London’s food and beverage (F&B) market exploded over the last few years as investors and operators sought to make the most of the consumer shift towards the experience economy. But while oversaturation and rising costs has led to a number of mid-market chains closing sites and restructuring, the London restaurant scene remains one of the most vibrant in the world and competition is fierce for prime locations.
Health and wellness continues to be a major trend, with a number of meat-free brands expanding in the market. New York’s vegan fast food chain By Chloe opened its first outpost outside of the US in London’s Covent Garden in February and will open its second site at the new Tower Bridge development, One Tower Bridge, in July.
Other examples include vegan burger specialist The Vurger Co, which opened its first site in Richmix Square in Shoreditch in April after raising £300,000 through a crowdfunding drive, and Thai-inspired Cook Daily, which expanded its flagship Shoreditch site at the end of last year.
Cuisine from the Levant region is also tipped for growth; underlined by the likes of Ceru, which has recently opened a new restaurant in Soho after a year of trading at its first Kensington site, and Sarona, which opened in Farringdon in May offering modern Middle Eastern dining. The founders of Shoreditch’s Oklava also opened a second Turkish restaurant called Kyseri in Fitzrovia in May, featuring Turkish pasta dishes and Middle Eastern wines.
While the A3 (restaurant) market continues to thrive with new concepts seeking to enter the London restaurant scene, limited supply means they are having to be slightly more creative with their location choices. XXX, XXX and XXX are set to become emerging hubs of interest for new entrants, as they look outside more established areas.
The next few years are unlikely to see the rental highs reached in previous years but this does not necessarily indicate a cooling of interest. Operators will continue to pay high rents for the right locations, which may place pressure on existing tenants without strong brands or independents that struggle to keep pace.
This is where the raft of new food halls step in, allowing a new breed of restaurateur to compete in prime locations with lower costs. Councils and developers, too, have woken up to the opportunities to revive an area or create a sense of place that food halls offer.
London Union, the parent company of Street Feast, has been a trailblazer in this area and has most recently opened a new outpost in Woolwich, in addition to existing sites in Canada Water, Lewisham, Shoreditch and Canary Wharf. Market Halls, meanwhile, is a new venture led by Simon Anderson, founder of barbecue restaurant Pitt Cue Co, and property investor Andy Lewis-Pratt, which opened its first of three locations in Fulham earlier this year. It will launch in Victoria in summer, complete with 14 restaurants and three bars, and in part of the former BHS flaghship just off Oxford Street later in the year, with 25 restaurants and four bars.
Italy’s Eately has confirmed it will open a major new food hall at Broadgate in the city of London in 2020 and Time Out is still looking to open a food market in the capital by 2020, despite its initial plans for Spitalfields being rejected by planners.
The A1 (cafes and convenience food) sector is becoming saturated and even in high footfall locations, operators are concerned about the number of similar concepts nearby, particularly when also considering rising total occupational costs. There continues to be demand for units around transport hubs and tourist attractions but outside these locations, operators struggle to pay more than £80,000 per annum.
Pret a Manger have the strongest position in this market by securing strategic sites and paying high rents when necessary for key locations. Joe & the Juice have secured extra funding to allow a major expansion plan, however there are concerns over whether this is sustainable. Leon, meanwhile, are on trend with a broad range of health-conscious offerings and are particularly selective on their new sites, meaning they are often on landlord’s target lists.
There is also room for further growth in the artisanal bakery market, which has seen existing brands like Ole & Steen joined by the likes of Japanese bakery Kova in Soho and French chef Dominique Ansel in Belgravia in recent years.
While the tremors of the so-called ‘casual dining crunch’ are indeed being felt across the industry, the situation may free up some prime sites and encourage landlords to create a more diverse tenant mix, benefitting some smaller operators. Areas such as Granary Square at Kings Cross and St Christopher’s Place underline how vital F&B and leisure are to creating a vibrant location that people want to visit.