Established brands under pressure as restaurant property prices grow 14 per cent

By Hannah Thompson contact

- Last updated on GMT

Established brands pressure restaurant property prices grow 14 %

Related tags: Cent, Restaurant

Prices for restaurant sites have grown by 14 per cent, according to leisure property specialist Christie & Co, which warned that operators needed to drive footfall with original ideas and strong social media presence.  

In its Business Outlook 2017 report, the company said that business property prices had increased across all sectors, with restaurant especially vulnerable to rises at 14.1 per cent up, just second on a list of eight sectors (second to dental businesses, at 14.9 per cent).

Hotel property prices were up six per cent, the same list said, and pubs up 4.4 per cent.

This puts restaurant rises especially high, compared to the 8.8 per cent for retail property, five per cent for care, and 9.7 per cent for childcare property.  

Brexit was found to have had little effect on domestic business property sales as yet, the report said, as 90 per cent of UK property sales were said to be to buyers within the same geographic area, rather than to outside investors. However, the effect of Brexit once negotiations begin is yet to be seen, it said.

The specialist also said that established brands were facing competition from new operators, and that the casual dining sector was seeing pressures and rising costs, especially if investors look to boost smaller ‘next big thing’ brands, rather than established groups.

Simon Chaplin, head of restaurants at Christie & Co said: “The level of competition for restaurant sites has grown significantly. We saw a 94 per cent increase in restaurants for sale in 2016 on the previous year, but with the pressure of rising costs starting to impact on the casual dining sector, we may be reaching a peak where rents are at a point where they cannot be sustained.

“Established brands are increasingly facing stiff competition from new ‘on trend’ operators. Late in 2016 we saw the fall of Ed’s Easy Diner and we expect one, maybe even two, other chains to go the same way in 2017.”

He added that the recent announcement of six Jamie’s Italian sites closing showed that “established brands were struggling”, and warned that although “a good social media presence and a different idea is good enough to drive footfall…. sustaining this brings more challenges which operators need to find ways to combat.”

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