The turnover of the UK restaurant sector increased by 5% last year to £20.9 billion, up from £19.9 billion in 2014, driven by the booming ‘fast casual’ segment of the market, says Funding Options, the online business finance supermarket.
Funding Options says that in recent years there has been a huge proliferation of restaurants and food concepts as customers have demonstrated demand for novelty when eating out, pushing the sector’s growth to twice that of overall GDP (2.2%) in the same period.
Strong sector growth has resulted in restaurateurs investing heavily in new equipment – the value of restaurant assets is up by 14%, or £550 million, in a year.*
Funding Options says that specialist kitchen equipment such as meat smokers, wood-fired pizza ovens and high-grade juicers can help a restaurant differentiate itself and compete for a share of the growing market for diners.
New pop-ups and mobile restaurants are also driving the trend. Many are started by aspiring chefs trying their hand at running a professional kitchen, and often employ innovative cooking techniques.
Additionally, private equity funds are behind some of the increase by funding the rapid rollout of restaurant chains as PE houses look to take advantage of increases in discretionary spending.
The ‘fast casual’ business model relies on opening new branches rapidly and serving consistent food across the chain. Using the same equipment in each restaurant makes this easier, so the businesses are significant purchasers of new kitchen equipment.
Conrad Ford, CEO of Funding Options, says:
“The last few years have seen strong growth in the UK restaurant sector and a huge array of artisan techniques and concepts come to market.”
“UK restaurants are adjusting to a broader base of consumers becoming increasingly discerning and increasingly fickle. Many will pay higher prices for mid-range meals but expect chains to maintain high levels of capital expenditure.”
“Many customers will pay higher prices for mid-range meals but expect chains to maintain high levels of capital expenditure and excellent hygiene standards, meaning that restaurant equipment turnover is high.”
“Mediocre restaurants find it hard to compete in a booming sector – successful restaurateurs are constantly improving and innovating.”
“The increasing variety of restaurants means there has been more investment in specialist kitchen items that can help provide novel but high quality food. The use of a certain cooking technique can be a key differentiator and marketing tool for many food outlets.”
“Even many chains of restaurants see rapid menu turnover, with new items regularly added or changed in order to continue to attract new customers and keep established customers coming back.”
“Restaurants have been investing in front-of-house as well as new kitchens equipment. Trends in restaurant décor move as quickly as food – pulled pork and exposed brickwork might attract the customers one year but keep them away the next.”