More restaurant space is appearing on the market than “for many a year” in a sign that rental conditions could be softening for operators, the owner of Franco Manco and The Real Greek has said.
David Page, chairman of Fulham Shore, said a number of market factors meant operators with their eyes on expansion have more options than ever.
“Recent years have seen unprecedented amounts of capital invested in the UK restaurant sector and, in recent months, more restaurant space has appeared on the market than for many a year,” he said. “This is largely a function of larger businesses trying to sell poor performing locations, newly created developments and administrators selling sites for broken companies.”
Mr Page, who has been in the restaurant industry since 1976, revealed to analysts that a site in a London suburb being offered for £90,000-a-year rent three years ago was recently marketed to it for £50,000.
“Restaurant supply and demand often have a fractious relationship and, however quickly demand for eating out grows, there will always be a risk that restaurant supply may sometimes grow faster, either nationally or locally,” he said.
“In addition, we are entering a difficult forecasting period due to Brexit. Against this backdrop, some restaurant businesses will make the grade and others will not. We believe that operators with “me-too” offerings, over-rented sites, tails of unprofitable sites, dated menus, too much debt, poor concepts and unincentivised staff (or all of the above) will struggle.”
Fulham Shore owns Franco Manca, which has trebled its UK sites to 38 in the last two years. Its kitchens are now serving more than 60,000 pizzas per week, up from 25,000 just over two years ago. It has expanded outside of the capital to places such as Brighton and Reading, where it is serving more customers per week than its average London pizzeria.
The Real Greek, meanwhile, has added three new units to its 14-strong store network over the past year, including Southampton, Bournemouth and Reading.
It said it was “reviewing” the progress of its third business, the single franchise Bukowski Grill brand in Soho, over the next few months.
Mr Page confirmed that it anticipates opening 15 new locations overall in the current financial year, but said much of this will depend on its ability to secure sites that meet its return on capital criteria.
“This is critical to our success and we will not open new sites just to chase expansion numbers. We believe it is far better to wait for the right sites at the right rents than to chase short-term targets,” he stated.
Fulham Shore made profits of almost £1m on sales of £41m last year.