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Restaurant closures rise as high street pressures hit hard

Published:  21 May, 2019

The number of restaurants in Britain dropped by 2.8% in the year to March 2019, according to the latest Market Growth Monitor from CGA and AlixPartners.

The figure represents 768 net closures of restaurants over 12 months, or around 15 a week. It’s the fifth successive quarter of decline in the restaurant sector, following a spell of growth that saw restaurant numbers increase by over 15% between 2013 and 2018.

High streets in the south of England, excluding London, were hit especially hard. The majority of closures were independent restaurants, but group restaurants also fell by 1.1%, with numbers on British high streets falling by 2.4% over the 12 months to March, compared to net openings of 1.8% in suburban areas.

The pace of closures for group operators was significantly higher in the south of England, at 2.8%, than in the north where the rate was just 0.4%.

“CGA research has charted a remarkable surge in restaurants over the last decade, but our latest Market Growth Monitor makes it clear that the gold rush is over,” said CGA vice president Peter Martin.

“Some distinctive and resolutely customer-focused restaurant groups continue to flourish, but for brands that have over-reached themselves or lost sight of their proposition and purpose, there are undoubtedly more tough times ahead. Major challenges on British high streets, like rising costs and declining footfall, are adding another layer of difficulty.”

However, the Market Growth Monitor reveals a better picture for pubs and bars. In 2016 pubs and bars were closing at an average rate of 31 a week but that rate dropped to 13 in the 12 months to March 2019.

“The positive take on this clear out is that ambitious and well-resourced operators now have more headroom for growth, and the Market Growth Monitor identifies bright prospects for many groups in the drink-led pub and bar space in particular,” said AlixPartners managing director Graeme Smith.

“Brands that can deliver a compelling premium drinks offer and strike the right balance with food have all to play for in 2019 and beyond. The next 12 to 24 months offer an opportunity for well-funded restaurant groups to expand into prime sites at much reduced costs—and if you can catch the right consumer wave the returns are impressive.”