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Restaurant Closures Extend City Centre Churn

Major UK cities including Manchester have seen some high-profile restaurant closures lately—a result of volatile trading dynamics that have led to a rapid turnover of licensed premises in metropolitan areas.

As the Manchester Evening News has reported, two prominent Spinningfields venues, Living Ventures’ Manchester House and Artisan, have just closed. In common with many other leading cities, Manchester has seen the shutters come down on a number of restaurants in both the fine dining and casual dining sectors, with several leading managed brands undergoing closure programmes or CVAs in 2018.

But CGA data shows that while some operators have quit major cities, there has also been a steady flow of new openings. Put together, they add up to some dramatic overall increases in the supply of restaurants in British city centres.

CGA research shows that by June 2018 the centre of Manchester had 34.7% more restaurants than it did just five years earlier. Growth has also been rapid in the centres of several other cities in northern England, including Leeds (28.0%), Liverpool (34.7%) and Newcastle (23.9%). These rates of new openings comfortably outpace the 11.0% increase in the number of restaurants across the whole of Britain over the last five years.

However, CGA’s research indicates that restaurant growth has slowed substantially in the last year. The latest edition of the Market Growth Monitor from CGA and AlixPartners revealed that Britain’s supply of restaurants fell by 1.0% in the year to June, while the total number of licensed premises dropped 2.5%. Fears of saturation, broadly flat like for like sales and rising food, property and people costs have all combined to rein in the rate of new openings.

As the news from Manchester shows, city centres have not been immune to this downturn. But the closures are part of a more complex churn that has seen dynamic new entrants add even more energy to the restaurant scene, both in Manchester and in other cities. Another consequence of the trend is that consumers have been pulled in to key cities from neighbouring towns and suburbs, which often has a negative impact on demand and new openings in these secondary areas.

It all means that consumers have more choice than ever before when they eat out in city centres. For operators, though, it has created a fiercely competitive market in which they need to be at the top of their game to succeed.

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