Small chains set to outstrip rival giants

Small and adventurous restaurant companies will do much better than their big corporate rivals in the next 10 years, predicts property agent Christie & Co in its review of 1999.

The company contrasted the success of small chains such as Shimla Pinks, La Tasca and Montana with the more mixed fortunes endured by big companies. The financial difficulties of the Celebrated Group and Planet Hollywood, it claimed, underlined the vulnerability of theme restaurants to customer boredom and rigid location criteria.

The report said: "Those multiple operators which remain successful are those which have up-and-coming brands in the wings, ready to take over when existing concepts have run their natural course."

Relaxing the licensing laws was predicted to have the greatest long-term effect on the sector, although the report warned that this would cut the prices now enjoyed by sellers with multiple licences. Business rates were also predicted to affect earnings as they could eventually increase by as much as 25%.

For hotels, 1999 was a year of consolidation bookended by Ladbroke's takeover of Stakis and Whitbread's of Swallow. However, Christie's director of hotels, Simon Hughes, expected to see much of this year's activity among smaller listed chains as they merged with rivals or bought non-core properties from the corporations.

He warned that the major chains would have to overcome their traditional reluctance to buy hotels in Europe or the USA if they wanted to continue their expansion.

"This reticence could cost them dear," he said, "not only by restricting their ability to grow their businesses in an increasingly pan-European market, but also by making them possible bid targets." He cited Accor, Sol Meliá , Jurys Doyle and Ryan Hotels as overseas brands active in snapping up UK sites.

Average property prices for hotels and restaurants edged up by more than 5% during 1999.

by Angela Frewin

Source: Caterer & Hotelkeeper magazine, 13 - 19 January 2000