Restaurants and cafes take bigger bite of UK retail market - Cushman & Wakefield

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Restaurants and cafes take bigger bite of UK retail market

  • Net addition of nearly 3,000 new Food & Beverage (F&B) units planned in next two years requiring additional £1.4bn spending to be sustainable
  • Eating out market predicted to grow 17% over the next four years but potential risks include inflation, business rates, living wage and Brexit
  • F&B sector now accounts for a fifth of all UK retail and leisure units as landlords seek to attract shoppers and boost dwell time
  • Cafes, fast food and restaurants – particularly American casual dining – increasing but pubs in decline

Food and beverage operators plan to capitalise on changing shopping habits by opening nearly 3,000 new restaurants and cafes (net) in the two years to the end of 2018, according to Cushman & Wakefield’s report

The growth in online shopping, which has seen the number of clothing and white goods stores decline, has prompted shopping centres to focus on opening cafes and restaurants. By improving the overall shopping experience, they aim to encourage consumers to shop for longer and spend more.  

Cushman & Wakefield surveyed F&B operators* on their future plans with results suggesting there will be a net addition of 1,414 units in 2017, from these operators and the wider market, followed by 1,515 in 2018. These expansion plans will require consumer F&B outlay to increase by a net £674m and £722m respectively. 

Operators surveyed said that although demand for sites fell after the EU referendum by 14%, it is forecast to pick up again in 2018 – 7% up on 2017 and only 8% down on the level stated before the referendum. 

The research revealed that between January 2014 and January 2017 the number of clothing, footwear and white goods shops decreased by 2,185, while the number of restaurants and cafes increased by 2,998 – growth of 9%. As a result F&B now accounts for one fifth of all retail and leisure units. 

EATING OUT SPEND GROWTH AGAINST MODELLED REQUIRED SPEND*


Cafes and fast food and takeaways have seen the strongest growth within the food and beverage sector, up 1,527 and 1,035 respectively in the last three years. 

It has been well documented that the number of pubs are in decline across the UK. This is reinforced by Cushman & Wakefield’s report, which shows there were 319 fewer pubs in the UK in January 2017 than there were in January 2014. 

In the same period, the number of restaurants has increased by 897, with expansion of American food operators, such as Red’s True Barbeque. The growth in American cuisine has come at the expense of Indian and Chinese restaurants, with the removal of 205 and 192 sites respectively. 

The report also shows that food and beverage expansion has also become increasingly dominated by multiple retailers - those with five outlets or more. These operators accounted for 37% of net expansion in 2014 which increased to 49% by 2016. Moving forward, it is expected this dominance of market share will continue to rise.

UK consumers’ taste for coffee has risen dramatically since 2000, with Costa, Starbucks and Caffè Nero continuing to lead the way with strong expansion plans. 

Growth in the eating out market is expected to be 3.8% in 2017, well ahead of the average total consumer spend, which includes clothing and footwear, household furnishings and food. From 2016 to 2021, the eating out market is forecast to increase by 17% and be worth over £103bn.  

Thomas Rose, Head of Cushman & Wakefield’s Leisure & Restaurants team, said: “Online retailing has grown rapidly and as a result, consumers are spending less in physical stores, particularly on clothing and footwear. This reflects a move to experiential and leisure offerings, like food and beverage outlets, which cannot be replaced wholly online. 

“Food and beverage outlets present an opportunity for landlords to increase dwell time and spend within their centres. It also allows them to capture a larger slice of the available catering spend by moving from pure retail to experiential destinations where people go not just to shop, but also to socialise and be entertained.” 

From 2014 to 2017, expansion of food and beverage operators has become increasingly dominated by multiple retailers. In 2014, multiple operators were responsible for 37% of net addition of units but this increased to 49% in 2016. Cushman & Wakefield expects future food and beverage growth to be dominated by multiple operators expanding their presence across the UK. 

Darren Yates, Cushman & Wakefield’s Head of EMEA Retail Insight, added: “The total value growth in the eating out market can sustain these growth levels but several downside risks remain, such as rising inflation, potential business rate increases, a rise in the living wage and potentially tighter labour laws due to Brexit.” 

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Richard Coleman

Richard Coleman

Marketing

London, United Kingdom

T: +44 203 296 4326

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