EATING OUT
If the big names shut up shop, don’t assume that local independents will take their place, says
Another day, another doom-laden headline about chain restaurants struggling in the time of Covid. In recent weeks there have been stories about The Restaurant Group closing 125 sites, including branches of Frankie & Benny’s, Garfunkel’s and Chiquito; Pizza Hut considering insolvency and Byron burger company closing 31 of its 51 restaurants. The latest in trouble is Pizza Express, which may close 67 sites as part of an insolvency agreement. For anyone whose job is at risk it is of course terrible news, but it should come as no surprise.
Putting aside the obvious negative impact of the pandemic on eating out, the casual dining sector has been in crisis for several years. The “casual dining crunch” began back in early 2018, when Jamie’s Italian, Strada and Prezzo were among the high street brands desperately restructuring to stay afloat. The toxic mix of a massively oversaturated market coupled with relentlessly rising costs, including rents, rates, staff and ingredients, has meant that making a quick buck from fast-ish food has become increasingly difficult.
It would, however, be foolish to start ringing the death knell for the casual dining sector. Some brands such as Jamie’s Italian may be no more (although it still exits as a franchise in a number of overseas locations, including Brazil, Cyprus and Qatar) but many are battling on. The apparently bulletproof Nando’s looks set to eventually reopen all of its 400 restaurants, and a company voluntary agreement could see most if not all of Pizza Hut’s 250 locations begin trading again this month. And if Pizza Express does close the expected number of stores, that will still leave 382 restaurants to eventually reopen (it currently has 166 restaurants operating). No one is going to go short of an overpriced dough ball.
There is still a lot of investor interest in high street brands. The Casual
Familiar chains deliver the sort of convenience and affordability that many diners crave
brands. With familiar names such as Leon and Wahaca having appointed advisers, it looks likely that there are more deals to be done, but not everyone believes that’s a good thing.
In an interview with the Financial Times, entrepreneur Hugh Osmond claimed that high street casual dining chains had “no future”, that their business model was “absolutely broken” and that investors did not “understand the business they are acquiring”.
So, what will high street dining look like in the future? According to Osmond, it’s upmarket chains such as