Smart casual
Consumer demand for food & beverage remains robust, despite the persistent threat of recession in 2023. But how are cost pressures and consumer behaviour impacting on the provision we see across the UK’s towns and cities?
Sector recovery from the impact of lockdown is now `complete' – Lumina Intelligence's UK Market report indicates the UK restaurant market was set to recover to 94% of its 2019 value in 2022 and predicted the value of the market in 2022 to be worth £17.8bn, making it an appealing sector for investors. And with vacant space across the UK's towns and cities at an all-time high, operators have access to a quantum and often a quality of space that has never been available before.
However, this does not mean all operators are thriving. Cost pressures (ingredients, fit out costs, staff, business rates, heating and lighting) are both high and often increasing, whilst changing patterns of consumption including the potential for work-from-home and the increased availability of delivery services has also impacted where people choose to eat. This has fundamentally impacted the viability of sites. Many operators had to close outlets in the lockdown period including Zizzi and Ask Italian (75), Bella Italia (35), and Gourmet Burger Kitchen (26). In 2023 there has also been the closure of nine Byron outlets and another 12 Bill's restaurants.
Despite the issues experienced by these casual dining brands, other national chains continue to expand - Rosa's Thai plan to open up to six more sites this year; Loungers continue to open in a variety of locations (new sites include Leeds and Thornbury) and Wagamama has announced three new US stores in addition to new UK stores in Battersea Power station and other regional towns and cities. Key to the success of these brands would appear to be a freshness and relevance of concept, and an ability to ensure the business model is suited to the micro-location, to ensure the sales generated can substantiate a profit, in spite of rising costs.
The flexibility of the business model and ability to alter the concept to achieve and maintain relevance is what is driving the success of many of the street food halls currently expanding in the UK. Arcade Food Halls (seen above) offer a sit-down table service option but allow visitors to order from a selection of open kitchens within the food hall. The first of these was launched in April 2022 with another 24,000 sqft site planning to open at the Battersea Power station in 2023. Scaled down versions by different operators are becoming increasingly common across the UK, allowing independent occupiers to bring new concepts to smaller towns and cities without the overbearing, fixed costs and commitment of a standalone unit.
Whilst ensuring the offer and business model is viable, the other key difference between some of the more and less successful brands appears to be the willingness to adapt to changing market trends and connect with local communities to establish a brand identity that attracts the local catchment. With good quality food increasingly available in the home through improved takeaway services, eating out has become more of an experience for consumers.
Loungers Group and Arcade Food Halls have recognised and responded to this trend, organising regular community focused events like bake sales, charity fundraisers, and cooking workshops to draw footfall from local residents. Wagamama has been able to expand on its sustainability agenda through seasonal rotating menus with at least 50% of dishes being vegan or plant based. Additionally, the chain has a bowl return scheme that encourages customers to return used food bowls for commercial recycling and rewards them with free side dishes on future orders.
Going forward, F&B brands must look to incorporate a policy of continuous improvement and align with latest market trends to ensure they come out on top, regardless of market conditions.
Soham Nayak