One of the industry’s top figureheads is convinced that restaurant operators are regretting the opening of landmark sites in Central London as the first signs emerge that market premiums might have peaked.
Martin Robinson, non-executive chairman of the 300-strong Casual Dining Group and a former chairman of Wagamama, believes the steady level of new launches since Brexit isn’t necessarily a sign of market resilience as the restaurant industry traditionally suffers a “lag” due to the lead time in rental agreements.
“There are still lots of big headline sites in Central London being opened that would have been signed up or agreed two years ago with the landlord. I think some of the people opening those sites now must be rather wishing they could wind the clock back,” said Mr Robinson, who once led the buy-out of Center Parcs and currently sits on the board of Disneyland Paris.
“The opening of new sites, and the fact that there are lots of new sites that you see in London opening up, isn’t necessarily a sign of health today, it is a sign of the health that was perceived to exist two years ago, so I think there is a lag on that.”
Despite recent growth in managed pub and restaurant openings, data suggests new licensed premises openings have decreased, supporting Mr Robinson’s view that it is “pretty inevitable” that expansion activity will slow down over the next 12 months.
He said that landlord behaviour was the clearest “lagging indicator”.
“Landlords only start to bring their premiums down when they absolutely have to and there is no doubt in my experience that those premiums now are starting to come down very, very quickly. I think we are just now at that tipping point where you’d have wished that you hadn’t been opening lots of new sites in the last year if you’d have had your time all over again. There will probably be a year for things to settle down into a new norm and then probably next year will be a great time to be buying new sites again.”
Casual Dining Group, which owns the Bella Italia, Cafe Rouge and Las Iguanas brands – an empire that spans 300 restaurants – has also revisited its own growth strategy in the capital, Mr Robinson confirmed.
“We have reduced the number of sites in London as well, and business rates is definitely triggering another round of there being less sites in London, without a doubt. And we can see that happening – we can see sites that we have signed up for that we have pulled out of now and that is just starting to happen.”
Mr Robinson was speaking at yesterday’s Casual Dining Show. The second and final day of the event takes place at the Business Design Centre in London today.