Author: Andrew McVicker, 07 June 2018

Market Growth Monitor figures show that Britain’s number of restaurants increased by 16.7% between 2011 and 2016, but by just 0.6% in 2017. Over-supply of casual dining, unsustainable rents plus both a lack of understanding of the drivers of performance and changing consumer requirements have led to high profile closures and CVAs, scaring national multiple F&B providers into inactivity. However, with a higher proportion of people eating out than in previous years and with people eating out more often, consumer spend on F&B continues to grow. This has presented an opportunity for numerous small and independent operators to establish themselves, with savvy operators spotting gaps in provision in their local markets.

eating out

A good example is Manchester. With the Corn Exchange and Spinningfields dominating the evening casual dining market, the recently refurbished Gateway House outside Piccadilly station has seen its last five lettings go to local F&B operators including Northern Soul, Bandito Burrito, Flock, Archie’s and Moose Coffee. Further mini F&B hot spots are also emerging in Ancoats and the area around First Street, as independents benefit from the lack of new offerings from national operators.

Moose Coffee

With F&B playing an increasingly important role in the choice of shopping destination, proactive landlords must recognise and react to the adjustment that has taken place in the sector. With food prices and employment costs rising (employment typically accounts for 30% of net sales in F&B) and increased competition in the market, the days of the F&B sector propping up 6 figure ERVs are largely gone. Landlords must accept the increasingly important role that F&B plays in bringing footfall to their assets, and cultivate the most appropriate offer.

One of the outcomes of the turmoil in the sector has been to nullify multiple operators advantage over independents on covenant strength. However, it is clearly still vital that landlords do not pay incentives, fit out costs or go into partnership with operators that do not either know the market or know their business model. This is where FSP can assist. With over 40 years’ experience working with retailers across the country, we can use our market leading P&L analysis to scrutinise business models and separate the wheat from the chaff. And our F&B segmentation of any catchment quantifies the opportunity by customer type, helping landlords understand the market opportunity and the type of offer best placed to succeed.

To help understand how the independent F&B sector could help bring life and footfall to your asset, contact FSP

Tags: F&B, FSP View

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