Public spending habits in this sector have seen a notable change over the last few years. Many households in the UK have seen instability in their amount of disposable income, and with this uncertainty have chosen to tighten their belts and spend less regularly on entertainment and instead save for holidays or other experience-led activities.
Despite an upward trend on the number of people dining out, the traditional restaurant industry will continue to struggle with financial and social pressures. Many have failed to adapt in such a highly competitive market with consumers who have less money to spend, but who expect a lot more. Cook-at-home kits, street food markets, and grab and go alternatives are all responsible for luring potential customers away from restaurants. Together with mid-market chains who are now having to scale back their empires, there is the potential for an increased number of restaurant closures in 2019.
I expect bars to remain relatively safe next year due to the fact that they tend to have less overheads than restaurants. However, as with all of the businesses that make up the night time economy, they also have the same pressure of competition and those without the “x factor” ingredient may find themselves losing out.
Pubs will weather the storm for the longest time but are already facing difficulties, with independent and country pubs the most at risk. Those that fail are likely to be taken back in house by the breweries.
Despite the challenges, those interested in starting a business or buying premises will still be able to find good opportunities in the market place in 2019. Innovative concepts, a robust business plan and meticulous strategic planning will be the key to success. Exciting menus, new cuisines and a focus on technology and sustainability are all ways businesses can help attract customers.
There are also some very positive practical points to consider for those who are planning to expand or start a new venture in 2019, as the value of fixtures and fittings have decreased due to an increase in supply. We’ve seen falling premiums in good locations, with an associated fall in reduction of rents, as both high rent and high premiums cannot co-exist.
