UK restaurant numbers slump for sixth consecutive quarter

22 August 2019 Consultancy.uk

The number of licensed premises in Britain is continuing its steady year-on-year decline, with 2,920 fewer such venues than there were just 12 months ago. According to a new industry benchmark, there has also been a drop in restaurant numbers – despite small flourishes in the group restaurant scene.

2018 saw the UK witness a string of casual dining chains looking to find efficiency savings, or entering into full-blown administration. What has become increasingly clear throughout this year is that the casual dining crunch has bled deep into 2019, and continues to threaten thousands of jobs across the country. 

Since late 2017, a growing number of dining chains have been found to be floundering, amid poor sales figures and mounting debt, following a number of years of expansion. However, myriad issues – including heightened business rates, inflated import rates relating to Brexit, and the repressed wages of the bulk of the UK’s working population causing many consumers to scale back on ‘luxury spending’ – have left the industry looking over-stretched, and exposed to a volatile market.

Top 10 cuisine types - Group restaurants

While up-market restaurants are insulated from this due to their traditional clientele being willing and able to pay more for their dining experience, this has led to a host of mid-tier chains collapsing. In May, this even saw the chain belonging to celebrity chef Jamie Oliver appoint KPMG to oversee the administration of its 25 locations, after a CVA last year failed to dig the company out of trouble.

Despite this, however, a new report from AlixPartners and research consultancy CGA has suggested that while chains receive more press when they collapse – due in part to the wider impact of their closures on the jobs market – smaller operators seem to be faring worse still. A survey of the country’s supply of licensed premises conducted by the consultancy showed a 3.4% drop in restaurant numbers in the year leading to June 2019, an average of about 18 net closures a week. Group-owned restaurants, with more than one site, saw a smaller reduction of 1.2%.

This is largely attributed to the fact that while some chains have collapsed, others have continued expansion plans, meaning the average of restaurant chains closing appears lower. However, in some segments of the food and drink sector, AlixPartners found that group entities were so resilient that they were actually bucking the trend to grow in number. In the last year, Indian group restaurants saw an 8.9% increase, to total 159. British group restaurants remain the most common variety, at 394, and do not seem to have reached an over-saturation point, enjoying 3.7% growth.

Over the last five years, meanwhile, a number of new cuisines have also become popular in the group scene. While independent Middle Eastern restaurants outnumber group ones by more than five to one, growth has been equally rapid on both sides in the last few years, increasing by 60.7%. The impact of group restaurants on the market was much more pronounced among Caribbean-style diners, however, with Turtle Bay, which now has more than 40 restaurants in the UK, leading the charge at 143.8% five-year growth, to 117 venues.

AlixPartners Managing Director Graeme Smith explained that the rapid growth of restaurants focused on certain cuisine types highlighted how they can quickly find favour in response to the fast-changing tastes of British diners. However, he also warned that groups were not immune to “overall market pressures”, and the current collapse of many chains across the country was also built on the back of a period of rapid expansion which could not be sustained beyond a certain point.

Warning that further contraction could be on the horizon, Karl Chessell, Business Unit Director for food and retail at CGA, added, “These are turbulent times for the restaurant, pub and bar sectors. As our new research shows, conditions are especially tough for independents, leased pubs and Italian restaurant operators.”


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