Thomas Cook

6th September 2019

The Casual Dining industry has gotten cold - Are things about to heat up?

The Restaurant Group, owner of Frankie & Benny’s and Chiquito has announced it will close at least 124 of its branches over the next six years. The news comes after reporting losses despite improvements to menus and the benefit of a weak previous year given 2018’s extreme weather and men’s football world cup.

 

This adds to the previous disruption in the industry where we have seen other casual dining outlets such as Jamie’s Italian, Prezzo and Byron Burgers close a number of stores.

 

The Plimsoll analysis of the top 992 companies in the UK Restaurants industry shows that the growth and profitability in the industry has quite consistently decreased since 2015. There are also 387 companies which are selling less than last year and 461 companies (almost half of the industry) are rated as being ‘in danger’ by the analysis. There are however 284 companies which are rated as ‘strong’ and demonstrating that there is opportunity in the industry, although market saturation has been cited as an issue.

 

A number of contributory factors that a study by Deloitte found to be impacting negatively on the industry are the weakening of the pound (£) which has increased cost of food sourced abroad, the increase in minimum wage which has pushed up labour costs in the industry, the potential threat Brexit and tightening immigration law causes to the workforce as 28% of the industry’s workers are foreign born, and a consumer reliance on offers and ads which squeezes margins even further.

 

We could be in the midst of a change in how the restaurants and casual dining industry operates based on changing consumer habits and other contributory factors. It appears that the resolution of Brexit, whichever way, will not solve all of the industry’s problems.

 

If you’d like to find out more about the Plimsoll Analysis on the UK restaurants industry, please click here.