Restaurant sector shakes off blues as it returns to growth

The fortunes of the casual dining sector, which suffered under the twin pressures of Covid and soaring inflation, have taken a turn for the better. The number of midmarket restaurants is up for the first time since the pandemic.
According to Hospitality Market Monitor, the number of outlets had reached 6,696 when lockdown was imposed in March 2020. That had tumbled to 5,082 by June 2023, equivalent to more than one closure a day.
The 1,611 net closures analysed by CGA by NielsenIQ, the market researcher, working with AlixPartners, represented a 24 per cent slump. The casualties — some temporary, some permanent — included brands such as Chiquito, Carluccio’s, Byron and Pizza Express.
Now there is a modest return to growth, with a 1.7 per cent increase in the number of casual dining venues in the past 12 months, an average of three net new sites a week in the first half of 2024. Hospitality Market Monitor suggests that the turnaround applies to the wider industry, with the number of licensed premises up by 0.5 per cent between March and June, comprising 462 net new openings, or five a day.
It is the first increase since the middle of 2022 and only the third since the start of the pandemic. Second-quarter growth was even across all hospitality sectors. It extended to independents, where the number increased by 0.5 per cent, ending a years-long trend of sustained closures.
Longer-term comparisons are weaker, however. The number of hospitality outlets is down by 1 per cent, or 969, since June 2023. Stretching the comparison back to the start of the first lockdown in March 2020 shows that the number of licensed premises is down by 13.8 per cent.
Karl Chessell, the director of CGA by NielsenIQ, said it was a welcome sign of returning confidence. “While it’s too early to be sure that hospitality’s downward trend in outlets has bottomed out, alongside solid sales growth in the first half of 2024 these figures indicate the brightest outlook for some time.”
Graeme Smith, managing director at AlixPartners, an American consulting firm, said that the return of outlet growth reflected the stabilisation of the market. He highlighted significant growth in the themed bars and competitive socialising sector, where the number of outlets had grown by 28.9 per cent in 12 months.
Katie Kirwan, from DesignMyNight, a booking platform, said: “Whether it’s photos they can share, experiences they can talk about or activities they can try, your average night out is no longer limited to a couple of G&Ts on the dancefloor but rather a bucket-list of new themed spots and more unique reasons to leave the house.”