Britain’s supply of licensed premises has been pared back this year – but casual dining restaurants and branded food pubs remain firmly in growth, reveals the sixth edition of the Market Growth Monitor from AlixPartners and CGA Peach.
The headline figure is that the country’s stock of licensed premises was trimmed by 1.2% in the 12 months to September this year, to a little under 123,000. Much of this net decline can be put down to the continued demise of old-fashioned, drink-led pubs and also traditional independent restaurants.
Also, the Brexit vote has affected business confidence in the sector, as CGA research has shown, and there is evidence that pub and restaurant groups have become more cautious, pulling back on some more ambitious expansion plans as well as taking a tougher approach to under-performing sites.
“Nevertheless, competition in the managed chain restaurant and food pub market remains fierce and the sector continues to grow in numbers – particularly in our major cities. It is also worth noting that sites being opened tend to be much larger than the establishments being closed – leading to a net increase in trading space,” said Peter Martin, vice president of CGA Peach, the business insight consultancy that produces the Monitor in partnership with AlixPartners.
The latest Market Growth Monitor shows that while the number of drink-led licensed premises fell by 2.1% in the last 12 months, largely due to the closures of community locals and circuit bar, the total of food-led premises slipped only 0.4%.
“Within this segment, closures have tended to be of independent outlets, with a particular skew towards Indian or Chinese restaurants. The rising popularity of takeaways and delivery, through intermediaries like JustEat and Hungry House, has been a major pressure here. But even more significant has been the intense competition from still growing casual dining brands,” added Martin.
“Parts of the market are still witnessing significant growth – the numbers of managed restaurants in the UK has grown by 4.9% in the 12 months to September alone. The roll out of high quality branded concepts, and those run by fledgling, entrepreneurial operators in particular, is the central narrative of the story in eating out.
— Paul Hemming, managing director of AlixPartners
Also striking in this round of Market Growth Monitor data is the continued rise of branded food pubs, whose numbers grew by 19.1% in the year to September, equivalent to more than one new addition a day. Some of these have been new openings, but many more are conversions of previously unbranded pubs to formats under the control of major pub groups such as Mitchells & Butlers and Greene King. The number of branded food pubs has leapt by nearly half (45.7%) in the last five years.
“The fortunes of pubs and bars that are led by drink, down by 18.1% in five years, make for a stark contrast. The collapse of suburban and rural drinking pubs is a thread that the media likes to follow, but the success of pub restaurants is a hugely positive one that tends to be overlooked.
Added Hemming: “The changing face of the British pub has helped to create an opportunity for operators across the pub spectrum, be it the larger pubcos converting suboptimal wet-led units to food or the new wave of premium concepts such as White Brasserie Company, Hippo Inns and Seafood Pub Company, the success of which suggest the pub is an increasingly attractive home for restaurant operators, often engendering markedly higher customer satisfaction ratings relative to restaurants.”
These quarterly trends of rising pub and restaurant brands and falling independents and drinking pubs have been consistent across the country. They are also strikingly similar when split by locations like the high street (where the number of licensed premises is down 1.1%), the suburbs (down 1.4%) and rural areas (down 1.0%).