By Tony Lorenz, Senior Partner of The Lorenz Consultancy (www.lorenzconsultancy.com)
With the news that Westminster Council is extending licenses for Al Fresco dining, it’s clear that the way we dine may look substantially different in the short term, and may mark the beginning of a long-term trend.
Al Fresco dining street licences have allowed many operators to generate some extra trade during the pandemic. It’s also been a great experiment: as we stroll around Central London, it’s clear that very little harm has been done by operators trading outside their premises – in many cases for the first time ever.
As the Capital returns to normal, some roads around Soho have been re-opened removing opportunities for street dining. However, it’s still a really positive development that the pavement licenses under the Business and Planning Act 2020, which were due to expire on the 30th September this year, are to be extended until 30 September 2022.
WHAT DOES THIS MEAN IN THE SHORT-TERM?
Put simply, we’re going to see outdoor dining continue in the capital. It seems that Westminster council have realised that little harm is done by allowing operators to use space outside their restaurants for trading purposes. Some operators are agreeing with adjacent retailers to extend their operations into the evening by placing tables in front of their shops. London, a city that has not benefited from Al Fresco dining in the way that many cities on the Continent have, is finding that this flexible provision allowing people to eat outdoors is catalysing economic recovery from the harsh effects of the pandemic.
This seems particularly prudent given the possible need for social distancing measures in the winter.With the use of outdoor seating, it’s possible that this winter’s trade will be different to the lockdown of last, as we will be able to meet under the protection of vaccines and outdoor seating.
Our restaurant clients cherish outside seating, since, once customers arrive, customers who can’t get a table will invariably book or take a table inside.
All that’s needed is good, or at least mild, weather for restaurateurs to see real benefit on their bottom line. From a real-estate perspective, we predict that where operators cause little harm trading outside their licensed premises, they may enjoy the benefit of this extension, and also be able, on expiry, to make this facility permanent.
It will be of paramount importance to ensure no encumbrance to pavement users.With permanence, it may be cost effective to enclose the space going forwards, with restaurants erecting enclosures or at least roping off sections of pavement, to clarify where their outdoor seating begins. Pavement users would appreciate that.
WHAT DOES THIS MEAN IN THE LONG-TERM?
It is likely that this amended legislation could result in permanence, which would then fundamentally alter how restaurant experiences work especially in Central London, and indeed in the big cities across the UK.
When acquiring new premises, operators will be looking for those which have the ability for external trading.This will change the game for developers constructing new sites with a restaurant element: open space will become a major consideration.
It is also likely that after a successful test period Al Fresco dining will be supported by the public, who have limited desire to return to cramped settings, even with widespread vaccination.
Most landlords will need to agree to lift restrictions in existing leases to allow external trading for some extra rent.The normal rule of thumb has valued outside trading space on rent reviews and lease renewals at 25% of the value of the ground floor rate per square foot, a small increase for restaurateurs to pay for this facility.
CHANGE IS HERE TO STAY
The look of the UK restaurant industry is changing.This is going to mean that restaurateurs and investors are going to have to be more inventive, which isn’t a bad thing.
Innovation and change to suit changing consumer habits will lead to the resurgence of the UK hospitality sector.
Outside trading space attracts customers into premises and increases the number of covers. Overseas visitors love London, and when tourism comes back permanently, al fresco dining may entice people to return and encourage others.
All we need is some pleasant weather in the UK to make it the new norm. Where’s the downside I ask?