Investor confidence has returned following an uplift in mergers & acquisitions according to the latest Pubs & Restaurants 2024 Mid-Year Market Insight report by Christie & Co, which reflects on market activity and trends across the UK’s pub and restaurant transactional markets in the first half of 2024 and provides an outlook for the rest of the year.
The report reveals that pub market activity improved in H1 2024, compared to the subdued levels seen in 2023, with Christie & Co’s key transactional metrics trending upwards since January this year, albeit off soft year-on-year comparables.
Demand has been polarised towards bottom-end and premium assets however, this also shifted over the past six months, with signs suggesting the mid-market is returning. Additionally, there has been increased M&A activity signalling that investor confidence has improved.
The key market insights and trends revealed in the report include:
- Christie & Co instructions increased by 46% compared to historic low levels. Viewings, offers, deals agreed and exchanges increased by 5%, 15%, 46% and 74% respectively
- The sub 600K market remains strong but the freehold, freehouse market is returning as confidence improves
- There is increased demand for closed sites, particularly within the restaurant sector as buyers would prefer to buy the property and add value in the current environment
- The most active buyers are predominantly experienced operators or individuals already in the marketplace who understand value
- Pub Co’s have been notably active. They are looking to divest sites that no longer fit their portfolios, subsequently freeing up capital to acquire new sites
- The late-night sector has continued to struggle, with the latest figures from CGA Nielsen indicating there were approximately five closures per week in Q1 2024. The growth of the late-night bar, changing social trends and disproportionate impact of the cost-of-living crisis on the student and younger demographic has contributed to this. Entertainment-led venues are faring better
- Consumer habits have shifted with regards to food, drinking and dining out times – a continuation of last year
- Operators are focusing on creating lean, consolidated businesses versus saturation
Looking ahead, whilst it is noted that operators are still contending with staffing issues, cost pressures and current interest rates have made funding deals challenging, Christie & Co remains optimistic that market activity is moving in the right direction and suggests that correctly pricing assets is the key to increased deal activity as vendor expectations remain high, particularly as rates are expected to come down in the coming months.
Stephen Owens, Managing Director of Pubs & Restaurants comments,
“The first half of 2024 has seen the forward momentum continue from the end of last year. What the sector now requires in order to ensure that the recovery continues, is stability, the new government to keep its pledge to help the hospitality sector particularly around business rate reform, interest rates starting to ease, improved consumer confidence and hopefully for the sun to come out and play its part.”
