The restaurants defying the high street downturn

The British high street looks more and more bruised. Even betting shops are shutting. With footfall down and consumer uncertainty hitting sales, the casual dining sector is a prominent casualty.

Restaurant closures averaged 15 per week in the year to the end of March, according to the CGA industry tracker. In May, Jamie’s Italian went into administration. Last month PizzaExpress, which opened its first restaurant in 1965, published its annual report that showed a loss before tax of £55m for 2018 compared with £29m a year earlier.

But not all are struggling. Some smaller, more focused operators are differentiating themselves.

Anna Barnfather, an analyst at Liberum, said that since the first wave of mass market chain restaurants there had been a move to more informal eateries aimed at customers who did not want to stick to rigid meal times.


Loungers, which runs all day café-cum-bar locations under the Lounge and Cosy Club brands, debuted on Aim in April at a value of £185m. It now has a market capitalisation of almost £200m.

Analysts at Peel Hunt called it “the UK’s leading hospitality business”, attributing its success to its ability to trade throughout the day. It offers refreshments from coffee to mojitos from 9am to 11pm, and acts as much as a co-working space as somewhere to socialise.

“Because we generate revenues right through the day, we can open in relatively small locations,” said chief executive Nick Collins. He added that Loungers’ rent to revenue ratio was just over 5.5 per cent, whereas most other operators in the sector worked on a ratio of more than 10 per cent.

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Mr Collins said he saw potential for 400 sites in the UK — there are 150 at present — but added that the company was “making sure we are as good as we can be in the existing sites”.

Fulham Shore

Staying small enough to maintain a supply chain where you know your suppliers is the ethos of Fulham Shore, which runs the Franco Manca pizza chain and The Real Greek.

“Number one is knowing where your food is coming from and that it tastes good for the customer. Value comes second,” said David Page, chief executive.

He added that bigger chains had to source their ingredients from catering suppliers such as Booker, which resulted in their serving the same food. “We think we’re serving better capers, better olive oil than everyone else,” he said.

Shareholders certainly have an appetite for the ingredients. Fulham Shore’s share price is up 20 per cent in the past year.

In its last set of results, Fulham Shore reported revenues of £33m for the six months to the end of September 2018, up from £27m in the same period the year before. Profit before tax was £1.4m. Mr Page vowed that you would always be able to get a pizza and a drink for under £10 in its Franco Manca chain.

It has proved popular. Franco Manca, which operates a no booking policy, still attracts queues at many of its locations. This week its Southfield branch near to the Wimbledon Tennis Championships served 750 pizzas in one day — up from its usual average of 150.

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Tasty plc

Tasty PLC’s share price is down 70 per cent in the past year. The company, which operates the Wildwood and dim t brands, said that, in line with many casual dining groups, it had suffered from the “extremely challenging” conditions in the sector. Brexit uncertainty had also caused a “slow start” to 2019.

Wildwood, which Tasty said was “aimed at a wide market”, offers pizza, pasta and grills in the price range of £8.95-£17.95. Dim t serves oriental food.

Revenues in 2018 were down to £47.3m from £50.3m the year before.

The company raised £3.25m from a share placing and open offer in April. Keith Lassman, chairman, said this would allow it to “continue our strategic plans with vigour” as well as pay down debt.

Ms Barnfather suggested Tasty was one of many operators hit by “a cost inflation environment”, particularly high rent costs. The answer, she added, was to nurture the existing business before rolling out more sites.

Tasty sold three restaurants in 2018 and closed one. It now operates 58 branches and said it did not have plans to open any in 2019.

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