uk leisure market update - f.datasrvr.com › fr1 › 517 › 10041 › the_uk... · the uk leisure...

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R E S E ARCH

UK Leisure Market UpdateAutumn 2017


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www.realestate.bnpparibas.com3

As keen foodies we have enjoyed the continued boom of the London restaurant market over the past couple of years. However, it’s not just been the capital which has seen explosive growth in the F&B sector; the depth of the regional market has increased almost beyond recognition. As such, our strategy going into 2018 sees our reach extend beyond London and into the UK’s ever growing regional cities. While we advise on Central London markets, right through to multi-faceted mixed use schemes across the UK and Europe, the principle is the same; to ensure continued success in an evolving market for our clients.

The overarching retail team’s ethos, powered by one of the world’s largest banks, is to think differently and ensure our

clients are well equipped to keep pace with today’s rapidly changing face of retail, F&B and leisure, and to understand its role in the wider environment.

Our team doesn’t play by the same rules as other corporates. We have advisers, foodies, shoppers, investors; all here to help shape and curate the best places for people.

In a changing world, there is the need for specialist market advice.

Mark CalderDirector of Restaurants & Leisure

Hello & Welcome...

@BNPPRE_UK @BNP PARIBAS REAL ESTATE www.realestate.bnpparibas.co.uk

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03The UK Leisure Market

Lost for Inspiration?

What’s New? Oystermen

Focus on Brewdog Foodies: Aspirational or Socially Loyal?


#01 The UK Leisure Market

“The UK consumer continues to prioritise spending in this area”

espite the uncertainty in the wider consumer and economic markets, the leisure sector has held up remarkably well.

Over the past two years, consumer expenditure on leisure has grown nearly twice as fast as total consumer expenditure. Research from GlobalData found that the foodservice sector in the UK is now worth £72.55bn. Of this total, the restaurant channel is the largest subsector with a 38.7% market share. Despite the number of outlets expanding considerably over the past couple of years, growth within the channel has predominantly been driven by an increased number of transactions. Whilst this growth has clearly been spectacular, over the past year

“Leisure space within regional shopping centres is set to grow by 6.1% over the next 5 years”

The UK Leisure Market

Dmany have questioned whether it is sustainable or if the leisure sector is overheating. The one certainty is that the UK consumer continues to prioritise spending in this area.

Whilst the current rate of inflation is undoubtedly the biggest area of concern within the wider retail economy, perhaps the most significant worry affecting the leisure sector is the uncertainty surrounding the future of EU nationals living in the UK. According to the ONS, Europeans currently make up 13% of the UK hospitality workforce of which only 4% are British. Any limitations placed on the movement of people into the UK would increase costs at a time when the sector is facing several other major challenges.

Another challenge facing the UK restaurant market has been the growth in popularity of food delivery disruptors such as Deliveroo and UberEats. Deliveroo, founded in 2013, saw growth of 650% in 2016, demonstrating the increased consumer preference for both convenience and eating in. However, rather than viewing the growth of these companies as a threat, it may represent an opportunity for fledgling brands to reach consumers who they otherwise might not have. Restaurant group Azzurri (which owns the ASK, Zizzi, Coco Di Mama and Radio Alice brands) stated in October 2017 that

in the past 18 months, the groups takeaway business had grown from near 0% to 5% of total sales off the back of partnership with Deliveroo.

With a backdrop of rising costs, one of the primary targets for occupiers over 2017 has been seeking out smaller format outlets. In prime locations, rents and rates have been steadily spiralling for leisure operators. As a result, small - mid sized restaurant brands have been taking smaller floorplates in order to remain profitable.

Fortunately for the sector, whilst

many restaurant brands have been migrating away from large units, the continued popularity of so called ‘competitive socialising’ has ensured that large sites have not remained vacant. The segment has seen expansion across the UK, with a wide variety of activities including crazy golf, table tennis and axe throwing providing a competitive element to leisure space.

It has not just been high streets which have seen leisure provision enhanced over recent years - Shopping centres have also continued to witness significant growth of leisure space. The vast majority of new shopping centre pipeline to be delivered over the next five years is purposed for F&B and leisure uses. GlobalData has recently forecast that total leisure space within regional shopping centres is set to grow by 6.1% over the next five years, far outstripping the growth of retail space.

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Oystermen - WC2E 8NADarjeeling Express - W1B 5PW

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#02 Lost For Inspiration?

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“Good quality food should be served in a setting that puts you at ease”

ondon’s seafood scene has gone from strength to strength over the past couple of years. After years of the cuisine being overlooked in

favour of the most current in vogue global food trend, British seafood is now experiencing somewhat of a renaissance period, with a plethora of new occupiers setting up in the capital.

One of the newest of these is Oystermen, which opened its first unit in summer 2017 at 32 Henrietta Street, Covent Garden. Prior to this, the business traded from a market stall at Waterloo, whilst also operating pop ups at parties and weddings. We recently spoke to co-founder Rob Hampton about they’ve been up to recently and what they have planned for 2018.

Where did the inspiration for Oystermen come from? How long have you guys been working with seafood and what does the future of Oystermen look like?

We met in a seafood restaurant, back in 2013, and bonded over a shared love of seafood and hospitality, this was often over a couple of dozen oysters. Ultimately both of us had previous experience working with seafood and it was always something we came back to.

The true inspiration behind the Oystermen came from Matt’s wedding, when we ended up shucking oysters together for the other guests. It just seemed so much fun, to do it on this level, all stripped back. Working weddings and events gave us the opportunity to build up the Oystermen

“Restaurants are about a complete package, no element works without the other”

Whats New? Osytermen

L

#03 Whats New? Oystermen

brand, and gave us time to find the site on Henrietta Street we now call home.

The seafood market in London has seen several new entrants over the past year – how do you plan to differentiate yourself from the rest of the market?

We are experienced restaurant operators and we love what we do. As well as working with the best and freshest quality ingredients and with a team of amazingly talented and experienced chefs we have a real commitment to high levels of hospitality. Good quality food should be served in a setting that puts you at ease and by a team of staff who are friendly, knowledgeable and know what they are doing. Restaurants are about a complete package, no element works without the others.

How do you plan to attract diners who perhaps would have been reluctant to eat oysters previously?

We sell oysters individually to allow people to try just the one, we offer our Happy Hour (Monday to Friday 3-5, 6 oysters and glass of French bubbly for £10), and we have a team of staff who love selling oysters, so we have a number of ways of enticing people in. Ultimately oysters are 100% about freshness; give someone a nice fresh oyster and they are unlikely to not enjoy it!

How important is the provenance of your product? Do you source exclusively from within the UK?

Our policy is that we serve from the UK where possible. For some things we are willing to go a little further afield if it works better in terms of price and quality, but this is actually quite rare. Our oysters are all bought directly from growers and so, these are UK only, with a particular focus on the South East and south coast. The only exception here is our regular

supply of oysters from Carlingford in the Republic of Ireland, but that’s only a couple of miles across the border!

Any new concepts in the pipeline?

We do have a couple of concepts for accessible seafood restaurants which we believe could be scaled up and rolled out in a way in which the Oystermen can’t be, but these remain focused on seafood, as this is something we love working with.


#04 Focus On: BrewDog

“People are sick of mass produced, light fizzy lagers”

he craft beer industry’s momentum over recent years has been nothing short of extraordinary. According to recent research from UHY

Hacker Young, the number of new breweries rose by 18% in 2016 and 64% over the past five years. By no means a purely UK phenomenon, demand has been increasing from Europe, the US and Asia. BrewDog has been the golden child of the UK craft beer movement and has witnessed unbelievable growth in just 10 years - the company now employ over 800 staff, whilst a recent private equity investment in April valued them at almost £1bn. We caught up with Andrew Statham, BrewDog bar hunter, to talk about all things beer.

T So what’s the BrewDog story? In 2007, bored with industrially made lagers and stuffy ales James Watt and Martin Dickie started brewing in a garage in Fraserburgh and in April 2007 BrewDog was born. The mission in 2007, as it still is today, is to make other people as passionate about beer as we are. We opened our first bar in Aberdeen in 2010 and two years later moved brewing to our current

HQ in Ellon. Today there are 50 bars worldwide along with a brewery in Columbus, Ohio.

What are your plans for the next two years for the brand? The next two years involves massive growth. We are in the midst of crowdfunding via Equity For Punks V. Amongst other things this will help us fund expansion of our bars

worldwide, brewpubs in London and other international cities as well as breweries in Australia and China.

How have other international markets taken to BrewDog? In particular some of the European markets who might have been a bit less exposed to the craft beer movement? Amazingly! Craft beer is popular all over the world. We have bars globally and are pushing hard to open more, particularly in Europe.

What makes Craftbeer special? The endless possibilities as well as the amazing people and community. People are sick of mass produced, light fizzy lagers and want their beer to actually taste of something! Do you feel that BrewDog has had a key role in ‘brand beer’, engaging new audiences who wouldn’t have been beer drinkers? Our goal is to make other people as passionate about craft beer as we are so the more people we can engage and convert the better.

In light of recent press how is BrewDog dealing with challenges such as rising inflation, rising staff costs, business rates etc? We absolutely prioritise beer and people. We want BrewDog to be the best place to work ever! We are a Living Wage Employer and offer dog loving staff paid Pawternity leave to help settle in any new pets. We’ve seen some recent press about the Unicorn fund which you guys have set up? Can you give us a brief explanation of what the funds objectives are? The Unicorn fund has two aspects the first is that 10% of BrewDog’s profits are distributed equally among all our staff. The second, which was announced earlier this year, is that a further 10% of our profits is distributed to charities selected by our staff and shareholders. Over and above this addition, we have formally committed to reinvesting the entire balance of our profits each year, for at least the next seven years, into the two things we care about most – our beer and our people - in order to fuel further growth.

“Our goal is to make other people as passionate about craft beer as we are”

Focus On: Brewdog


he way in which we interact with restaurants has changed considerably over the past decade. We are all now seemingly expert food

critics and photographers, deciding on the fate of restaurateurs’ new projects with the nonchalant post of a meal on social media.

The numbers associated with Instagram are staggering – there are currently half a billion photos that have been posted using the top 10 hashtags containing the word food since its inception in 2010. Never before has the pressure on restaurants been so great to ensure that their product is ‘Insta worthy’, in every instant.

However, while social media has provided a real-time minefield for the restaurant sector, it has also provided restaurants with a marketing opportunity by which they can be propelled into rapid success.

This trend has definitely benefitted the more affordable, street eats

“Instagram has become a reflection of consumers’ aspirations as opposed to their daily habits”

#05 Foodies: Aspirational or Socially Loyal?

T segment of the market that appeals to the younger Instagram demographic – take for instance the success of Honest Burger, which first opened in Brixton in 2011. In just over five years, the brand now has 23 branches and has amassed 34.2k followers on Instagram.

Though does racking up thousands of Instagram followers necessarily capitalize into spending customers? Does following a restaurant or bar necessarily translate into walking through the door and becoming a loyal patron? Instagram has become a reflection of consumers’ aspirations as opposed to their daily habits. It is about being seen to be following the trendiest brands – actually visiting the physical locations is merely a bonus.

Before the explosive growth of both Instagram and the F&B sector within the UK, the range of restaurants that a person could access was far more constrained – generally to the consumer’s town.

A person would be limited to a handful of restaurants and would have their personal favourites to which they would be loyal customers.

But, with so much more choice, the concept of loyalty seems somewhat outdated. For the Millennial consumer, in London in particular, it is much more fashionable to eat at a small scale or independent restaurant. Subsequently, it has been this group that has seen very strong growth over the past years.

Recent research from AlixPartners and CGA found that small restaurant groups (under 25 sites) have

seen a 32% increase in numbers of restaurants in the last three years. This was in contrast to large restaurant groups, which witnessed 7.6% growth over the same period. For the modern consumer, a traditional sense of loyalty to your ‘local’ has been displaced by their desire to eat the best and most inventive food.

This trend also highlights consumers’ aversion to overly recognisable branding as well as larger companies’ relative inability to react nimbly to changing consumer tastes. While price pressures arising from Brexit have clearly had an impact, the closure of several high street chain

restaurants earlier this year and many others stalling their acquisition pipeline is testament to this trend – if restaurants fail to adapt to changing consumer preferences, or fail to provide affordable, high-quality food, the current level of competition means that branches will shut their doors and consumers will continue to migrate to more indy brands.

The growing presence of social media – and Instagram in particular – gives a bigger voice to the minnows of the sector, and we expect that this trend is set to continue.

Foodies: Apsiration or Socially Loyal?


Agency & Investment

Mark Calder Restaurants & Leisure+44(0)207 338 [email protected]

Sally French Restaurants & Leisure+44(0)207 338 [email protected]

Stephanie McMahon Head of Research+44(0)207 338 [email protected]

Denizer Ibrahim Special Projects +44(0)207 338 [email protected]

Research & Consultancy

Lease Advisory

Nigel Ball Head of Lease Advisory+44(0)207 484 8132 [email protected]

Mark Elbourne Leisure Lease Advisory+44(0)207 338 [email protected]

Kate Pearson Leisure Lease Advisory+44(0)114 263 [email protected]

Nick Robinson Research+44(0)207 338 [email protected]


Nick Lyell National Leisure & Investment+44(0)207 338 [email protected]

Gavin Redrupp Retail & Restaurants+44(0)207 318 [email protected]

Contacts


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uk leisure market update - f.datasrvr.com › fr1 › 517 › 10041 › the_uk... · the uk leisure...

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