Too many businesses are restructuring or entering into Company Voluntary Arrangements, risking the future growth of the hospitality industry.
That's according to Peter Backman, principal of Peter Backman Foodservice, as he spoke about the risks of overexpansion at the Casual Dining Show in Angel's Business Design Centre today.
He said that brands were opening too many sites fuelled by private equity and often in former retail sites in shopping centres and high streets.
"The market is slimming down," he said. "Lots of chains have announced closures for one reason or another. Some have closed down, while others have foreseen that and started to drop underperforming sites."
Backman, who has been tracking growth in the industry since 1981, said the cuts are making the sector fit for purpose. He added that the industry will always suffer from overcapacity, but that it's dependent on the strength of the operators to carry on.
He continued: "The restaurant market always pulls through. In every recession there's been growth and new business. Out of 1981 was the resurgence of fast food, such as KFC, Burger King and McDonald's, driven from the franchise model from the states; 1991 was rise of food in pubs, while 2002 gave rise to the fast-casual sector, which saw food-to-go and coffee shops emerge. Casual dining has emerged since 2009."
He advised operators to review everything, from prices to costs, people and property, and to "retrench" by cutting back on overheads and underfunded expansion.
Backman predicted food costs to stabilise and rents to reduce and for the number of food delivery firms would increase, along with the emergence of unbranded restaurants. "Maybe customers will feel happier if they go somewhere where there's only three or four of the same type of restaurants rather than hundreds," he said.
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