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Operators spend heavily on kitchen kit to keep up with casual dining boom

03 May 2016 by
Operators spend heavily on kitchen kit to keep up with casual dining boom

Restaurant sector turnover has grown 18% to £20.9b in two years with investment in new equipment up 25% over the same period, according to the latest data.

SME finance aggregator Funding Options said the sector was growing at twice the pace of UK GDP, leading both investors and operators to spend more to capitalise on the boom in casual dining.

Its data puts sector turnover in 2013 at £17.7b, growing 12.4% to £19.9b in 2014 and a further 5% to £20.9b in 2015. That suggests a slowdown of consumer spending and a 12-month lag in equipment spend as operators reacted to the boom of 2014.

Investment in equipment (including plant, machinery, kitchen equipment and IT) stood at £3.6b in 2013, according to the firm, rising 8.3% to £3.9b in 2014. However, in 2015 it jumped 15.4% to £4.5b.

Funding Options said that growth was due in part to Food Hygiene Ratings, driving demand for easy to maintain fixtures and fittings and demand for specialist kit used by an increasing number of pop-ups and mobile operators.

Private equity was also fuelling equipment spend as the fast casual business model relies on rapid roll-out of multiple outlets to a template. As they tend to use the same equipment in each outlet, those businesses were a significant driver of increased equipment spend, according to Funding Options.

"Many customers will pay higher prices for mid-range meals but expect chains to maintain high levels of capital expenditure and excellent hygiene standards, meaning that restaurant equipment turnover is high," said Funding Options CEO Conrad Ford. He added that while many operators were now serving a broader customer base due to the boom, those customers were "increasingly discerning and increasingly fickle".

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