Hospitality & Leisure

The hospitality and leisure sectors continue to face very challenging market conditions

The hospitality and leisure sector is more susceptible than other sectors to the country’s economic well-being and consumer confidence, mainly because much of their income is discretionary. Such businesses, like high street stores, also face increasing costs from rates and rent, as well as from online competitors who provide food home delivery services.

Background

In the last 10 years disposable income has fallen as wages have failed to keep pace with inflation. Although the number of consumers buying meals has increased, this has unfortunately not translated to increased covers in restaurants. Instead, a number of restaurant home delivery companies have sprung up, allowing customers greater menu choice at lower cost, and supermarkets have continued to aggressively target the ready meal market.

Restaurant chains have faced specific difficulties. Costs have risen significantly due to rent and rate increases. Staff costs have risen too, with increases to the minimum wage. In recent years, concerns over Brexit has led EU nationals to return home, and many in the sector point to future staff shortages. This has resulted in many chains having to scale back their restaurant footprint to focus on profitable restaurants. More restaurant closures are anticipated in 2019.

Pubs also face challenges. Many, if not most, have diversified and offer food. However, pub footfall continues to decrease, due to supermarket competition and consumer trends in younger demographics moving away from alcohol consumption in favour of other drinks as well as social venues. Rent as well as operational cost increases continue to squeeze margins and again, the closure trend is expected to continue in 2019.

Bars face their own unique challenges, not least from local authority and police pressure to address antisocial behaviour resulting in licences being revoked and more strictly controlled.

Outlook

Despite the challenges facing businesses in the hospitality and leisure sector, 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 as well as 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.

This may be the time for the brave in the hospitality sector. If you are a knowledgeable operator and/or have a good concept then you can pick up excellent premises, many of which will not require any money to be spent on fitting out. A simple ‘rebrand and run’, with minimal start-up costs can make good money, and we are already seeing this happen across the UK.

How Quantuma can help

Our hospitality and leisure sector group has extensive experience working across a wide variety of assignments within the sector. Our recent assignments include the sale of leisure club, accelerated sale of a number of hotels, handling the administration of a number of professional sporting clubs, and restructuring a number of restaurants, bars, pubs and club businesses.

Related news

Quantuma completes sale of Bolton Whites Hotel in deal to save Bolton Wanderers
Quantuma completes sale of Bolton Whites Hotel in deal to save Bolton Wanderers
The transaction secures the future of at least 100 jobs
Read more
Quantuma advises on sale of The CoffeeWorks Project sites
Quantuma advises on sale of The CoffeeWorks Project sites
The artisan food and coffee producer had run into financial difficulties
Read more
Quantuma appointed as administrators to Brighton Holiday Homes
Quantuma appointed as administrators to Brighton Holiday Homes
Business closes unexpectedly
Read more
Quantuma completes the sale of national beauty bar
Quantuma completes the sale of national beauty bar
Popular makeover concession Arch Angelz sold to Archangels Brows and Lashes Ltd.
Read more
Jobs secured as Quantuma advises BCF Heating & Plumbing
Jobs secured as Quantuma advises BCF Heating & Plumbing
Company Voluntary Arrangement saves 7 jobs
Read more
Quantuma saves 200-year-old Titanic uniform supplier
Quantuma saves 200-year-old Titanic uniform supplier
Andrew Watling and Carl Jackson advise on the sale of marine and aviation clothing supplier, Miller Rayner Ltd
Read more
30 jobs secured as Quantuma advises Dicks Electrical Installations
30 jobs secured as Quantuma advises Dicks Electrical Installations
The Winchester based company specialises in the commercial property sector
Read more
BBC radio staff could be faced with tax bills after classifying themselves as self-employed
BBC radio staff could be faced with tax bills after classifying themselves as self-employed
It has been suggested that in the past the BBC actively encouraged individuals into forming PSC’s so they could work as contractors
Read more
Greg Rutherford leaps to the aid of two teenage Bucks athletes
Greg Rutherford leaps to the aid of two teenage Bucks athletes
Quantuma proud sponsors of Bucks Sporting Lunch Club, supporting young talented athletes in Buckinghamshire
Read more
Quantuma promotes Paul Zalkin to partner
Quantuma promotes Paul Zalkin to partner
Paul Zalkin is promoted to partner at fast growing advisory firm Quantuma
Read more
Quantuma appoints new restructuring partner
Quantuma appoints new restructuring partner
Michael Kiely joins Quantuma's London office as partner
Read more
Administrators ‘cautiously optimistic’ as Quantuma appointed at Grosvenor Chemicals
Administrators ‘cautiously optimistic’ as Quantuma appointed at Grosvenor Chemicals
Paul Zalkin and Andrew Andronikou have been appointed administrators to Huddersfield-based Grosvenor Chemicals Ltd
Read more
Quantuma targets international expansion with new Cyprus office
Quantuma targets international expansion with new Cyprus office
Based in Nicosia and Paphos, the Cypriot team will be led by Andrew Andronikou and Constantinos Ioannou
Read more
Quantuma boosts Bristol office with two arrivals
Quantuma boosts Bristol office with two arrivals
New hires in Bristol to help team build presence in the south west and South Wales
Read more
Interest rate rise could have been the final straw for some struggling businesses
Interest rate rise could have been the final straw for some struggling businesses
Latest insolvency figures show even a small interest rate rise can have a major effect on UK businesses
Read more
Quantuma save 16 jobs after rescuing Huddersfield engineering business
Quantuma save 16 jobs after rescuing Huddersfield engineering business
Andrew Andronikou and Paul Zalkin secure sale of business with all jobs transferred
Read more
No show for Heaven on Earth show
No show for Heaven on Earth show
High profile musical starring Russell Watson is to be placed into liquidation
Read more
Quantuma appointed to handle the receivership of a Pembrokeshire hotel
Quantuma appointed to handle the receivership of a Pembrokeshire hotel
Receivership of Penrallt Hotel
Read more