Restaurant Industry to Reach £20bn But Market Correction Looms

For months now, restaurant industry insiders have been muttering darkly about an impending apocalypse, presaging truly dark times ahead as a perfect storm of socioeconomic, political, and self-inflicted Brexit-shaped headwinds bears down on an independent sector already threatened by rent hikes and mega chain monopolisation.

Today those voices got a little bit louder, and found a focal point in the MCA’s annual UK Restaurant Market report, which gave everyone the good news — the sector will reach the astronomical value of £20bn in 2017, 4.3% up on 2016 — before undercutting it with a sentence that should strike fear into the heart of anyone with even a tangential interest in the health of the restaurant market.

“Should”, because these guys are not given over to a hyperbole; when, therefore, they say something like “a challenging period of market correction looms […] until demand better aligns with supply,” it is time to heed the warning, to batten down the hatches.

Even more than the usage of “looms” — though an excellent, appropriate word in the circumstances — it’s the perceived misalignment of supply and demand that is ominous: in the context of “declining consumer visit frequencies,” “rising cost pressures,” and “concerns from over-expansion,” that only realistically means one thing: closures, potentially lots of them.

There is a checklist of possible remedies that existing operators are encouraged to tick off — “targeted pricing, encouraging trading up, effective use of promotions and upselling and developing delivery” — but any restaurateur not aware of fundamentals like these is likely long out of business already. And so it’s back to more pessimism, with branded chains stealing share from the huge, slow-moving independent sector but still forecast to chug along at lower growth rates than in the past, as they cut back on planned expansions and focus on same-store sales.

MCA’s executive director, Simon Stenning, pulled very few punches in his summary verdict: the short term is likely to be “tough for many,” with operators constrained by “undifferentiated offers,” “dated menus,” and “low calibre management” the “most at risk in increasingly turbulent times.”

Sobering news on a Friday, for sure — but it’s worth observing that things could get yet worse, as Brexit uncertainty (“fear”?) could put further pressure on imports and deter even more potential staff. Whatever shakes out, it is hard to imagine restaurants in the UK — and even the historically robust London market — looking anything like they do now after the coming readjustment; in the true doomsday scenario, survival will take skill and a willingness to reconsider pretty much all the received wisdom of what a successful restaurant looks like, not to mention a healthy dose of luck.

Fingers crossed it doesn’t come to that, but today’s report makes it even harder to believe it won’t.

• Restaurant growth is up, but turbulent times lie ahead [Big Hospitality]
• Restaurant market to reach £20bn - but challenges loom large [MCA/Paywall]