With previous industrial revolutions there came a bustling high street, but with the latest digital revolution, it’s more a case of businesses going bust. At first it seemed as though only backwards-looking high street shops would suffer. As we have seen recently however, it’s casual dining restaurants that are faltering more and more.
Below we look into why certain restaurants have failed and are failing as well as why certain restaurants have bucked the trend. We will also give our take on how casual dining restaurants can combat the many challenges they face in the hazardous high street environment.
Since the crash in 2009, we have seen a fair few high street shops go under. A steady trickle of the likes of Austin Reed, Jaeger and BHS. Part mismanagement, part failure to adopt a digital strategy and part reduction in consumer spending seem to explain their departure from town and city centres.
This last year, however, has seen a flurry of, not only big high street shops, like House of Fraser, Marks & Spencer, Homebase, Mothercare and everyone’s favourite, Poundworld, go into administration or have closures, but also casual dining restaurants.
GBK is the latest to announce it is struggling, having suffered an operating loss of £2.24m in the 22 weeks ending 29 July. Other casual dining chains battling to survive include Jamie’s Italian, Prezzo, Byron and Carluccio’s. They have all had to adopt Company Voluntary Arrangements (CVAs) as a means to manage underperforming sites. While London-based operators, such as Barbecoa, Conran & Prescott, Hummus Brothers and, more recently, Gaucho Group have gone into administration. In Wales, the chain Eat closed its Cardiff branch for the last time as well as numerous stores across the country. They have decided instead to focus on London and transport hubs.
Why these casual dining restaurants?
From competitive capitals to down-at-heel small towns, the collapse of the high street seems to be felt everywhere. Even in affluent cities like Bath, which has its people lamenting the many boarded up and empty windows on show. To stop the city from turning into a complete ghost town, Bath residents have even launched a High Street Fightback campaign. But what are they fighting back against?
Mainly it’s the internet…
The convenience of online shopping (for high street shops) and online delivery (for casual dining restaurants) has made traditional retailers and restaurants have to work much harder for their customer to come all the way into town. Why would the average punter bother when they can get lunch delivered to their office or, to their home, after a hard day’s work? And who wants to go out on Sunday evenings when they can stay in and watch the TV, all snuggled up with a delivery?
So really it’s special occasions and Saturday nights out where casual dining restaurants can clean up. But restaurants can’t survive on those times alone. Therefore, there must be other reasons why the likes of Jamie’s Italian and Carluccio’s are crumbling.
The economy stupid…
The main monetary fish slapping everyone in the face at the minute is, of course, the B word aka Brexit. Its role is significant in the collapse of casual dining restaurants on the high street. For when the result of the referendum was announced, there was a subsequent collapse in the pound. Not only did this increase the cost of many items on a restaurant’s shopping list, but it also had specific consequences for those such as Jamie’s Italian and Carluccio’s, whose USP was in sourcing ingredients from Italy. Unfortunately for them, the cost to buy ingredients from Italy sky-rocketed. When coupled with spiralling property prices and increased National Living Wages (which were actually already having an effect post-crash and pre-Brexit) the ability to survive on the high street was seriously under threat. Even more so when taking into account the increase in business rates and VAT; all of which combined to create the perfect storm.
Don’t underestimate location…
What made matters worse for Jamie’s Italian, for example, are the types of space that many of the restaurants occupied. Often large and often listed, these qualities lent glamour to the restaurant chain, but ultimately the rents were not affordable long term. They were only manageable when business was booming. This same problem was faced by a number of the casual dining restaurants currently suffering and falling into administration. For Cau, their choice of location (slightly out of the way) and rapid over expansion were the primary reasons listed for their failure, by Deloitte. When jostling for competition on the high street positioning is important, but this can be circumvented if the offering is unique enough.
Casual dining restaurants like Byron may have started the burger trend, but, unfortunately, they weren’t able to keep up with the exciting variety now on offer. You can check out our review of the best burgers in London here. But finish reading this first! That is, if you think it’s interesting how mid-market chains like Prezzo simply weren’t special enough to hey presto people out of their homes. We’ll look at the ways restaurants can get that extra edge further down. What informs that list however, is an understanding of which restaurants are doing well despite the hazardous environment they operate within.
Buck that trend cowboy…or girl
Amidst the competitive landscape of casual dining (a market which has seen the number of restaurants up by 16% since 2010) some winners have emerged. Nando’s reigns supreme with double digit growth reported and continued expansion in the UK. Wagamama has similarly expanded, mainly overseas, and has also shown significant growth. Then there’s Dishoom with its 47% boost to turnover last year and subsequent decision to expand into a few major cities. Rosa’s Thai Cafe is similarly on an expansion mission after receiving massive investment. But it’s also smaller independents like Mowgli, Honest Burger and Giggling Squid that have found their feet with their street food concepts.
What are they and others doing right then?
We’re glad you asked as we have put together the below list, which suggests how casual dining restaurants can thrive on the high street.
Get busy online, or get busy dyin’ is the basic tenet here. Being able to do takeaway and delivery is really quite essential for a casual dining restaurant on the high street. But there are other elements to being online. See Wagamama’s ‘Uber-style’ payment app, Qkr! for instance. By partnering with Mastercard, Wagamama has made the dining experience much more convenient for casual dining customers, as they can now pay when they like. So they don’t have to wait around to be serviced if in a rush. They can also split the bill. It is these kinds of pioneering details which can make the difference on the high street.
Hit the Spot
Obviously the reasons behind the success of many casual dining restaurants are manifold, but the marriage of tasting and looking great is important. For people to schlep into town they want visual splendour as well as taste sensation. This is where Mowgli and Dishoom really stand out. Their welcoming, yet exotic decor creates an environment which is detailed and luxurious for a casual dining hang out. This gives them the edge to out perform. Of course their delicious food is the real beauty, but comforting surroundings that blend perfectly with the food certainly helps. We are happy to work with clients like Comptoir Libanais, who also lead the field in this arena with their bright, colourful, middle eastern style restaurants that perfectly match their vibrant food.
Mix of services
This is an interesting one based on being experience-led. We all know millennials love experiences…Well, so do most people really. Whether it’s Gen X and baby-boomers sitting pretty in their bought homes or Millennials and Gen Z piling out of their rented accommodation, people do crave community and experiences. So one way casual dining restaurants can capitalise is by offering a mix of services that require a punter’s presence, such as Comptoir Libanais having a souk-style market in their restaurants.
Another leader in this field is Yard Sale. Through a clever partnership strategy they have been able to collaborate with awesome products and people. For instance, bringing over New York chef Anthony Falco (from legendary Roberto’s pizza in New York) to run a series of special events and masterclasses as well as to create limited edition pizzas. Dead Dolls House in Islington does casual dining but it also provides a forum for thought-provoking events, such as Scarlet Ladies UK who talk sex, body confidence & feminism.
The Cosy Club brand may not be big in London but is certainly getting very cosy around the rest of the U.K.. Rather than succumbing to the trap of taking over previously abandoned A3 lots, they have instead been converting former A1 retail spaces. With their great value menu, at the lower end of the price scale, their versatile offering and clever open design, they now have 137 locations and have grown by 25 each year for the past three. The opposite approach has been made by Benito’s Hat who have downsized their restaurants but expanded their sites by offering take away.
Benito’s managing director Mike Pearson said: “The whole beauty of the smaller format is that 80% of our product in our existing stores is taken away. When you can do a 400 sq ft site, the rents are considerably lower but you’re still able to generate 80% of the revenue you would have if you had 50-60 seats.”
Last, but not least…
This is a small and obvious one, but if a casual dining restaurant has an enticing wet offering that can work too. People will come in for one drink after work, but end up having a couple plus some nibbles and maybe even a whole meal! Never underestimate the power of booze for the Great British Public!
The future looks dicy for casual dining restaurants. Especially with the prediction of specialist business property adviser Christie & Co saying they “expect at least another two or three restaurant groups to fall before the year is out.” The sector could wait for the government to bring in the proposed Amazon tax which would help them with rents and overall outgoing costs…But when has it ever been a good idea to trust the government? Not lately anyway. So beware the high street no longer casual dining restaurants; we’ve got your back. Also, did we mention we do PR?