Restaurant stalwart David Page has hit out at the level of poor investment decisions made in the sector during the past five years and warned that more businesses will fail if they can’t get the core elements of restaurant ownership right.
Mr Page, a former chief executive of Pizza Express, is now chairman of Fulham Shore, which owns The Real Greek and Franco Manca. The group has improved headline EBITDA in every reporting period since its admission to AIM in 2014 and expanded without shutting hardly any locations.
He said: “Much of the capital invested in the UK restaurant sector over the past five years has not been spent wisely… successful restaurant businesses continue to be those that offer consistent, delicious and reasonably priced food made with quality ingredients.
“These businesses are likely to be operating from a well-chosen modern estate, avoiding the demise of the old prime high street and instead favouring restored markets, destination locations and unpretentious interiors.”
Mr Page suggested there are two key key ingredients of business that every operator must get right if they are to succeed.
“As long as successful restaurant operators keep their menu pricing right and their financial structure stable, they will continue to succeed where some larger operators have failed. There are many disrupters in the casual dining market that are competing well with the incumbents.
“A good restaurant can still open in a difficult, secondary or ‘brave’ tertiary location if the offer is good enough and time is invested. Not only will the public find it but other restaurant operators will follow it and the location can grow organically into a popular destination. This is the natural evolution of a new area of restaurant excellence in a town, as opposed to an engineered environment created by a planner or a developer which sometimes misses the mark.”
Rising costs, such as goods purchased following the fall in the value of the pound, rent and labour will present issues if sales cannot mitigate these increases, Mr Page added.
“If sales are a problem because of a lack of demand for a restaurant operator’s menu, or there is a resistance to the restaurant’s pricing policy, then that operator is in trouble.”
Fulham Shore’s sales increased 17% to £64m for the year ending 31 March 2019, while EBITDA grew by £400,000 to £7.8m.