'˜Brand fatigue' expected to lead to more restaurant closures in 2018

Jason Smith, a hospitality director at Christie & Co in Leeds, said some restaurants had become a victim of their own success.

Speaking at the launch of the firm’s Business Outlook 2018 in Leeds, Mr Smith said that nationally an estimated 3,000 new restaurants had opened their doors over the last three years.

The trend is driven by an increasing number of diners, predominantly millennials and generation X, who are happy to use their disposable income on eating out.

However, Mr Smith added it has led to the demise of brand loyalty as customers increasingly look for new and alternative dining experiences.

Jamie Oliver’s Italian restaurants and the burger chain Byron are among the big names closing sites in a bid to rescue their businesses.

Meanwhile, The Restaurant Group, the UK’s largest operator with 500 sites, is also implementing a turnaround programme to create a leaner company.

Mr Smith said: “We believe that there will be increased distress in this sector due to ‘brand fatigue’ and the impact of similar cost pressures to pubs, particularly the cost of buying ingredients as world food prices rise,.”

The rise in popularity of food delivery services, like Deliveroo is also having an impact on the sector, he added. “These are affecting a restaurant’s margin when a proportion of their food sales is now by way of cheaper food delivered, without the dining in mark up,” he said. “This will put further pressure on the underlying net profit of the business.”

Mr Smith said innovation and quality will be the key drivers for success. Operators making the best use of technology and social media, promoting healthy eating and an ever-changing experience will continue to thrive.

Unique venues, such as Leeds’ new Kitty Café, where customers are invited to pet cats whilst dining, are proving popular, he added.

Christie and Co sells, values and advises on properties in the hospitality and leisure, care, and retail sectors.