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“Clear out of independents" as restaurant numbers fall 2% in a year




The number of restaurants in Britain has fallen by 2% in the past year, equivalent to more than 10 closures a week.

According to Market Growth Monitor from CGA and AlixPartners, Britain had a total of 26,892 restaurants in September this year, 539 fewer than in September 2017. The fall marks an acceleration of closures since the start of 2018, when the restaurant sector was still in year on year growth.

The report indicates a clear out of independents with restaurant numbers falling by 2.6%, and a slowdown from big brands which recorded a modest increase of 1.0%, despite news of closures.

Family-owned Chinese, Indian and Italian restaurants have borne the brunt of closures.

Many small and medium-sized operators, however, 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.

According to the report, closures have been higher in rural areas of Britain (3.6%) than on high streets while some city centres continuing to grow their numbers of restaurants, pubs and bars.

CGA vice president Peter Martin said: “The eating out sector has been one 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 adds: “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.” 

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