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How the independents are beating the casual dining crunch

Posted: Wednesday 2 May 2018

Just as big name high street and retail park restaurants are facing a financial crisis in a bloated market, it’s not all doom and gloom. Smaller, individual restaurants and cafés are beating the casual dining crunch, and creating a power shift back to the independents, with consistent growth and sensible prices. 

It’s no secret the casual dining boom is feeling the effects of a saturated market. On every high street and retail park, the glut of identikit eateries are feeling the pinch, as consumers are bombarded with a smorgasbord of overpriced options. As a result, we’re staying away, meaning 25% of the largest mid-market dining giants have reported operating losses since October 2017.

With higher rents, rising business rates, and commitment to paying the living wage all taking their toll, some of the industry’s biggest names are facing multiple branch closures. But for small, independent food operators, this means a real-term rise in footfall and revenue as they whet the consumer appetite with alternative options. And that’s a fantastic advert for the David Vs Goliath business model as well as our local economy.

High profile closures
Over the last decade, the UK high street has been dogged by ‘clone town syndrome’. A situation where the same chain supermarkets, book shops, clothes shops, and chemists dominate the pedestrian streets up and down the country. A recent twist to this has seen the influx of larger, mid-market dining chains becoming an ever growing sight, both in and out of town centres.

But these chains are suffering losses and closures like never before. One of the highest profile brand name restaurants, Jamie’s Italian, owned by celebrity chef Jamie Oliver, has taken the decision to close 12 of its 37 restaurants after reporting losses of £10m in the previous financial year.

Byron Burger, an upmarket gourmet burger restaurant, has decided to close 12 of its branches, with a further eight also at risk, after falling £71.5m in debt. And it’s a similar story for others too: Strada, Frankie & Benny’s, Chiquito, and Carluccio’s are among those to suffered similar losses or closures.

Local economy
Despite doors closing, it hasn’t stopped a further flood of casual dining chains opening in Devon. Exeter’s Guildhall Shopping Centre was revamped in 2016 to include ‘Queen Street Dining’ - an area that saw the likes of Kupp, Absurd Bird, and The Stable opening for business.

KPMG, one of the big four accounting and business services firms in the UK, has overseen Company Voluntary Arrangements (CVA) for several mid-market dining chains, including Jamie’s Italian, and predict another wave of closures this year. 

But despite the erratic nature of the opening and closing of these dining chain branches, one thing it has done is fuel the local economy, as more and more diners are now choosing to eat out at local, independent restaurants and cafés.

David vs. Goliath
In the face of our faltering economy, many of the large dining chains are still keen to continue branching out, with many trying their luck in a region that’s not financially built to sustain them. The attitude of ‘open more and they will come’ is clearly not working. As a result, we’re seeing an uprising of local operators coming through who aren’t afraid to take on the big guns.

Airbnb and JustPark are famous examples of small businesses competing with the large - and winning. 30 years ago, to compete in the hotel or car park industry, you’d have to establish yourself over many years, and build a lot of hotels or a lot of car parks. Now Airbnb and JustPark have shown someone’s spare bedroom can be a hotel, or someone’s driveway can be a car park. Both are now multi-million pound, worldwide companies.

Quick to adapt
But one of the main reasons why we’re seeing the smaller food outlets winning the high street ‘bums on seats’ challenge at the moment, is because they’re just that: small. Newer, smaller restaurants, bistros and cafés are much more capable of adapting to a fast-changing environment than a chain. And because of that, they’re seeing healthy sales in a challenging economy.

The lack of red tape, investors, shareholders, committees, and CEO’s, has been crucial to this growth. When an independent restaurant needs to change the menu, alter their opening hours, or hire staff, they can do it, allowing them to react quickly to customer feedback or a change in consumer habits.

Continued growth
As commercial estate agents and business sales advisors, Charles Darrow are willing representatives for many local and regional individual restaurants, bars, and cafés. And many have felt the tide turn, forecasting continued growth in the sector even with the challenges of a stuttering economy.

A recent Charles Darrow success story has been for one of Exeter’s favourite bars. Once known to many as Coolings, Hatt’s Cellar Bar in Gandy Street has been snapped up by a local independent buyer, keen to put it back on the map and reinvigorate the cocktail and wine bar. Not only that, it will revert back to the name Coolings, and offer a creative and innovative menu.

And a second sale, though bought by a corporate company, promises to breathe a new lease of independent life into an Exeter city centre landmark. The Old Fire House in New North Road has been a key player in Exeter nightlife since 1986, so for Charles Darrow to be appointed as agents for possibly Devon’s largest Free House transaction was an honour.

Charles Darrow Director, Jon Clyne said “The High Street is finding it challenging at the moment, but it's working for those bringing something special, with their own USP, and not charging customers London prices. This transaction is a perfect example of that." 

And to show that appetite is still rising in the City leisure and tourism sector overall, the sale of another iconic venue, Exeter Snooker Club led to much interest. The popular business in Guinea Street, is another venue sold by Charles Darrow allowing for fresh investment, including a refurbish throughout.

Locals feeling the benefit
The high street is changing. With the saturation of chain dining brands in major cities and larger towns, many of the smaller, regional towns are feeling the benefit. So despite large chains struggling in some key areas, it means we’re seeing a people-powered food revolution. And that can only be a good thing for our economy and our wallets.