Smaller restaurant chains are taking advantage of the malaise on UK high streets to snag sites left by competitors at lower rents.
Loungers, a hybrid café-come-bar chain, and the pizzeria Franco Manca, which both announced results on Wednesday, said that they had managed to maintain growth by refusing to pay high rents for new outlets.
Franco Manca said on Wednesday it was taking advantage of cheaper sites becoming available “as a result of the current conditions in the wider property, retail and dining out sectors”. It has recently opened pizzerias in Greenwich, Birmingham, Exeter, Leeds and Edinburgh.
Loungers noted that the “well-documented travails of the high street are undoubtedly throwing up opportunities,” even as “many of the regional high streets we have identified remain very well supported and consequently sites that become available are relatively highly valued”.
The group, which launched an initial public offering earlier this year, has been aggressively expanding throughout the UK in midsized towns and cities. It opened 25 new sites in the year to April 21, bringing it to a total of 146 café-bars under its Loungers and Cosy Club brands.
Revenues for the period increased 26.4 per cent to £153m. Operating profit, adjusted to account for the cost of its IPO and some initial share-based payments, was up 23.3 per cent to £12.4m.
Loungers has set itself apart from the UK’s casual dining market by opening from breakfast time until 11pm and offering food, coffee and alcoholic drinks. In a presentation to analysts in May it described itself as “serving everyone, for every occasion, everywhere”.
Both the expansion and the cost of listing on Aim in April, caused the dining chain to register a loss before tax of £4.9m, up from £6.6m in 2018.
After a torrid period in which 15 restaurants were closing per week in the UK, according to CGA Market Growth Monitor, restaurants reported marginally better sales in July — up 3.8 per cent compared to last year.
