When the price is right

09 July 2002
When the price is right

The new breed of gastro pubs are continuing to take the fall out from the decline in the old-fashioned pub market.

As Trevor Shelley, of Shelley Sandzer points out: "The local pub has had its day, and the main story is the success of gastro pubs and the modernisation of something which is increasingly no longer required." The gastro pubs are bringing the traditional English pub up to today's standard, which is becoming more local bar than local pub."

Despite the fall in tourist numbers and the slowing of the gross domestic product, which have both impacted on the restaurant market, initial indications are that Christmas period 2001 was strong and spending remains strong. Shelley reports a greater demand for prime sites in central London due to a drastic reduction in properties coming on to the market, with queues of clients forming for both premises with late licenses and those sited on the prime pitch. Yet away from the prime pitch the secondary sites remain notoriously hard to shift.

The trend in London for turning pubs in key residential streets into local restaurants is being rolled out nationwide into the regional city centres, where demand is still strong for the prime sites. Yet Shelley urges caution. He states that in certain areas there will be some effects where a scenario of very few restaurants has moved to too many too fast.

"So many restaurants have been put into city centres in the past few years that the local population have created a situation of fallout of the weaker players until these cities reach an equilibrium," says Shelley.

Kelly Freeman, director at Davis Coffer Lyons, believes brands with one identity will be better placed to ride the market than those owned by multiple operators, which have several different pub and restaurant chains under their belt. She advises operators against being jacks-of-all-trades and masters of none.

"The city doesn't favour the multi-branded operators because they are unable to achieve the operational standards necessary in today's economic climate," she says. "The multi branded restaurant, pub and bar operators have too large a number of brands. It's very important that the city sees a brand as performing well in the market if they want to invest in it."

Freeman agrees with Shelley that this means the weaker players in the middle market without the right concepts will be cut out. "Brands will need to be consistent. The sophisticated consumer wants value and personal service in today's climate."

Colin Wellstead, director at Christie & Co says that because the pub and restaurant market is so large and diverse, there are so many things happening that it is difficult to be specific on current trends. "Some multiple pub brands are doing well, others are doing less well," he speculates. "The sector is buoyant, but you can't generalise about it."

Other agents predict that in order to survive what may prove to be a troublesome year, operators will need to offer top quality and attention to detail in 2002. Shelley says: "Everybody in the industry needs to focus on quality and price. Those are the main issues.

"At the beginning of 2002, the market was fragile and a number of operators sat on the fence," he explains. "But since the beginning of February this year, there have been a number of people on the acquisition trail and the market is no longer quite so sensitive."

Shelley advises caution. "The public are not willing to be ripped off in what might prove to be an unstable year. There will be slow growth, but it will be fragile."

Licensed and Leisure Property Supplement, Spring 2002

A joint supplement by Estates Gazette and Caterer & Hotelkeeper magazine

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