With Harden’s 2016 survey recording “off-the-charts” growth in new restaurants opening in the capital, those in the industry naturally ask “is this likely to continue this year?”.
We think so. The restaurant property market has been short of stock for the last 5 years, so now even with the number of buyers down by 25%, the demand still far outstrips the supply.
You only ever need one buyer for a transaction to go ahead, so really, there has been little change other than premiums have become a little more sensible.
You only ever need one buyer for a transaction to go ahead.
With regards to there being more restaurants in London now than ever before, the number of new openings is a misleading figure as over 90% of the time a new restaurant opens, it’s simply replaced another failed restaurant.
The biggest change in the market has been the cooling off of national expansion plans for most of the big chains.
Most groups are having a shake-up of their estates (which is not unusual) however to see central London sites on them is rare. These are being snapped up predominantly by independent operators who are viewing this as a time to secure sites they otherwise would struggle to secure.
London operators are aware they need to be the “best in class” as the competition is so strong. Many now see London restaurants as leading the way for New York and we at Restaurant Property agree with this view. Irrespective of price point, operators need to offer value and an excellent overall experience to drive repeat business.
Up to now, regional expansion has been dominated by chains (as landlords want to covenant strength to drive up their property value), but now they are not expanding at the same rate they will need to consider good local operators. London based operators are focusing on clean (healthy) eating, relaxed environments and a strong social media presence. It’s quite likely that some chefs create certain colourful dishes just so they can be Instagrammed by both themselves and patrons.
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