There has been a considerable difference for many years between the dining culture of London and the rest of the UK. Central London, in particular, is well established as a global centre for restaurants from all culinary corners of the world, while for decades regional cities were more dominated by Chinese and Indian restaurants and cinema anchored leisure schemes that promoted a relatively small pool of national chains. Meanwhile, wet led pubs across the country have provided consumers with the vast majority of eating out opportunities.

Gradual changes in food culture through the availability of ingredients, cookery programmes and health awareness, have increased demand for more diversity and quality of experience in the dining market. People are drinking out less and eating out more and as a consequence, drink-led eateries are growing much more slowly than in the past and food-led establishments are surging. This provides a great opportunity for further casual dining growth across the UK.

Outside of London, the major city centres have led the growth in eating out and are the key battlegrounds. New schemes in, Leeds, Liverpool and Manchester have changed the casual dining landscape. Brands are competing for premium space, committing to punchy rents and speculating on expensive fit-outs and long leases in order to secure the best sites.

The cosmopolitanisation of the UK diner is also feeding down into smaller towns and cities, further reflecting a swing from drink-led to food-led eating establishments. Hence in the last three years drink-led establishments have declined/stalled in towns like Cheltenham, Southport and Worthing, while food-led locations have grown significantly (Alix/CGA Monitor).

^{Source: Alix Partners CGA Peach Market Growth Monitor}

While the Alix/CGA analysis in Figure 7 is not specifically casual dining, it reinforces the point that the UK eating out market, of which the branded restaurant element remains a relatively small but growing share, is incredibly dynamic and expansive in the current climate.

Furthermore, regionality and affluence have become less of a governance to limiting expansion, with smaller less saturated markets providing some excellent opportunities; provided of course that there is the market capacity.

So what part of the casual dining market is the most expansive? Small businesses opportunity tend to be more optimistic than large established players and it is easier to grow small-medium businesses on a like-for-like basis. The latest CGA Peach & Korn Ferry Survey of Business Leaders indicates that 30% of the largest businesses lack optimism for market growth.

However, 27% of business leaders surveyed also said they expect to open more than 10 sites in 2016. Much of this growth is anticipated to be from bigger more established companies as businesses under private equity or stock market ownership are under pressure to meet investor demands, while smaller companies are typically more prepared to grow organically.

Given the modest share of the overall eat-out market we are not unduly concerned about saturation on a macro-market level and expect the growth in branded restaurants to continue, with further new brands and concepts yet to appear and many parts of the country still underserved.

There are however, concerns felt by operators at the local-market level, where at times there are more restaurants appearing than there is the consumer spend, or inclination to support them. Eating-out culture is changing at pace towards the casual dining model and while critical mass of restaurants is important to drive this trend, where the pace of supply outstrips the pace of demand some operators will struggle.

CGA Peach report that trip spend is expected to increase, but frequency of visit is expected to decrease in the sector, largely because more choice results in decreased loyalty. This could prove challenging for chains taking space in crowded markets, or for brands with limited menu choice.

Operators with50 sites and in particular >200 sites, presumably because they can be more flexible over location and growth. There can be clear challenges with upscaling portfolios, which is likely to be most felt by some brands that lack funding, or are already well represented.

Local market saturation is forcing operators in all tiers to up their game and innovation is at an all-time high. Creative but costly fit-outs, improved service levels, social media tie-ins and more convenient payments via mobile are all designed to improve the customer journey and increase footfall. Further concessions are expected following tie-ups between Rossopomodoro in John Lewis, Burger & Lobster in Harvey Nichols and Ed’s Easy Diner in Debenhams. For consumers at least, competition is a good thing; it forces improvements in standards, which in turn increases appeal.

The five formats most expected to thrive in the next few years are:

■ Premium fast food

■ All day/flexible formats

■ Street food/pop ups

■ Premium casual dining

■ Third party delivery services

^{Source: Savills Research}

The London conundrum

Despite London leading the way in its dining offer, there are increasingly concerns over capacity issues. 180 new restaurants open in Central London each year, but 35% of these close down in the first two years. Total sales remains good and there are still queues around the corner of the trendiest restaurants, but trade growth is not increasing at the rates witnessed in recent years.

The Coffer Peach Business Tracker shows that for 2015, restaurant like-for-likes within London have fallen for 8 months in the year, while outside of London sales grew in all but one month of the year. Despite this, demand for space in London remains high and given the large amount of spend available and the high propensity for dining out, it is a market that all brands will inevitably want to crack.

Delivery point

A new trend is further shaking up the sector as many casual dining operators are now branching out into providing takeaway services in addition to their restaurant operations with the help of third party delivery services. This is not a new concept in itself; Just Eat and Hungryhouse have been around for over a decade. However, their business model is to link consumers to small businesses predominantly from the traditional takeaway sector.

Unlike its competitors, Deliveroo provides the delivery service as well as marketing and order taking, via an ‘Uber’ friendly mobile app. This allows it to provide food from restaurants that do not normally offer a delivery service, including a growing tranche of casual dining operators. Diners now find it as easy to order a Byron burger or Wagamama pad-thai as an Indian takeaway into their homes.

Given increased consumer demand for a higher quality and fresher food offer, the upshot for the sector is clear. Tapping into the pool of consumer restaurant spend that doesn’t typically leave the home, increasing sales in restaurants without using tables, and having staff efficiencies in serving an increased number of customers. Pizza Express have seen the benefit of adding delivery services to their offer, but are going it alone, while Chiquito’s are the latest brand to embrace Deliveroo with plans to trial the offer from a dozen of its restaurants.

Incepted in 2013, Deliveroo already operates from 13 countries and is rapidly expanding across the UK, having successfully raised almost $200m in funding. Their ever growing network of delivery riders are already a familiar sight in our major cities.

^{▲ Deliveroo drivers: a familiar sight in our cities}