Restaurants and cafes take bigger bite of UK retail and leisure market

Ed Purcell, Cushman & Wakefield

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 UK Food & Beverage Market 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 95 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.

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.

Cafés, 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.

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 – defined as those with five outlets or more. These operators accounted for 37% of net expansion in 2014, which had increased to 49% by 2016. Cushman & Wakefield expects this market share will continue to rise as multiple operators expand their presence across the UK.

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 total consumer spending, 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 changing their habits. Food and beverage outlets, which offer an experience that cannot be replaced wholly online, present an opportunity for landlords to increase dwell time and expenditure within their centres. They also allow them to capture a larger slice of the total available catering market by moving from pure retail to experiential destinations where people go not just to shop, but also to socialise and be entertained.”

Ed Purcell, Associate in the National Retail agency team in Birmingham commented: “There is continued demand from existing and new leisure and restaurant operators who wish to enter and expand within the Birmingham and Midlands market. This is due to a number of reasons, continued inward investment by companies into the service and manufacturing industries leading to higher levels of employment, increases in population levels as people seek to relocate to Birmingham, and increased levels of spending by consumers on their food and leisure activities.”

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