EDITOR’S VIEW: It might look like carnage out there, but one operator’s loss is another one’s gain

Andrew Seymour grayscale

If the first month of this year is anything to go by then the only thing we can say for certain about 2018 is that it’s going to be unpredictable.

It is well-documented that operators have been lamenting the cost challenges facing them for some time now, but aside from the usual bits of consolidation here and there, the evidence suggests that the majority have done their best to keep a lid on their struggles.

That all seems to have changed since the clock struck midnight on New Year’s Eve, however. A string of high-profile names from the restaurant industry have issued pleas for help, reiterating the fine margins between success and failure that the industry is exposed to.

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Byron Hamburger, once seen as the perfect example of a trendy casual dining trend with no limit to its expansion, has proposed a company voluntary arrangement (CVA) that will ultimately lead to a massive restructuring of its business, while Strada axed a third of its estate over profitability fears.

Smaller chains are not immune from the pain, either. The likes of Vital Ingredient and Fuel Juice Bars, heralded as players with a bright future not too long ago, have also had to call on either creditors or administrators to remain afloat.

Meanwhile, Jamie’s Italian said this week that it will culled 12 restaurants from its portfolio, shrinking its estate to 25 stores, in order to ensure the brand can continue trading. Bosses at the firm have previously revealed that some of its restaurants needed to be serving an average of 3,000 covers every week to be sustainable, underscoring the scale of the challenge it faced.

It has been clear for some time that the UK foodservice market is heavily saturated. Even without factors such as Brexit and business rates, there was always the risk that some chains had become too bloated and that some form of ‘rightsizing’ was inevitable.

Suppliers of equipment might be forgiven for thinking that their customer base is disappearing before their eyes, but if there is one thing that gives the hospitality an edge over other sectors it is that when one brand or business slips away, another usually – and very quickly – emerges in its place.

In the same fortnight that Byron, Strada and Jamie’s Italian’s problems became apparent, Gregg’s confirmed that it will open 130 stores this year, Australia’s largest restaurant franchise firm announced plans to roll out two of its foodservice concepts in the UK and Nando’s revealed that it is trialling a new small format store model. All will need robust kitchen solutions and services to achieve their operational and financial objectives.

Predicting winners and losers in this market is rarely easy, but with every tale of woe comes a new opportunity for somebody else.

Tags : consolidationEditor's viewoperatorsopinionRestaurants
Andrew Seymour

The author Andrew Seymour

1 Comment

  1. As one door closes another chain will eagerly view the site as an opportunity, often paying way over the odds in rent and business rates to keep a competitor at bay. Many of these areas as the Editor suggests are heavily saturated already with many established brands, these all deemed as “gold mine” sites, though many replicating near the same offer. As above, take Byron, now overshadowed by Five Guys, Jamie’s kinda of moved into Strada territory now both are struggling. Are we going to see some of the upcoming Pizza offers go the same way. Site closures will give some of the emerging brands an opportunity to gain a foothold but the warning will be, “don’t over pay the landlord” and tie yourself into a “fools gold deal” deal The year has delivered a number of surprises to our great industry with the chains listed above and some of the recent profit warnings, add Carillion to the mix and we are in for an interesting perhaps bumpy 2018 for some of the operators.
    Business mergers and acquisitions could be the trend for 2018.

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