Casual dining: What makes a viable food and drink venture in the North West?
The first half of 2018 saw a slew of casual dining chains announce drastic cost-cutting measures and restaurant closures up and down the country. All the while independent eateries appear more popular than ever, prompting the question of what makes a viable food and drink venture here in the North West today?
Words by Lawrence Saunders
An oversaturated market, mounting food costs, a rise in the national minimum wage – just some of the perceived factors behind a dramatic reversal in fortunes for some of the UK’s best-known casual dining operators.
The start of 2018 saw Jamie’s Italian drop 12 restaurants, whilst Byron Burger announced it was entering into a Company Voluntary Arrangement (CVA) which put 20 sites at risk.
Here in the North West, despite recent data which shows the number of food-led licensed premises grew in Manchester and Liverpool over the five months to March, the region hasn’t avoided the cull with Prezzo closing sites in Formby, Warrington, Deansgate and Chester (Chimichanga).
Elsewhere Carluccio’s called time on its Hale restaurant as part of a restructuring process aimed at saving the struggling Italian chain.
“There has certainly been an over-saturation of some of these brands, with many operating two or three venues within the same city,” says Felicity Tulloch, licensing partner for North West commercial law firm Kuits.
“Customers are becoming more discerning and looking for experiential dining concepts and more authentic cuisine.”
“You cannot say an independent restaurant is a better investment than a chain, both are equally vulnerable to market changes.”
In contrast to the so-called ‘casual dining crunch’, the independent restaurant scene appears to be booming with recent BBC Two series ‘Million Pound Menu’ documenting the hunt for the “next restaurant sensation to take the UK by storm”.
Each week two pop-ups were given a three-day trial run in a 40-seater Spinningfields restaurant, and the chance to win over diners as well as potential backers including Jeremy Roberts of Living Ventures and Allied London’s Tim Gee.
Hundreds of thousands of pounds were invested by the experts over 12 shows, demonstrating a strong interest from financers for food and drink start-ups.
So should we expect investors to abandon casual chains wholesale in search of the next bright young foodie things?
“You cannot say an independent restaurant is a better investment than a chain, both are equally vulnerable to market changes and increasing customer expectations,” says Andreas Anastasiou from Tano Properties.
“Investors have, however, noticed there is a gap in the market, providing a source of finance to talented restauranteurs who cannot raise money through mainstream lenders.”
Anastasiou, who has been involved with numerous restaurant lettings on Liverpool’s Bold Street and has, himself , invested in the city’s Baltic Market food hall, thinks a shift in how people want to spend their money and the quality of food they expect has been fundamental to a change in fortunes for chains.
“To be viable you need to be relevant; you need to understand what is required in terms of customer service, quality of food and pricing,” he adds.
“You have to understand the mechanics of how a restaurant works, but above all you have to have a real passion for the industry and food.
“There are people who run restaurants and there are restaurateurs who run and understand the DNA of the restaurant industry.
“You are only as good as your last meal.”
One prolific North West restaurateur who’s on the cusp of opening her sixth venue certainly wouldn’t argue with Anastasiou on that.
“The barometer for any restaurant, chain or independent, should be ‘would you want to serve this food to the people you love three times a week?’,” says Nisha Katona, owner of Mowgli Street Food.
“If the answer to that is no then you have no right in selling it to the public.
“The half of [running a successful restaurant] is your passion for the product.”
For Katona, who opened her first ‘twisted Indian’ eatery in Liverpool in 2014, the independent versus chain debate isn’t as black and white as it might seem to some.
“The truth is, the independents aren’t doing better [than the chains] because if they were, they would be chains!
“One of the saddest things for this nation is for us to think of the word ‘chain’ as a pejorative term.”
“If an independent is doing really well, it will build more because it wants to take its ‘Disco Cauliflower’ or its ‘Yoghurt Chat Bombs’ to the nation.”
With sites in Liverpool, Manchester, Birmingham, Oxford, and one in Nottingham on the way, Mowgli itself is very much on the way to becoming a chain – something which doesn’t bother Katona but does raise an interesting question for foodie startups expanding beyond their modest beginnings.
“Is it bad to have more than one restaurant? Does it mean you suddenly stop caring about your food? It absolutely doesn’t at all.
“I think one of the saddest things for this nation is for us to think of the word ‘chain’ as a pejorative term.
“If you look at somewhere like Nando’s, which does one dish really well, then it’s a great thing to become more than one.”
Whether they’re opening additional restaurants or their first permanent venues, according to Tulloch at Kuits, independents have begun to take advantage of sites vacated by departing casual dining occupiers.
“The closure of some of these brands’ sites doesn’t mean that the market in Liverpool and the North West is necessarily saturated,” she says.
“For the right operator with the right concept in the right location there are opportunities.
“We have certainly been busy applying for new licences, but for smaller, independent brands.”
Tulloch cites an award-winning beer and Indian restaurant as an example of a growing independent which has made a successful step up from pop-up to permanent and as a sign of the times for the industry.
“Bundobust, which currently operates in Leeds and Manchester, has recently obtained a licence in Liverpool.
“The street food revolution is evolving into food halls, providing startups with their first permanent locations, allowing them then to take the next step and open standalone sites.”