Restaurant sales rose in 2022, but more CVAs are on the way, predicts Christie & Co
Prices have also remained strong, with average sales achieved within 10% of the final asking price, according to Christie & Co’s annual Business Outlook report, Business Outlook 2023: Finding Clarity.
The report from the property advisor also found that 85% of transactions were cash funded because of a nervousness from lenders, causing offer levels to drop. This meant that the number of leasehold restaurant transactions with a premium in 2022 was at an all-time low.
Distressed transactions remained at a low level due to the fact that, with no value to be gained, many keys went direct to landlords, it says.
“In a sector which has historically been dominated by leasehold asset sales, it is good to see freehold restaurants make up a large part of the current market,” says
Simon Chaplin, senior director of pubs, restaurants and franchise at Christie & Co.
“This is driven in part by the work-from-home revolution, whereby customers are now more regularly able to frequent neighbourhood venues in their market town or village, which are more likely to be an owner operated freehold business.”
The report also suggests that the COVID-19 related upheaval of the past two years has ‘fundamentally re-shaped the UK restaurant sector’, from both a consumer behaviour and operational point of view, with customers and operators placing a significant emphasis on convenience, consistency and value now more than ever.
Certain markets have benefited as a result, including, quick service restaurants (QSR) franchising and drive-thru.
More CVAs on the cards
Looking to 2023, Christie & Co predicts that there will be an increased roll out of new, more cost-effective models and brands as well as more CVAs 'as tired and over leveraged businesses feel the heat'.
It also predicts that the market will be characterised by good property deals as landlords offer concessions and rent deals and that QSR, franchising and drive-thru concepts will continue to grow in popularity.
“Where consumers are looking for consistency and value, the franchised brands are taking advantage and this is an area of the transactional market we see developing further in 2023,” adds Chaplin.
