Don’t take this the wrong way, but how do restaurant operators sleep at night? Read interviews within the industry, attend a panel, or even strike up conversation down the pub, and you’d think we’ve got the toughest economic climate we’ve had in the past ten years – a lethal concoction of new business rates, rent rises, and a change in customer spending, all compounded by Brexit uncertainties, has got many businesses from small independents to the big chains bucking under the pressure.
No one’s blaming these businesses. But is that part of the problem? AlixPartners, who last year co-reported on casual dining groups closing the gap on industry giants in terms of rate of expansion, put this down to the gaping holes left open by big chains. ‘Tired offerings that fail to evolve will have a limited shelf life,’ said AlixPartners managing director Paul Hemming. ‘But for emerging operators with a differentiated, consistent product, there will be amble room to blossom.’
It’s much like when British pubs started to fall by the wayside a few years ago, with dozens of pubs boarded up every week – in many cases, this was down to the fact they weren’t offering anything interesting. ‘I think a brand can keep going forever if it keeps innovating and making sure it has great people working within it,’ Wahaca co-founder Mark Selby told Eater last year. ‘Nando’s has been the best example of that.’
Indeed, Wahaca, Nando’s, Piccolino, and several other chains are in the process of expanding, in some cases thriving, even – Piccolino announced ‘record sales’ in January. So don’t believe the headlines. Sure, certain brands over-expanded at a time when the economy was, unknown to them, on the cusp of turning sour. But for many others, business is a-boomin’.
Rosa’s Thai café, for example – a comparatively small chain with 13 sites plus more expected to come, opened two branches in the past year, and recently attracted the attentions of American investors TriSpan, who bought a majority stake in the company at the start of June. Just goes to show – the apparent adverse economic conditions in the UK aren’t putting off investment. Thai brand The Giggling Squid has also seen impressive growth, set to open six new branches in the next few months, and is aiming to reach a total of 32 sites from their current 24 before the end of the financial year.
‘We’re increasing our sales by 35% every four months,’ Giggling Squid co-owner Andy Laurillard says. ‘There are headwinds in the sector, but we’ve either sidestepped some of the issues, or absorbed them and worked to improve the situation through better management.’ Andy admits Brexit had an affect on GS’s input costs immediately after the referendum. But rather than accepting that as fact, the business decided to evaluate its supply chain: Instead of, say, ten vans, one from each of their suppliers on the road, GS now has one delivering to a central hub.
In doing so, they’ve not lost their trusted suppliers, and, ‘despite the exchange rate,’ says Andy, ‘we’ve turned it around and managed to improve on our costs. We’re in a much stronger position than we were two years ago.’
As well as adapting the supply chain, the prospect of Brexit inspired Giggling Squid to work on their staff retention, which has played dividends in itself. Ultimately, as Andy says, ‘it’s the shock of something making you realise there’s a better way of doing it when you have to tackle the problem.’
Incidentally, the mentality of looking at difficulties as a challenge rather than an insurmountable obstacle is how Andy and his wife and business partner Pranee got Giggling Squid going in the first place. ‘We were able to get started because of the recession,’ says Andy. ‘When it hit, lots of banks pulled back and a lot of sites became available. We picked up four or five sites for virtually nothing quite quickly. Otherwise, we’d never have had access to them.’
For Giggling Squid’s first eight sites, the two paid £130,000 premium for in total. Look at most high-streets around the UK now, and the amount of empty sites is plain to see. Rather than signs that times are tough for the restaurant market, these should signal opportunity for new businesses to find their feet. And as Andy suggests, this is good news for the customer as much as it is the wannabe restaurateur.
‘I think it’s quite an exciting time,’ says Andy. ‘There are quite a few juicy restaurant sites coming up in lots of interesting places very cheaply. I’ve got so much confidence in this sector – there’s a huge demand for paying for quality food now, and for different ideas. And there’s a wall of capital waiting to be invested in those concepts.’
