The UK restaurant sector has seen what appears to be surprising turmoil over the last few months. But are its problems really so unexpected?
Take a walk through any British city centre, and the choices are seemingly endless. The number of restaurants to entice the palate of even the most demanding consumer appeared to be growing unstoppably. But recently, in what’s been dubbed the “casual dining crunch”, the sector has been facing a difficult period.
Italian-style chain Prezzo is the latest to announce staff cuts and restaurant closures, adding itself to a list occupied by Jamie’s Italian, Byron Hamburgers and Strada.
Many of the companies themselves have pointed to ever-increasing rent prices as the main cause of their difficulties. But undoubtedly the overcrowding of the market is another major factor; is it mere coincidence that a number of the struggling cases are Italian restaurants, arguably one of the most crowded areas of the dining sector?
A glance at the Plimsoll analyses of some of the companies currently in the headlines shows that problems have been on the horizon for some time. Jamie’s Italian for one has a plunging profitability rating, and along with Byron and Papa Topco (owners of Prezzo) has high levels of debt.
One explanation is a change in consumer behaviour. Just Eat, an online ordering and delivery platform – which incidentally ranks within the top 30 apps on both the Google Play and App Store this week – recently entered the FTSE 100. Furthermore, the rise in food-delivery start-ups such as Deliveroo has reportedly been hugely significant for both the takeaway and traditional restaurant industries.
Examining the restaurant sector across Europe also paints an interesting picture. In France, Spain and Italy restaurant chains are comparatively absent, with family-run establishments enjoying popularity in even the most desirable city centre locations. There are many possible explanations for these difference, be they economic – related to rent, staff and food costs – or cultural. Our European neighbours have long been particularly discerning when it comes to their restaurant choices; perhaps UK consumers are following suit?
Whatever the reasons behind it, significant change is perhaps unavoidable for the industry back home in the UK. It will certainly be fascinating for onlookers to see how the story plays out.
Plimsoll has a number of in-depth analyses on the restaurant sector, both in the UK and across Europe. Click here to find out more