Food and DrinkNews

UK Dining Out Market Improving-But Still Lags Behind Europe

The UK eating and drinking-out market is showing signs of recovery, according to the latest Operational Real Estate Recovery Tracker from CBRE, but performance overall still lags behind other European countries.

The report said some UK operators are reporting like-for-like sales not too far below previous levels, but with some limited menus and reduced capacities, margins may be affected. Restaurant patron numbers in the UK are behind many European counterparts, signifying the closure period in various cities and countries. Some European cities are seen customer numbers approach pre-Covid levels, however in London, levels are still below 30% of those previously, but the picture across the UK as a whole “is a little better”, at circa 50%.

Retail investment market activity is not expected to pick up until Q4 2020. UK retail investment volumes declined 37% year-on-year, reaching £1.58bn for H1 2020 compared to £2.5bn for H1 2019. Discounts available on retail assets should attract investors and may encourage some asset repurposing to non-retail. Retail share prices have also rebounded since the UK lockdown was lifted, although are still below pre-Covid levels whilst yields have continued to expand across retail asset classes, and are expected to increase further, as the effect of Covid-19 continues to be felt.

The lack of tourists in London and Edinburgh, the latter also being affected by currently stricter lock-down restrictions means these areas are lagging behind more local centres, the report said. In Europe, London is significantly behind other capital cities with Paris currently back to pre-covid levels. The Tracker said the cinema sector could be very slow to recover given film studios have been unable to produce new content. Meanwhile, the report said the key test for the hotel industry will be as occupancy picks up, how quickly room rates recover.