlines much more positive trends in many pockets of the country, especially big cities. Recent hot spots for growth have included Manchester and Liverpool, which have both increased their number of licensed premises by around 20% in the last five years. The report highlights the importance of locally and regionally focused businesses in these cities, including multi-site groups like the New World Trading Company, Arc Inspirations, Mission Mars and the Graffiti Spirits Group.

Graeme Smith added: “This edition highlights a regional success story in the return to sustained growth of managed restaurant groups (versus single-site independents), driven by innovative local operators in major cities across the UK. What sets many of these businesses apart is their experience and deep understanding of what works for different customer groups in their local area.”

“The contrast between Britain’s big cities and seaside towns couldn’t be starker,” said Karl Chessell. “Resorts where restaurants, pubs and bars once thrived have suffered serious hardships, with independents particularly hard hit. But the night-time economy in many of our regional hubs continues to flourish, with consumers drawn by some distinctive and vibrant operators who know their cities inside out.”

All data from the Market Growth Monitor is drawn from CGA’s Outlet Index, a comprehensive and continually updated database of all licensed premises in Britain. The full report is available now to download, contact chris.jeffrey@cga.co.uk or gsmith@alixpartners.com with questions.

     

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