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Bars and restaurants rise

Eating out sector rises as menus adapt to health trend

Wagamama, service, hospitality, restaurant

Restaurants saw an uplift in business in January

Britain’s managed pub, bar and restaurant sector has kicked-off the New Year on the front foot as many outlets revised their menus to take account of consumers demanding more meat-free and low alcohol options.

Collective like-for-like sales were up 1.9% in January compared to the same month last year, according to the Coffer Peach Business Tracker.

January’s positive results come on the back of strong trading over the festive period, which saw collective like-for-likes up 2.5% against the previous year.

“Reasonably good weather, in particular the lack of snow, will have helped sales, but nonetheless it is encouraging to see that the public is continuing to go out to eat and drink,” said Karl Chessell, director of CGA, the business insight consultancy that produces the Tracker in partnership with TheCoffer Group and RSM.

The eating and drinking out market is showing resilience and people’s appetite for going out remains intact

– Trevor Watson, Davis Coffer Lyons

Restaurant groups saw the biggest increase in January, with like-for-likes up 2.5%, driven almost entirely by strong sales outside of London. Managed pubs saw like-for-likes grow 1.7% over the month, while bar operators were also up, although by only 0.9%.

Trevor Watson, executive director at Davis Coffer Lyons, said: “To put these figures in context, last January the market saw a 1.8% drop in like-for-likes against 2018, so essentially we are back to where we were two years ago.

“But it does show an underlying stability in the market, despite the political climate and what has been going on in the wider economy. The eating and drinking out market is showing resilience and people’s appetite for going out remains intact.”

Ivy Glasgow

The Ivy Glasgow was one of the new restaurants that opened last year

Paul Newman, head of leisure and hospitality at RSM, said: “A year-over-year sales boost is a welcome reward for the many pubs, bars and restaurants who refined their New Year offering to capitalise on the trends for Veganuary and alcohol alternative drinks.

“Any sales increase will be welcomed by a sector that still faces tremendous cost pressures, particularly around people, business rates and food prices. Operators will eagerly await any news on the easing of such costs from Sajid Javid’s upcoming budget announcement

The Coffer Peach Tracker industry sales monitor for the UK pub, bar and restaurant sector collects and analyses performance data from 58 operating groups, with together almost 10,000 sites and a combined turnover of over £11bn and is the established industry benchmark. 

Glasgow indies on the rise

Independent restaurateurs in Glasgow are performing better than chains as they have opted for quirky locations to help keep costs lower.

John Menzies, director in the retail team at Savills in Glasgow, said: “Independents have been more cautious around how quickly they grow, compared with some of the larger chains.

“For many independents, they have been priced out of premium rental locations and instead opted for quirky locations which are lower in rent, but still close enough to the centre to attract customers.

“As a result, many of these businesses have demonstrated positive turnover growth which has in turn encouraged more independent businesses to open.”

Highlights in the year include the openings of: Sugo, the pasta restaurant on Mitchell Street and sister restaurant to Paesano; Bo and Birdy, a modern brasserie at Blythswood Square; and Mezcal, a new Mexican taqueuria and bar on Hope Street.

While overall volume of space leased (65,000 sq ft) is down 15% from last year, the proportion leased to local independent operators increased by nearly 10%, rising from 36,000 sq ft in 2018 to approximately 40,000 sq ft in 2019.

We expect to see another busy year for the casual dining sector leasing market

– John Menzies, Savills

Demand from national operators was also evident in 2019 – The Ivy opened its doors on Buchanan Street in July, as part of the iconic London West End theatre restaurant’s nationwide roll-out. Others included Nandos, German Donner Kebab, Benihana, Kokoro and Project Pizza.

Menzies, adds: “We expect to see another busy year for the casual dining sector leasing market in 2020, but the focus of demand is continuing to evolve in terms of property type, size and location.

“A number of interesting national brands are expected to open in 2020, including Franco Manca, Mowgli, Pho and Wolf. With margins tightening in the face of rising operating costs, savvy occupiers are now looking for smaller units of 1,500-3,000 sq ft, often in quirky locations and in buildings with architectural character.”

Additionally, the pub sector is expected to experience growth in 2020, having traditionally grown at a slower pace compared with the restaurant market. One of UK’s largest pub businesses, Mitchells & Butlers, is actively looking for sites in Scotland.

Menzies, comments: “Over the last five years, the pub sector has not seen the same growth as restaurants, so with arguably less saturation in the sector there is room for growth.”

According to Savills, rental values have remained static in 2019 with prime rents reflecting between £35-40 per sq ft.

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