Restaurant Report 2024
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Welcome to the Restaurant Report 2024, which provides a snapshot of the UK’s diverse casual dining and QSR scene by looking at the top 100 restaurants groups.
In this report we rank 100 restaurants (101 in fact) based on their number of sites as well as look at the UK casual dining sector as a whole, the pressures it has faced, and the key trends and activity over the past 12 months.
Looking at the list, many of the brands in the top 10 are well established, with most having been around for many decades, but there are some relative newcomers waiting in the wings, most notably Fireaway Pizza and German Doner Kebab. Others have grown their estates significantly over the past year, including the ever-dependable Lounge and Cosy Club brands, Creams, and Slim Chickens. This is against a backdrop of consolidation over the past few years, with site numbers in the branded dining sector having declined steadily.
The industry faces numerous challenges, but the branded sector is proving resilient, particularly medium sized players with around 10-30 sites that are continuing on the expansion trail.
Methodology
The Restaurant Report is a list of the UK’s top 100 restaurant brands as ranked by number of sites. In most cases it ranks single brands rather than companies, although where a group comprises numerous different brands as part of its overall approach (JKS, for example) these are counted together to reflect their single ownership. Sites that are delivery only or dark kitchens are not counted. Information is sourced directly from the companies where possible and their websites and is correct as of October 2023.
Market Analysis
Market Analysis
Overview
Rising costs and a squeeze on discretionary income continues to create challenges for the UK’s eating out market, particularly independent restaurants, but the multi-site sector is proving more resilient.
2023 was not a vintage year for many in the restaurant industry, which has continued to be dogged by rising inflation, food and energy prices and recruitment costs twinned with falling consumer confidence and an accumulation of debt as a result of the Coronavirus pandemic.
Steps have been made towards recovery. The UK restaurant market is expected to grow 5.2% to a value £18.7bn in 2023, according to the latest Lumina Intelligence UK Restaurant Market Report, with much of this growth attributed to the high level of inflation. However, this figure is 2.6% behind the market’s pre-pandemic value.
Despite this growth, restaurants are still lagging behind the fast food and pub sectors thanks to the market's greater exposure to challenges around rising costs, staff shortages and dampened consumer spending, says Lumina. That said, branded restaurants are expected to perform much better than their independent peers, with Lumina predicting that branded restaurants will outstrip wider market turnover over the next three years and will have exceeded its 2019 value by the end of 2023 with a turnover growth rate of 9%.
Medium-sized brands, which can typically respond quicker to changing consumer needs than some of their larger counterparts, have been best placed for growth in 2023 and this looks set to continue into 2024. Brands including Slim Chickens, Mowgli, Popeyes, Fat Hippo, Rudy’s, Rosa’s Thai, and Flat Iron grew their estates in 2023 and are likely to continue to do so thanks to their financial backing but also because their relatively low price point and good value for money propositions suit the current trading environment.
Restaurant brands at the top of the list have had a mixed couple of years, with the economic environment favouring the large players in QSR – Subway, McDonald’s, KFC and Burger King – and their lower price points compared with the large high street chains such as Pizza Express and Nando’s. In its recent financial report Nando’s, for example, said that while revenue for the period ending February 26, 2023, had risen from £819.2m in 2022 to £976.5m, cost inflation remained a significant drag on its overall performance, with the group making a loss before tax for the year of £86.2m.
In its report Lumina notes that Italian casual dining brands including Prezzo, Pizza Hut and Pizza Express are struggling to recover post-pandemic due to rising labour costs, business rates and debt.
Debt is sitting heavily on the sector. The collective debt burden of the UK’s top restaurant groups recently broke the £3bn mark for the first time, according to research by UHY Hacker Young. Levels for the top 30 restaurant companies ranked by revenue increased in the past year from £2.96bn in 2021 to 3.03bn in 2022 despite a lot of restaurant groups working hard to restructure their debts and shed costs over recent years.
Many restaurant companies were forced to take on further debt during the Covid-19 pandemic through the Government's Bounce Back and Business Interruption loan schemes and the sharp rise in interest rates has substantially added to the strain of servicing that debt over the past two years.
One of the biggest branded success stories continues to be that of Loungers, which owns the Lounge and Cosy Club brands. In November 2023 Loungers reported another period of strong financial and operational growth and in the 24 weeks to 1 October 2023 posted revenue of £149.6m, up from £122.3m in the same period last year, and adjusted EBITDA of £23.9m.
The group opened 16 new sites in the period and is on-track to open 34 new sites in total by the end of the financial year, bringing its total combined estate to 256. “This has been another period of strong financial and operational growth for Loungers,” said Nick Collins, chief executive of Loungers.
Market Analysis
Cost pressures
Rampant inflation has helped grow the restaurant market by forcing businesses to increase menu prices but has also led to a lot of cost pressures.
Rising costs in energy, food and drink, and staffing had a significant impact on the sector in the past 12 months with businesses struggling to keep prices in check in the face of weaker consumer spending due to high inflation.
Inflation sat at around 7.4% in 2023, ahead of average earnings growth of 6%, which is leading to weaker spending power and consumers cutting back on their frequency of visiting restaurants and their spending when dining out. The Government’s raising of interest rates to tackle inflation has also had a negative impact, with consumers having less disposable income as a result of rising mortgage repayments. During times of belt tightening the restaurant sector and particularly the middle market suffers as consumers look to trade down to cheaper dining options.
The latest figures from Barclays show that restaurants experienced a spending decline of 6.7% in 2023, with Brits spending less on eating out to offset rising household bills. Despite this, hospitality and leisure spending grew by 9.5% over the year, with transaction growth of 4.7%.
While spending in restaurants fell, eating and drinking spending still grew by 6.8%, primarily led by bars and pubs and takeaways and fast food. The strong performance of pubs compared to restaurants suggests that while out socialising Brits are opting for more affordable pub food instead of formal restaurant meals.
In October 2023, Barclays reported that almost half (47%) of consumers were planning to cut down on discretionary spending so they could afford their energy bills throughout the autumn and winter, with eating out at restaurants (56%) one of the most cited areas for cutbacks.
A continued planned increase to the National Living Wage (NLW) is another issue with which restaurateurs must contend. In April this year NLW will rise by almost 10% from £10.42 to £11.44 an hour with its eligibility also be extended by reducing the age threshold from 23 to 21-year-olds for the first time. Meanwhile, National Minimum Wage rates for younger workers will also increase with 18-20-year-olds to get a wage boost to £8.60 per hour – a £1.11 hourly pay rise.
In response to these rising costs, restaurants have been forced to increase their prices, with Lumina reporting that branded restaurant operators have increased menu prices year-on-year by 7%. This figure is below inflation, with Average Transaction Values (ATV) across the F&B sector having risen below the level of inflation over the past two years, according to data from CACI’s Brand Dimensions research.
It found that between September 2021 and June 2023 cafés, delivery, QSR, and restaurants have all seen a rise in ATV, with the average spend rise across all sectors 12% for the period. This is compared with an average rise in inflation of 16% over the past two years, indicating efforts by brands to keep their prices competitive, it says.
QSR has also had a strong performance since September 2021, with average ATV rising 14%. This is driven mostly by Pret A Manger, whose ATV has risen 28% since September 2021, followed by KFC and McDonald’s at 21% and 20%, respectively
McDonald’s is one company that finally relented to price increases a few years back having frozen the price of many of its value items for more than a decade. In 2022 it raised the price of a cheeseburger from 99p to £1.19, with one now costing £1.39 - representing a 40% price increase in the product in the past two years alone.
Market Analysis
Takeaway and delivery
Takeaway and delivery offered a lifeline for many restaurants during the pandemic and remains a key part of many operators’ plans going into 2024.
The Covid-19 pandemic was a catalyst for change in the restaurant sector in a number of ways, and no more so than in the takeaway and delivery space, which gave restaurants forced to close a vital source of revenue.
Despite a return to normality in recent years with the reopening of restaurants, the delivery sector has remained buoyant, driven by the likes of aggregators such as Just Eat, Deliveroo, and Uber Eats and ingrained changed customer eating habits.
Recent data from CGA by NIQ’s latest Hospitality at Home Tracker shows that delivery sales at Britain’s top managed restaurant groups rose 4% year-on-year in November 2023, with deliveries in November accounting for 61% of restaurant groups’ orders — up from 52% just 12 months ago.
In contrast, takeaway sales fell 6% during the same period, indicating that consumers have changed their at-home ordering habits in recent years, moving away from the collection of meals in favour of delivery to the door. Takeaways and click-and-collect orders attracted 39% of spending.
Combined, the value of managed groups’ delivery and takeaway sales in November 2023 was 2% ahead of the same month in 2022. It is the sixth month of like-for-like growth in a row, but marks a slowdown from the figures of 7% and 4% in September and October.
Deliveries and takeaways accounted for around 15 pence in every pound that consumers spent with managed restaurants in November 2023, with the volume of total orders down by 6% year-on-year.
“After surging during Covid lockdowns and falling afterwards, a new normal is emerging in restaurants’ at-home sales,” says Karl Chessell, CGA by NIQ’s director - hospitality operators and food, EMEA.
“With deliveries now so easy and fast, takeaways have become a thing of the past for many consumers. But with sales by value virtually flat and order volumes down, it’s also clear that the only growth in this channel recently has come from increased menu prices. Sustaining delivery sales while protecting margins is going to be big challenge for all restaurant businesses in 2024.”
Market Analysis
Omnichannel
Whether it be a move onto the supermarket shelves, retail concessions or e-commerce, many operators are adopting an omnichannel approach to stay competitive.
A few years ago the word omnichannel would not have meant much to many in the restaurant sector, but events including Covid-19, which dramatically changed the way businesses needed to operate in the short term and consumer habits in the longer terms, have changed that.
Leaders in this area include Itsu, Boparan Restaurant Group (BRG), Pizza Express, McDonald’s, Pizza Pilgrims, and YO!, all of which have taken different approaches to omnichannel and all of which have benefitted as a result.
Pizza Express was one of the first high street restaurant brands to launch into retail more than 30 years ago with its range of chilled pizzas and ambient sauces and it continues to innovate and expand its retail range today, most recently launching a frozen range of pizzas and ready meals. Other pizza players have followed suit in more recent years, with Franco Manco’s pizzas also available in the chilled aisle in supermarkets while Pizza Pilgrims has taken a different route, selling DIY pizza kits through the post in a move that has proven to be lucrative for the business.
In January 2024, restaurant brand Zizzi launched its biggest retail listing to date with a frozen range debuting in 208 Morrison stores. The range features 17 products across mains, sides and desserts.
Companies like Creams Cafe, YO! and BRG have also recognised the role retail can play but in a more foodservice capacity. BRG has begun the roll out of its restaurant and takeaway brand The Restaurant Hub in Sainsbury’s supermarkets. The Restaurant Hub combines eat-in, takeaway and home delivery across BRG's dining brands, which include Harry Ramsden’s, Caffè Carluccio’s, Gourmet Burger Kitchen, Slim Chickens and Ed’s Easy Diner.
Creams Cafe, meanwhile, entered into a partnership with Tesco at the end of 2022, and signed a nationwide franchise agreement with the company at the end of 2023 that will see the dessert-focused group open sites in Tescos across the country. YO! also intends to do more with the retail giant and plans to open 35 more in-store sushi kiosks with the supermarket over the coming 12 months. YO! opened its first kiosk in Tesco in October 2018, in Sunbury-on-Thames, and has since reached the 300-store mark, with 200 kiosks having opened within the past year.
McDonald’s has also made great strides in the world of omnichannel, embracing digital ordering and menu personalisation as well as investing in drive-thru and delivery technology. In May 2022 it announced it would invest more than £250m over the next four years to redesign parts of its restaurant estate to suit the rise of omnichannel ordering. Restaurant kitchens and dining areas have been redesigned to better integrate digital sales channels, the My McDonald’s app, and make smarter use of space. Approximately 50% of McDonald's sales now go through digital channels, including McDelivery and self-order screens.
Other innovations being rolled out at the fast food giant include changes to the front counter redesign, with specific areas for different sales channels, meaning less congestion around touchscreens and shorter queues, a dedicated courier waiting area and entrance to reduce congestion, a bigger order assembly area, and dedicated areas to prepare delivery and dine in orders.
Market Analysis
Overseas expansion
Operators are taking a telescopic view of expansion as they look to tap into new markets.
When restaurants find themselves faced with challenges in their domestic markets, one approach is to explore new opportunities. The UK might be an attractive market for overseas investment, with Middle Eastern and US brands regularly pitching up on these shore, but it hasn’t all been one-way traffic.
Burger group Patty & Bun will become the latest in a long line of UK-based restaurant operator to open an outpost in Dubai when it opens in the city in the coming months. Dubai has long held a spell over UK operators looking to tap into the buoyant economy, with operators including Permanently Unique, which owns the Tattu Asian brand among others, looking to launch in the city this year; and San Carlo, which partnered with Sunset Hospitality Group (SHG) to open Signor Sassi there last year.
LSL Capital, also recently announced plans to establish outposts in Dubai for both its Jamavar and MiMi Mei Fair restaurant brands, describing Dubai as a ‘renowned as a worldwide destination for the gastronomic connoisseur’. London-based JKS has also been targeting the Middle East with the opening of a Hoppers restaurant in the Qatari capital of Doha followed by an outpost of high-end Indian restaurant Gymkhana in Riyadh and, most recently, Berenjak in Dubai.
Speaking prior to the opening of Hoppers Doha, co-founder Jyotin Sethi said: “There are real growth opportunities in the Middle East, Asia, and the US.”
Restaurant brands are also turning their attention stateside lured by the chance to break into the incredibly lucrative US restaurant scene. Brands including Burger & Lobster and Hawksmoor have made the early running, with the steakhouse group having opened in New York back in 2021 and with a second outpost opening later this year in Chicago.
JKS says it is ‘actively exploring’ opportunities in New York, Los Angeles and Las Vegas following the completion of its latest funding round. French-owned Italian restaurant group Big Mamma, which has several restaurants across London, also has Uncle Sam in its sights after recently securing long-term investment from private equity backer McWin. They are not alone: The Wolseley Hospitality Group is plotting a move to the US, and D&D London CEO David Loewi recently returned from looking at a number of possible new sites in New York where the London-centric restaurant group already has two successful restaurants (Gustavino’s and Queensyard).
Market Analysis
Acquisitions
The Covid-19 pandemic made many investors nervous about the hospitality space, but last year’s acquisitive activity shows there is growing optimism in the future from certain quarters.
Since the outbreak of Coronavirus, which hit the sector exceptionally hard, there has been a reluctance by some private equity companies and banks to invest in hospitality. This has led businesses, most notably Honest Burgers and MJMK, to look instead to crowdfunding to raise finance.
Harry Heartfield, senior partner at leisure investment group Edition Capital, last year described the current economic climate as a challenging time for investors with the legacy of Covid, inflationary pressures, and the long tail of Brexit all playing their part. In general, the mood among restaurateurs seems to be that it will take a couple more years for private equity to view hospitality as favourably as it did pre Covid, he said.
However, a look at investor activity over the past year is promising. In January 2023 burger chain Byron was bought out of administration and in the same month Trispan, which already backs brands including Pho and Rosa’s Thai, acquired a stake in Indian street food restaurant concept Mowgli. In April, Franco Manca owner Fulham shore was bought by Japanese company Toridoll for £93m, and in September YO! was bought by Zensho Holdings.
Other big deals to take place in 2023 included the purchase of Big Mamma group by McWin, Apollo’s purchase of The Restaurant Group, and Calveton and Breal Capital’s £60m purchase of D&D London and Breal’s purchase of wine bar group Vinoteca out of administration.
Moreover, Kricket recently announced it will open a fourth restaurant having secured a new round of funding from White Rabbit Projects, and JKS completed its latest funding round that reportedly saw it raise in the region of £10m. Hot chocolate brand Knoops announced it had achieved a ‘milestone’ £8.3m fundraise that will enable it to double the size of its estate in the next year.
The signs are there, then, that hospitality could once again be seen as a big ticket for investors.
Brands to Watch
Brands to Watch
Boojum
With 14 sites in the Republic of Ireland and Northern Ireland, Boojum is a major player in the fast-casual Mexican space in both countries but is relatively unheard of beyond the Irish borders. This could change, however, following its purchase by ASK Italian, Zizzi and Coco di Mama owner Azzurri Group, which acquired a controlling interest in the chain in June 2020. The deal sees Azzurri enter a new cuisine category, with the group looking to target what it says is the rapidly-growing Mexican fast casual segment in Great Britain that is currently dominated by Cali-Mexican chain Tortilla.
Azzurri has plans to expand Boojum across Great Britain and will be hoping to build on its experience of the fast casual sector with Coco di Mama. “Boojum is a really strong business, with devoted customers and an exceptionally talented team,” says Steve Holmes, chief executive officer at Azzurri. “By leaning into Azzurri’s financial strength and platform, Boojum can seize the massive opportunity in the Mexican fast casual segment. Boojum is a really good fit for Azzurri as the business will add a new dimension to our portfolio given it offers a different cuisine, a different occasion and serves a younger demographic. We know the GB market well and are looking forward to working with David and the team to deliver their growth plan.”
Boojum opened its first restaurant in Belfast in 2007 and was acquired by Renatus Capital Partners, in partnership with the Maxwell brothers, in 2015.
Brands to Watch
Dishoom
The Indian restaurant group has hardly flown under the radar since opening its first restaurant in London’s Covent Garden back in 2010 with snaking queues outside its sites a regular occurrence. Yet Dishoom has not only managed to stay relevant over the past decade and a half but has managed to lead the way in terms of both how it runs its business, innovation and design.
The company is known for occupying large sites designed with a keen eye for detail and at the end of the year entered double figures with the opening of its 10th Dishoom at London’s Battersea Power Station development. Moreover, it threw a curveball a few months earlier with the launch of a smaller concept called The Permit Room, which made its debut in Brighton. With an approach as fresh as the day it was conceived, Dishoom remains a brand that is held in very high regard by its peers, and for good reason.
Brands to Watch
Rudy’s
The UK isn’t short of pizza restaurants, with London-based players such as Pizza Pilgrims and Franco Manca having carved out very successful businesses as a result of diners’ newfound love for traditional Neapolitan pizza. Some pretenders to their throne have come and gone, but one brand that looks like it will take a decent slice of the pizza pie is Manchester-based Rudy’s.
The 23-strong brand recently opened two sites in the capital, bringing its tally there to three, and currently has 12 new sites going through legals, all of which are planned to open this year. Brand owner Mission Mars has just reported ‘record’ sales across its estate over the festive period with overall revenue across the group rising 38% to £10m between 27 November and 31 December 2023 when compared to the year before. Rudy’s saw revenue grow by 72% to £4m, driven by organic growth and new venues ‘performing well’.
Brands to Watch
Brightside
Loungers’ new roadside dining brand has been designed to fill the void left by the demise of Little Chef and Happy Eater and aims to revitalise a sector that, in its prime, boasted more than 500 venues across the UK. The first Brightside opened on the A38, south of Exeter, in February 2023, and was quickly followed by a handful more with the company believing there is scope to develop a truly national brand. Those familiar with Loungers know that it is not shy when it comes to expansion and Brightside will be no exception, with the company having announced ambitious plans to roll it out to all parts of the UK in the coming years.
The early signs are promising: Brightside’s nostalgic design appeals to a broad range of customers including families, locals, and UK holidaymakers, and with the growth in electric cars – and the need to take an extended break to charge them – the timing couldn’t be more perfect. “We believe there is a gap in the market for a fresh concept that gives customers the option to take a proper break and enjoy wholesome food and great hospitality, in a landscape that is currently dominated by drive-thru and QSR formats,” says Loungers co-founder Alex Reilley. “Brightside will really shake up what has become an uninspiring sector and that there is potential to roll out Brightside across the UK in the coming years. Our expertise in high-quality, great value all-day dining, developed through Lounge and Cosy Club, gives us confidence that Brightside can bring proper hospitality back to roadside dining across the UK.”
Brands to Watch
Popeyes
For the past 50 years the UK’s chicken category has been dominated by two major players – KFC locking up the fried chicken end of the sector and Nando’s leading the way in grilled chicken. In recent years fresh competition has entered the category, including Boparan Restaurant Group’s Slim Chickens, which was one of the fastest growing casual dining brands in 2023 having grown from 28 sites to 43. Slim Chickens remains a brand to keep an eye on, but there is another waiting in the wings that looks to have even more potential: Popeyes.
The US-born fried chicken brand made its Scottish debut in late 2023 with a drive-thru site just outside Glasgow, marking Popeyes UK’s 12th opening in 2023, and the chain’s 29th opening since landing in the UK in November 2021. In August 2023 it secured £50m of additional funding from private equity firm TDR Capital to accelerate its restaurant opening programme and has said previously that it is aiming to open 350 sites across the UK within 10 years. So far the signs are good, with the brand receiving good consumer feedback and attracting long queues at every new location it opens.
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