Restaurant industry undergoing "a period of transformation" according to Christie & Co's Business Outlook 2024.
The report notes that the UK restaurant industry has been undergoing a period of transformation in recent years, driven by pre-covid over expansion, challenging trading conditions and changing consumer dining habits. These factors continued to significantly shape the sector landscape and transactional activity in 2023, resulting in a negative 5.3% movement in Christie & Co's restaurant price index.
Christie & Co data revealed the team sold a total of £6.75m worth of restaurants in 2024 and 85% of sales were leases. In addition, the franchise market experienced increased activity, and the team assisted several key domestic and international market players with both franchisor disposals and franchisee searches. This included Sushi Shop, Chozen Noodles and international brands, Carl's Jr, Paulaner and Bonchon, who are looking to enter the UK market.
The report also outlines Christie & Co's market predictions for the year ahead, which are:
Mid-Market casual dining will continue to struggle for real growth
Some return to profitability as menu prices remain steady and inflationary costs reduce
Continued expansion for franchise brands with greater variety
Market landscape will continue to compress/decline
Uptick in insolvencies due to ongoing headwinds however this will attract new entrants seeking opportunity as confidence returns
Drop in new site openings as operators look to make better use of existing sites
Simon Chaplin, Senior Director of Pubs, Restaurants & Franchise at Christie & Co, said: “ In a year when closures reached a peak of five a day in Q1 2023, and over 2,000 businesses closed during a 12-month period, it’s clear to see it was a difficult year for restaurants. However, this may have represented a catch-up year from a tide that started in 2018. Such adversity often sees the best look to innovate and we are already seeing operators, large and small, review their business, tighten up on costs and fine-tune their audience.
"This is most evident in the QSR (quick service restaurant) market, where we have seen sustained growth since covid, as new and exciting franchise brands bring their offer to the UK market. As a result, the consumer will benefit which will keep them coming out for more, breathing life back into the industry."