Much of the focus on the restaurant sector is centred on the thriving London market, which isn’t surprising when tourism numbers are rising dramatically with London becoming the most visited city in the world in 2014 (Mastercard Global Destinations Cities Index).

Understandably the capital’s leisure sector has grown exponentially and whilst the significant influence of the branded restaurants is unquestioned, there are a growing number of new brands emerging.

Buoyed by their experience in the capital, these brands have also increasingly taken their confidence into the UK regions. The challenge is whether these emerging brands will flourish and survive in the smaller cities across the country.

Recent examples of London brands following the regional pathway include Hawksmoor and Busaba Eathai who have agreed deals in Manchester, together with Burger & Lobster in both Cardiff and Bath and Shake Shack who agreed their second site in St David’s, Cardiff.

"Buoyed by their experience in the capital brands have increasingly taken their confidence into the UK regions"

The good news story is not limited to the major cities, with historic market towns around the UK seeing their share of the influx of aspirational brands such as Carluccio’s, Giggling Squid, Loungers and Bill’s. We predict further regional expansion for London brands in 2015, as Central London becomes even more competitive, these operators will struggle to meet their predominantly private equity backers’ expectations for growth in the capital alone.

Private equity is still playing a crucial role in these trends and the growth of the A3 sector more generally, with a flurry of high profile buy-outs completing towards the end of 2014. This included the £303.7m sale of Prezzo to TPG and the final break-up of Gondola group, with the sale of Zizzi and ASK to Bridgepoint for £250m, following the sale of Byron to Hutton Collins Partners for £100m at the end of 2013 and Pizza Express to Hony Capital for £900m in July 2014; the largest corporate restaurant deal for many years.

The rush of private equity to occupy the restaurant space in the last 12 months has been at a level not seen since the pre-recessionary period prior to 2008 and we do not see this abating.

As independent restaurants struggle to cope with the wealth of quality brands that consumers now have at their finger tips, the stalwarts of the sector are also having to improve their fit outs, menu offer and experience to retain their customers. With the signal that the customer was not going away, many restaurants have chosen to eschew the voucher culture that has so dominated the sector in recent times, in favour of investing in and refreshing their proposition most notably Bella Italia.

We expect the top 10 most acquisitive brands in 2015 will be:

■ The Restaurant Group

■ Nando’s

■ Bill’s

■ Prezzo

■ Pizza Express

■ Five Guys

■ Giraffe

■ Carluccio’s

■ Wagamama

■ Ed’s

Taken from
Spotlight: UK Commercial Leisure Q1 2015