Greggs now has more locations in the UK then McDonalds after an aggressive period of expansion.
In the restaurant industry, opening new stores is often seen as a success in itself. More often than not, it is the expansion of an exciting new brand rather than the efficient management of an estate that grabs the industry headlines.
But for big national operators, disposing of properties within a portfolio can be part of a bold strategy, securing success for the future. Here, our London restaurant property agents look at two brands who have made bold disposal decisions in order to boost profits and reposition their brand for future success.
The world’s biggest fast-food chain made headlines in 2015, which was the first year in its history that it closed more stores than it opened in its US homeland. It was also the year of several high-profile London closures, including prime properties on Oxford Street and Regent Street.
The closures are thought to have been a response to a dip in profits in early 2015. The Golden Arches’ margins dropped from 20% in mid-2014 to 13% in 2015’s Q1. Following the disposal of less profitable (though high profile) sites, margins returned to 19% by the end of 2015. It was this fast and efficient disposal of prime restaurant locations that allowed the chain to respond quickly and safeguard profits.
Greggs now has more locations in the UK then McDonalds after an aggressive period of expansion. But this groundswell has not put them off making the decisive portfolio management needed to secure future growth.
After experimenting with a coffee-shop format called Greggs Moments, the Newcastle brand has decided to undertake a grand restructuring project, with around 60 stores closing. Chief Executive Roger Whiteside explained the decision.
“These are difficult changes that we believe are needed to support the long-term growth of the business,” he told City A.M. Gregg’s restructuring of assets seems to be working as they posted pre-tax profits of £373m last calendar year and have seen shares jump 25%.
The actions of these brands show that a good disposals strategy is a key tool for both business expansion and for the protection of your business as market conditions change. To have London’s top disposals agency on your side, contact Restaurant Property today on 020 7935 2222 or email firstname.lastname@example.org.
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