Report: Overcrowded market to slow restaurant growth

By Liam Garrahan contact

- Last updated on GMT

Report: Overcrowded market to slow restaurant growth
The UK’s restaurant industry is set to suffer a slump in growth as the market becomes overcrowded, according to a report by foodservice consultancy, Horizons.

The prediction comes after a period of bumper growth for the sector which saw 1,770 new restaurants open in the 12 months between October 2014 and October 2015, a 6.9 per cent increase​.

Over the past decade the number of chain restaurants in the UK has increased by 55 per cent, a growth percentage that Horizons say is unsustainable in the long-run.

 “It is difficult to see how this level growth in food outlets can be sustained in the longer term,” said Horizons’ managing director, Peter Backman.

“Competition amongst operators means there will be a struggle to improve like-for-like sales across the sector, keeping menu prices fairly flat and margins low.”

The consultancy expects to see a ‘blurring’ of eating-out formats as operators seek to differentiate themselves from one-another, with chains expected to appear in a wider variety of places offering different options to guests depending on the location. Starbucks, for example, has turned its London Covent Garden site into a wine bar during the evenings, and Pre a Manger has developed a sit-down evening food offer.

“Consumers are looking for a good quality eating experience wherever they are. This, and the pressure on sites means that operators are being extremely innovative and changing their offer to adapt,” said Backman.

“The year ahead is likely to be a challenge for operators with competition at its most intense. Those that maintain their quality, keep their menus fresh, their prices competitive and adapt to changing demand will emerge the winners.”

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