The number of managed restaurants in Britain has fallen for the first time in nine years, after a prolonged period of expansion in the sector.
There were 5,780 managed restaurants in Britain in December 2018, according to the latest Market Growth Monitor from CGA and Alix Partners.
While that was 27.3% or 1,241 more than just five years ago, numbers slipped by 0.1% as compared to December 2017.
The bulk of the decline was attributable to casual dining brands, according to the Market Growth Monitor, and follows concern about over-capacity in the fiercely competitive sector, as well as mounting pressures on property, people and food costs.
The research found that outside London and the M25, there was a 0.9% drop in the total of managed restaurants in December 2018 as compared to the year before. But inside it, there was a 1.5% rise.
High streets, where over-supply has been most notable, saw managed restaurant numbers dip 1.1% year on year, while suburban areas recorded 2.2% growth.
Last year was a tough one for British casual dining businesses, with a number of well-known brands entering creditors voluntary agreements (CVA) and closing restaurants.
Burger brand Byron announced a CVA in January 2018 and subsequently closed 19 branches, while early 2018 also saw a CVA at celebrity chef Jamie Oliver’s restaurant group and the closure of 12 sites. That was followed by Carluccio’s which announced a CVA and closures in May, as well as Italian casual restaurant brand Prezzo which agreed a CVA with creditors, closing 104 branches. In October last year, burger brand GBK also announced that it was seeking a CVA and planned to close 17 restaurants.
But the research revealed better news for pubs and bars, particularly those generating the majority of sales from drinks, which were boosted by good summer weather and the football World Cup. Closures of drink-led pubs and bars averaged 3.6 a day in the last five years, but in the last 12 months, the pace has slowed substantially, to 2.2 a day.
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.”