Issue of the week: restaurants feel the heat

A spate of closures in the sector is keeping accountants busy, but there’s a silver lining for some

There used to be an adage in the restaurant business that “you can always make dough from selling pizza”. No longer, said Caroline Davies in The Guardian. Times are tough in Britain’s “casual dining” sector – one in three of the country’s top 100 restaurant groups are now loss-making, according to a study published this week. The latest to feel the heat is Carluccio’s, co-founded by the late chef Antonio Carluccio, which has called in accountants KPMG to “assess its options”. There seems to be a pattern here. Several other midmarket Italian chains, including Jamie’s Italian, Prezzo and Strada, have also recently announced closures. It seems that the market is facing serious “oversaturation” – particularly when it comes to Italian restaurants.

Mid-market restaurant chains are facing a perfect storm of adverse conditions, said Naomi Rovnick in the FT. “The fall of sterling since Britain voted to leave the EU in 2016 has pushed up prices of imported food, while the Government has increased minimum wages and business rates.” Meanwhile, consumers are “tightening their belts” and changing dining habits. When in doubt, blame the millennials, said Julia Faurschou in Investors Chronicle. They’re “a fickle bunch” especially when it comes to food. They seem to want more natural and healthy options. “They want their meal to be an ‘experience’. But it can’t be from a chain, because that wouldn’t make the Instagram picture very unique.” That said, it seems that people of all ages are changing their habits. “A cosy night in has been made more appealing by the rise of delivery services like Just Eat and Deliveroo.” People still use restaurants, of course. But when they’re out, they “tend not to order high-margin products such as beverages”.

Restructuring experts like KPMG report they’ve never been so busy, said BBC Business online. But it’s not all doom and gloom. According to Deloitte, “there is still a booming market for places that get the offer right”: Wagamama and Nando’s to name but two. And you can still end up queuing at fashionable city centre cafés “offering highly Instagramable weekend brunches”. Sarah Humphreys, lead partner for casual dining at Deloitte, reckons things will get worse before they get better, but that the current spate of closures is just “a blip” in a longterm trend for more meals out. There’s still hay to be made, said Sabah Meddings in The Sunday Times. What the industry likes to call “wet-led” businesses – pubs where the majority of takings come from booze – are “back in vogue”. Time to raise your glasses, perhaps, to the “return of the pub”.