The UK’s ‘saturated’ casual dining market and the way forward for Jamie’s Italian

jamies-italian-restaurant‘Jamie’s Italian’ restaurants have been stealing the headlines recently due to the chain’s  debts and the closure of 12 sites.  And according to a new report by accountancy firm UHY Hacker Young, Jamie’s Italian is not alone. One in three of the top 100 UK restaurant groups are currently making a loss: this figure is up 75% since last year.  Wayne Redge reports

After revealing that the celebrity chef’s Italian restaurant chain has amassed debts of £71.5 million whilst owing its staff a sum of £2.2 million, Jamie’s Italian has announced its plan to stabilise. Jamie’s Italian’s backers have agreed to site closures along with rent cuts to avoid the whole business from collapsing.

Other restaurant groups from the Top 100 in the UK have faced problems. Byron Burgers, Strada, Chimichanga and Prezzo are amongst the strugglers. These businesses are blaming Brexit, increased competition, rising minimum wages and increased business rates for their losses.

UHY Hacker Young’s Peter Kubik explains: “Pressures on the restaurant sector have been building for years, and the last year has pushed a number of major groups to breaking point. With Brexit hanging over consumers like a dark cloud, restaurants can’t expect a bailout from a surge in discretionary spending.”

Jamie’s Italian appointed a new CEO in October 2017, Jon Knight, who blames complacency for the group’s problems. Knight explained that although the group did very well in its first five years, failure to innovate in the last decade has led to them falling behind competitors. The business started recording losses in 2016, according to Knight, because: “other brands started doing what we were doing at a more affordable price. Suddenly they were the new thing. We didn’t invest in our estate or our brand so other newer, smarter and even smaller restaurants started to overtake us”.

Between 2010 and 2016, it seemed that every Briton was looking for affordable and casual dining venues. As a result, many companies formed, often paying inflated rents for prominent high street locations. The result has been a saturation of extremely similar mid-market restaurants that expanded quickly.  Statistics show that diners aren’t necessarily reducing the amount that they spend on restaurant eating, but they are expecting better value for money.

It is suggested that the larger chains are constantly cutting down their costs by sourcing potentially lower quality suppliers. There was much surprise that supposedly higher-end restaurants are using the same meat supplier as Wetherspoons. This feeling will drive diners to favour places that they trust to put quality over margins.

Back at Jamie’s Italian, Jon Knight has laid out a plan of action for the group that will improve on these ideas. To combat increased high street rents, the group will be learning from its successful  restaurants at Gatwick Airport to further diversify themselves at major transport hubs. They will also address a “growing disconnect” between Jamie Oliver and the restaurant group, which had “lost touch” with his original vision. Working more closely with Oliver by moving their head offices to the same site as his licensing, media and nutritional teams is said to be a push towards streamlining and focusing their efforts. They will also look to revamp their existing restaurants and offer staff additional training and a “competitive salary.”

Wayne Redge is marketing assistant at Smart Hospitality Supplies


Author: Institute of Hospitality

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