Azzurri, Prezzo and CDG tipped to lead market consolidation

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Overseas investors could be tempted to dip their toe into the UK foodservice market over the next six to 12 months, while the country’s biggest chains may look upon acquisition as their quickest route to growth, analysts have suggested.

Despite challenging market conditions, continued private equity interest in “differentiated, scalable concepts” is expected to attract buyers, with the weak British pound making UK businesses more attractive to foreign suitors.

“Overseas deals like 2016’s acquisition of GBK by Famous Brands may become more common as a result,” stated Tom Barnard, director of corporate finance at business advisory firm BDO, adding: “Trade acquisitions could provide access to synergy savings to offset increasing cost pressures and deliver the growth that can’t be achieved by existing brands as a result of tapered down roll-out plans. We would not be surprised to see the likes of Azzuri Group, Prezzo, Cote, or CDG acquire other brands.”

Product expansion has the potential to open up new avenues of growth, like Azzuri Group’s acquisition of Coco di Mama and Whitbread’s takeover of Pure, wrote Barnard in BDO’s latest Restaurants & Bars Report.

He also said there were a number of attractive businesses expected to come to market over the next couple of years.

“Artisan bakery Gail’s and Caribbean eatery Turtle Bay are at the top of the list of stellar concepts being watched carefully. Vietnamese restaurant group Pho is expected to attract a lot of interest should it come to market and Bill’s, following a management reshuffle, will likely consider its options at some point.

“The Thai and South East Asian market is active with the likes of Giggling Squid, Thai Leisure Group, Koh Thai, Busaba and Rosa’s all looking to lead the category. Japanese staple Ramen is proving popular in London thanks to operators Tonkotsu and Bone Daddies. Cabana and Fazenda are giving Brazilian food a presence at the table. Hotcha and Zing Zing are certainly ones to watch. Given the UK’s love of Chinese takeaway, both concepts are excited about developing the first branded national Chinese takeaway and are growing quickly.”

Adding to the melting pot is a stream of arrivals from the US, including MOD Pizza and Wingstop. They are looking to follow in the footsteps of Five Guys and Shake Shack, which have successfully made the move across the Atlantic.

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