A fierce kitchen battle is beginning to rage as emerging smokehouse and barbecue chains such as Hickory’s, Blue’s and Red’s True Barbecue (above) tussle with groups that have developed a reputable smokehouse menu, such as Frankie & Benny’s and Harvester. Business advisory firm BDO recently examined the state of play for its latest Restaurants and Bars Report. Mark Edwards, audit partner at the firm, gives the full lowdown on why the smokehouse and barbeque revolution can’t be ignored.
The days when the closest the majority of consumers would get to American dining was munching their way through a hot dog during the trailers in the cinema are long gone. Changes in consumer tastes, coupled with a growing popularity for casual dining, are helping to make the new barbecue and smokehouse restaurants one of the fastest growing categories for eating out.
Casual dining growth
The concept of casual dining is seeing the fastest growth of any other dining sector in the UK. Coffer Peach statistics show that the sector grew by 8% nationally year-on-year between 2013 and 2014, with sales growth outside the M25 at 11%. Some restaurants are fast to react to this trend and are opening new outlets to cater for this kind of diner: Carluccio’s has grown its restaurant portfolio by 46% over the past three years, while Wagamama has increased its number of outlets by 50%.
However, two of the most notable increases are by the long established Frankie & Benny’s and Harvester chains. The former increased its outlet portfolio from 197 to 232 between 2011 and 2014 (an 18% increase) whilst Harvester saw its restaurant numbers increase by a fifth to 212. Former family stalwarts such as ASK, Strada and Table Table have actually seen their portfolios decline.
The transition to smokehouse
So, why are Frankie & Benny’s and Harvester enjoying newfound popularity? Although both chains are benefitting from a well thought out strategic opening programme, both also feature menus which feature either American or barbecue options: Frankie & Benny’s offers various pulled pork options and features choices such as blackened steak whilst Harvester’s menus are dominated by pictures of ribs and pulled pork, dripping in barbecue sauce.
The evolution of the menu
The evolution of the restaurant menu provides some insight into changing consumer tastes. If we look at the burger menu at the well-known chain Harvester, for example, one can see that burger options have greatly expanded from the standard beef, chicken and vegetarian options, with the source of meat being displayed prominently on the menu. Pulled pork is now provided as an option in all burgers — a trend which is being seen throughout restaurants.
These restaurants are, rather crudely, transition restaurants to the relatively new concept of smokehouse and barbecue restaurants. The public’s thirst for the new casual dining style concepts is unrelenting and this, coupled with an enduring love of meat, is propelling smokehouse and barbecue restaurants into the one of the fastest growing dining sectors of today.
Smokehouse and barbecue restaurants are being propelled into the one of the fastest growing dining sectors”
Barbecue concept set for growth
Indeed, in the CGA Peach Business Leaders’ Survey from February 2015, barbecue was identified as the food trend which would have an impact this year by some 57% of restaurant operators — with cheaper cuts (the second rated option) only identified by 31% of respondents.
It is hardly surprising that restaurant operators are springing up to capitalise on this trend — and are able to harness the capital to grow, thanks to financial providers sharing the same view as restaurant operators about the growth potential of the sector. Red’s True Barbecue, which began operating just three years ago, has enjoyed impressive success since its first branch opened in Leeds in 2012.
The company’s growth was supported by the Royal Bank of Scotland, but it has recently secured a £5m debt and equity investment from leading figures in the hospitality industry. Red’s True Barbecue admits that the premium burger concept is one of the major competitors to the barbecue concept and, despite premium burger restaurants being around for a number of years, the cuisine is still experiencing strong growth in the UK market.
The American low and slow barbecue concept is steeped in heritage, and the depth and breadth of the product range holds appeal for young adults who are the key demographic for smokehouse restaurants.
Indeed, the majority of smokehouse restaurant websites have a large section devoted to the history of the restaurant, with this playing an important a part as the menu in the PR strategy for any new restaurants opening. London-based operators including Bodean’s and Porky’s have enjoyed great success in recent years as the appetite for ribs and US barbecue has grown rapidly.
Growth from outside London
Interestingly, the growth of the smokehouse restaurant is being led from the north — a trend which is being seen across the UK restaurant industry rather than one which is unique to the smokehouse industry. Whilst Coffer Peach figures show that London continues to enjoy the best organic growth with like-for-like sales growth of 1.4%, there has been a defined move by operators to open new restaurants away from the capital, which helped to bring like-for-like sales up by 5.3% away from London.
Blue’s Smokehouse, which is part of PS the Pub Company, is focusing its expansion outside the capital. The company opened its first smokehouse in Bracknell and a second restaurant in Twickenham in March. The business is currently in talks with investors about opening four new smokehouses in Oxford, Brighton and Staines and is planning to open a new smokehouse in Oxfordshire in the summer.
Hickory’s Smokehouse, based in and around Chester, received funding from sector investors Piper Private Equity in October last year. Such a deal demonstrated not only that equity investors see growth in the sub-sector, but also that there is strength in concepts developed outside of the capital.
Meanwhile, Red’s True Barbecue, which has itself just received equity funding from sector investors, has restaurants in Leeds, Headingley, Manchester and Nottingham but has only recently entered the capital with a site in Shoreditch.
Whilst the company admits that London has the highest concentration of smokehouses, the popularity of smokehouses away from the capital is less saturated with significant growth potential.
Interestingly, the growth of the smokehouse restaurant is being led from the north”
What’s next for the industry?
The sector’s growth seems to be assured for the short- to mid-term at least, with the demand for barbecue showing no sign of waning. More players are likely to enter the market and some of the more well-known restaurants are likely to also provide barbecue offerings.
However, independent restaurants will continue to thrive in an area which consumers still view as niche, and we are likely to see smokehouse restaurants with an even more specialist offering enter the market — particularly in London — as restaurateurs seek to differentiate themselves from the rest of the market.
Recent examples of this include Suvaki in Soho, London and WingsEggs in Fulham — the former claims to be a fast casual Greek grill house concept whilst WingsEggs specialises in chicken wings and egg dishes (as well as craft beers) where barbecue plays a key part.
Some of the better known smokehouse brands are likely to be following in the footsteps of Nando’s and Pizza Express and launch sauces and home-cook meals in supermarkets as an extra source of revenue. However, launches will have to be made with care: low and slow may not replicate well in a microwave ready meal.
The prospects for the industry are very exciting, and we look forward to seeing the concept continue to grow and thrive over time as more consumers — and investors — gain an appetite for the low and slow barbecue and smokehouse concept.
View BDO’s latest Restaurants and Bars Report at: www.bdo.co.uk/sectors/leisure-and-hospitality
Smokehouse chain hits London as it eyes 20 sites
Leeds-based smokehouse chain Reds True Barbecue has launched its first branch in London after securing a £5m investment from a number of leading individuals from the industry earlier this year.
The consortium who funded the multimillion pound investment include former Wagamama chairman Ian Neill, Brandon Stephens (Tortilla), Stephen Wall (Pho), Jamie Barber (Cabana), Maurice Abboudi (K10), Dom Lake (Canteen) and retail entrepreneurs Aarish Patel and Sunny Gil.
The newest store, which opened for business recently in Shoreditch, London, comes as the firm looks to strengthen its geographic presence. It wants to get to 20 sites over the next few years. The fast-growing smokehouse chain already operates four sites across the North and Midlands. Its arrival into the London foodservice scene signals Reds’ intent to become a smokehouse powerhouse. This is further backed up by advisory firm BDO tipping it to become one of the leading operators in the UK smokehouse boom.
At the time of securing the investment, Scott Munro, who co-founded Red’s with James Douglas, said: “We’re two years into an incredible journey. Red’s is still a young company, and to have access to this wealth of advice and knowledge at this stage of our growth puts us in a strong and enviable position. This deal will guide us into early next year where we plan to re-look at our options. Our focus remains to open 20 sites within five years.”