Growth of US-themed restaurants ‘threatens Mexican diner dominance'

29 April 2016 by
Growth of US-themed restaurants ‘threatens Mexican diner dominance'

American-style steak and grill style restaurants could become the biggest growth area on the UK's restaurant scene in the next few years, usurping the dominance of Mexican diners, according to research from foodservice market consultancy Horizons.

Horizons' latest biannual Ones To Watch report tracks the growth of new and emerging brands which have between five and 25 outlets and over 20% growth over the past three years.

It lists a number of US themed outlets in its list of the top10 fastest growing brands and an even larger number of US-themed fledgling brands in its ‘Bubbling Under' category, which covers businesses yet to reach five outlets.

While Dunkin' Donuts tops the latest chart of the fastest growing brands by percentage growth rate (2013- 2016), US themed Red's True Barbecue comes in jointly at number six alongside Grillstock Smokehouse while Coast To Coast, the Restaurant Group-owned American-themed outlet, now has 21 sites with another four planned to open this year.

Conversely, Mexican burrito bars and restaurants seem to have reached a point of consolidation with main players continuing to expand but with fewer new operators emerging, the report said.

Horizons' analyst Nicola Knight said: "We have seen a significant rise in the numbers of Ones to Watch and Bubbling Under brands offering US-style dining including barbecue pits, smokehouses, burgers bars and classic American diners."

"They are opening across the UK on high streets in affluent market towns and secondary cities, many in converted pub premises, which offer the size, location and parking facilities that suit these all-day diners."

American casual dining outlets are also attracting investors as well as larger operators because of their rollout potential and scaleability, the report said.

Red's True Barbecue, at number 6 in the Ones To Watch rankings, has recently secured £9m-worth of investment, while Fulham Shore, owner of the Real Greek and Franco Manca chains, has agreed a franchise agreement with charcoal grill specialist Bukowski Grill.

Roll-out Restaurants is planning to grow its Dirty Burger concept, while pub operator Young's is about to open its first standalone Burger Shack & Bar, with plans for at least 20 by 2018. US-owned Smashburger is due to open its first UK outlet, while Fatburger and Shake Shack have both announced their intention to seek UK expansion.

Knight said: "American casual dining certainly isn't new to the UK but we are seeing a steady resurgence in its popularity as operators have modernized and upgraded the concept."

She added: "They appeal to a broad range of consumers, whether dining as a couple, a family or a group of friends. Not only that but they are good value, often offer a broad range of dishes of various cuisines, with friendly service and sophisticated marketing."

Horizons' latest list of Bubbling Under brands shows nearly 70 concepts offering an American-style dining or burger experience.

Knight said: "This means there will be a lot of competition amongst these players, particularly when it comes to sites. Typically only three or four will emerge as true high street brands with the staying power to survive and there's likely to be mergers, and even closures, while others fail to expand as intended."

Horizons also conducted a straw poll of 35 Ones to Watch entrepreneurs which revealed a more upbeat mood than in previous straw polls with all respondents planning for growth, with most planning over five new outlets.

Major cities, excluding London, as well as shopping centres continue to be the most targeted locations for expansion over the next 12 months, with some targeting event space, residential areas, tourist locations and international locations.

Property availability remains the biggest challenge to fledgling operators, said the report, although less of a challenge than in previous straw polls. Staffing was mentioned by 29% as a challenge, up from 12% in Horizon's previous straw poll in October 2015, with property costs mentioned by 23%, up from 16% in October's straw poll.

Fastest growing Ones to Watch brands by new site openings

(Figures show number of opening in 2013 compared to 2016)

1. Red Kiosk Company (0 to 20 outlets)

2. Dunkin' Donuts (1 to 20)

3. Kaspa's (2 to 18)

4. Franco Manca (6 to 20)

5. Cau (3 to 17)

6. Coffeelink (0 to 14)

7. Chatime (0 to 13)

8. Steakhouse Bar & Grill (0 to 13)

9. Coast To Coast (9 to 21)

10. Joe and the Juice (5 to 17)

11. Chozen Noodle (4 to 16)

Fastest growing Ones to Watch brands by percentage growth

1. Dunkin' Donuts

2. Bob and Berts

3. Kaspa's

4. Pita Pit

5. Chicken Shop

6. Red's True Barbeque

7. Grillstock Smokehouse

8. Toro's Steakhouse

9. Palm Sugar

10.Grind & Co

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