Industry veteran David Page says the UK restaurant market would have undergone significant consolidation even without the impact of coronavirus due to the number of businesses built on weak foundations.
The Real Greek and Franco Manco boss said plenty of operators were riding the wave of a growing sector when in actual fact they lacked the nous and experienced required.
“We believe that the restaurant market in the UK was heading for a correction well before the coronavirus outbreak. There were too many restaurant businesses with owners and managers convinced they could swim like Mark Spitz, but which were actually being kept afloat by some badly-made rubber rings and various leaky flotation devices.
“They were driven to expand by historically cheap debt, supposed high exit multiples on sale of the businesses and run by management teams who had never experienced either a downturn in the UK economy or an oversupply in the restaurant sector.”
Mr Page said successful restaurant businesses would continue to be those providing reasonably priced food, made with quality ingredients, served by motivated teams. He insisted Fulham Shore – which owns The Real Greek and Franco Manco – is able to offer all these components and that it benefitted from a well-positioned, carefully chosen, fairly rented estate.
The group saw revenues grow 7% to £68.6m for the year ending March 20. Since the business reopened following lockdown, some of Franco Manca’s regional and suburban restaurants are currently breaking trading records on a weekly basis as people stay away from city centres and metropolitan areas.
“Our experience over the last six months has shown that the restaurants that provide what customers want will thrive under the most difficult of circumstances. Ploughing the same old hackneyed furrow of formulaic me-too offerings won’t work anymore in the UK, especially in times of societal turmoil and economic upheaval.
“We believe that the public want food sourcing that is trustworthy; they want to know that the owner of a restaurant knows the farm or vineyard that the food and wine on the menu comes from.
“Combine this with menu pricing that doesn’t leave them with bill shock and servers who are seen to be having a good time while working makes for a great atmosphere and, consequently, high customer numbers per site.
“Purchasing directly from our growers and producers cuts out one, two or even three wholesalers, agents and middlemen. This enables us to pass on these savings to our customers in the form of more affordable menu prices. This results in the high numbers of customers visiting our restaurants per week and means that our turnover per site continues to be strong. This is the future – high quality ingredients combined with low prices, delivering high turnover per site.”
The tribulations of distressed UK businesses and their landlords have resulted in the group being offered more new sites than we can possibly view, Mr Page revealed. Locations such as Newcastle, Canterbury, Cardiff and Glasgow are all on its radar.
“These are ex-retail shops, ex-ground floor offices, ex chain restaurants, plus new-build sites which were some years in the planning, but now have no tenants. We feel the longer we wait for even the best of these sites the lower the rents we can achieve. We believe this situation may last at least five years.”