No room for complacency, restaurant chains warned

Chefs preparing food

The restaurant industry has been warned against complacency following the publication of figures that show a dip in monthly sales earlier this year and suggest customers are becoming more discerning.

The restaurant and bars sector has continued to enjoy healthy growth for the past three months, but March saw the first decline in like-for-like sales for two years, according to the latest report from business specialists BDO.

While operators are unlikely to dwell too heavily on the drop, BDO said the data was evidence that the industry cannot become complacent.

The Easter break, falling in the final weekend in March but counting towards April’s figures, saw like-for-like sales up by 5% year-on-year, so one theory is that consumers held back on spending during March in order to spend over the Easter weekend.

“Whether or not this is true, however, it should serve as a warning that restaurant and bar owners cannot afford to become complacent after two years of consistent like-for-like growth,” said BDO.

While London is still enjoying the best growth organically (like-for-likes up by 1.4% against growth outside the M25 of 1.2%), an increased focus on opening new establishments away from the capital is having an effect, with restaurant brands outside London posting the best like-for-like sales growth, according to BDO.

The company said that consumers are “clearly willing” to spend in restaurants and bars, but the post-recession consumer has become far more discerning.

“Some of the well-known fast food burger chains are losing up to a million customers a year, and some serious innovation to business models is needed to help stave against falling revenues,” stated the report. “Customers still want fast food, but from hipper establishments than the traditional fast food restaurant. Current players need to innovate both their menus and their restaurants in order to appeal better to today’s consumer — and be better prepared to fight off the competition.”

It pointed out t hat premium burger chain Five Guys operates nearly 30 restaurants in the UK, while the Colorado-based Smashburger is looking to open 35 restaurants around the UK.

“Burgers are no longer sold on price, and appearance matters: restaurant chain Chili’s recently announced in the US that it is spending $750,000 (£433,000) on an innovative glaze for their burger buns to make them look more appetising when they are posted on social media.”

However, it said that the premium fast food concept is extending beyond burgers. Kebabs are becoming a delicacy rather than a commodity item purchased after the closing time bell in the pub, while a new craze for Mediterranean street food, eaten in a restaurant environment, is evolving.

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