What’s happening to the casual dining sector?

Compared to 30 years ago the casual dining landscape in the UK is so different, McDonalds had only been around for 10 years, Olive Oil was a weird thing that you had on holiday and Pizza Express was for the jazz loving cognoscenti of Soho. Over the 30-year period the service industry has largely replaced manufacturing as the key employer in the UK, although who knows what the effect of Brexit will be on the sector that draws much of its workforce from overseas. Within the sector, however, some are thriving and some are literally dying, how can this be?

Put very simply there seems to have been a massive desire to open more cafés, bars and restaurants, chasing a finite number of customers and budget, how did the sector believe it could survive by continually opening more outlets in a crowded space. This pressure has been exerted by demanding owners who wish to see their investment perform quickly before exiting to the next opportunity. The result has been quite catastrophic; some household names are in great difficulty Prezzo and Jamie’s with Gaucho and Prescott and Conran being two of the latest groups to go into administration.

It isn’t all doom and gloom, and it’s interesting to see that two of the sectors star performers, Wagamama’s and Nando’s, haven’t succumbed to the discount route to entice customers in. Discounting has been the scourge off the sector, almost like an injured shark devouring itself, many players have simply become hooked on the discount drug and the thought of yet another CVA doesn’t seem to be a strong enough deterrent.

Meantime aptly named Casual Dining Group has just had a cash injection of £30m and is well placed to ride the storm. It has perhaps over expanded with Bella Italia, but has managed to reinvent Café Rouge bizarrely by getting to know its customer base, the brand plays well to its audience, rather than trying to reinvent itself as another Byron. The brand appears to have realised that it has a loyal and affluent customer base who like the simple things done well. So rather than trying to chase more customers in an overcrowded market place it has decided to look after the ones it already has.

Various Eateries group are building up an eclectic set of bars and restaurants that are tailored to a specific location rather cookie cutting a formulaic concept, Coppa Club in St Pauls is totally different to Coppa Club in Sonning, they genuinely play the local card. Maybe one to watch is The Ivy which seems to be opening restaurants at a pace, maybe their plans will slow down a little considering the current market, perhaps they should focus on building customer loyalty and not just outlets. In a similar vein, smaller operators like Caravan seem to have created an offer that caters for morning, noon and night, embracing the fact that peoples’ needs vary depending upon the time of day – this is surely part of the future, extending offers to include breakfast, working with a coffee, take away, delivery, click and collect and variable pricing.

There is little doubt that the landscape now is different to 30 years ago, we travel more, have wider interests and undoubtedly eat out more. The cafés and restaurants that will continue to be successful are the ones who talk to and listen to their customers, provide great service and know their offer and stay relevant. And as counter point, who on earth would have imagined Costa being sold for 3.8bn?!

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