Hospitality venues are showing resilience amongst reports of rising inflation and increasing running costs with property specialist, Cushman and Wakefield, predicting the opening of around 3000 new restaurants and cafes in the UK in the two years to the end of 2018.
Pixabay – PexelsIt’s the multi-site operators that appear to be primarily driving this growth, with expansion of food and beverage operators becoming increasingly dominated by multiple retailers. In fact, research revealed multiple operators were responsible for 37% of net addition units in 2014, which increased to 49% in 2016.
Aside from the continued growth of large restaurant franchises, this momentum has also been recognised on a smaller scale, with successful independent restaurants, bars and diners expanding to their second, third and fourth sites and beyond. Research conducted by hospitality trade show, Northern Restaurant and Bar, found that independent restaurants (those with less than three sites) have experienced growth across all major UK cities, peaking at 12.8% in both Newcastle and Leeds.
Meanwhile, The Caterer and TLT’s insight report: The growth of the UK’s restaurant market identifies the casual dining and fast casual businesses as the most likely to increase their number of sites. Their research also highlighted some of the challenges operators face achieving growth, the most prominent of which was finding a suitable site, which 66% rated as the most significant ahead of recruiting suitable staff (53%) and the expense of acquiring the site (38%).
Finance is a popular avenue for those looking to expand and open multiple sites, however, The Caterer and TLT found that 53% of operators would consider a bank loan as their preferred funding route during expansion.
“Bank loans are a well-known and familiar finance route for operators, but not always the most sensible or time-effective choice,” explains Johnson Reed catering accounts manager, Ian Gage. “Whilst rates can look appealing, it can take banks weeks and weeks to process applications or even return a decision, and that’s time many operators just don’t have in such a fast-paced market.
“Operators need to secure their premises, hire the right staff, purchase their equipment and set all the necessary cogs in motion in conjunction with tight deadlines, and our competitive lease and loan facilities allow businesses to do just that.”
Chilli Banana, DidsburyJohnson Reed have a proven track record in helping catering operators during expansion. Most recently, we’ve been working with Thai restaurant franchise, Chilli Banana, on the rollout of new sites in Didsbury and Knutsford to add to those in Wilmslow, Liverpool, Macclesfield and Bramhall. Working with director of the two newest additions to the Chilli Banana group, Adrian Lea, Johnson Reed facilitated a lease for the vital equipment needed to start trading, including the restaurant’s EPOS system, commercial kitchen equipment and furniture.
“Using leasing to acquire all the necessary equipment for a new site allows the operator to minimise the upfront outlay in the busy expansion period and ease cash flow concerns,” Ian explains, “The repayments are made whilst the business is trading and generating revenue, bringing the point of ROI much closer.”
Johnson Reed also facilitated an unsecured loan facility to assist Adrian in purchasing the soon-to-open Knutsford Chilli Banana site. With non-bank loans accounting for 19% of preferred funding routes during expansion (The Caterer and TLT), this is a route that could well increase in popularity as conditions and applications become less stringent. What’s more, Johnson Reed’s loan facility is entirely independent, and will not affect any existing streams of credit.
Whether you’re opening your second, third or 30th site, we’d be happy to help! Contact us on 0161 429 6949 or info@johnsonreed.co.uk to discuss your requirements in further detail.
