Retail climate becomes hard to stomach

This opening reminded me of the time I was invited to dine at the first – tiny – unit of another fried chicken specialist that appeared in the same stretch of road in the capital. Its owners also forecast they would make a big splash in the UK with an offer that had proved a big success in its homeland, South Africa.

All I recall from this complimentary dinner of half a Portuguese-style peri-peri chicken and fries was I was left in a stupor from the portion size and heat. The waitress could see I was in no state to move anywhere fast and suggested I sit there as long as required to recover. A few weeks later she would have been pushing me out the door to re-use the table because the restaurant became a sensation and today there are about 340 Nando’s outlets in the UK.

The reported 18-hour queues outside Jollibee’s on opening day suggest it might have the potential to enjoy the same trajectory as Nando’s. Except there might be one thing that works against it compared with 25 years ago when its South African counterpart landed on these shores.

I’m talking about the tougher climate for running foodservice businesses in the UK and the difficulty securing financially viable properties. Among those finding life tough was Villandry, which was a pioneer of the hybrid retail/consume-on-premise model but called in administrators in August after citing a doubling of rent at its site in Great Portland Street.

This was followed by Scandinavian restaurant chain Rök closing its debut unit in Shoreditch this month and curtailing plans to open a further central London site. Its owners cited rising rates and operational costs and said they would concentrate solely on their remaining north London restaurant.

In Manchester, it came as a shock when Living Ventures recently announced the closure of its flagship venue Manchester House as well as Artisan. It was the same story as in London, with rising costs and high rents blamed. These closures come amidst rising staff and produce costs but we could also mention Brexit, which is making recruitment even tougher. The upshot is these factors all combine to create what is probably the perfect storm swirling around the industry.

But hold on, some further factors aren’t exactly helping including the continued high level of competition in the market, which is being driven by the constant stream of launches. In Manchester there has been a net increase in restaurants of almost 35% from five years ago, according to CGA. The newcomers will invariably include people who are willing to pay nose-bleeding high rents as a result of inexperience and sacks of easy money raised through crowdfunding.

Finally, there is another kick in the teeth for some businesses – the barriers to trading being enforced by certain local councils. This is particularly acute in the capital, where London Union closed its Hawker Union site in Wood Green after less than three months citing the council as “deliberately difficult” and making it “not worth the hassle” to keep the business going.

Likewise, Temper’s Neil Rankin has railed against the “suffocating restrictions” placed on his operations by councils focused “more on residents and property investors than local businesses”. This has resulted in him only being allowed to serve drinks to people who are dining, having to adhere to midnight curfews at weekends, and being unable to offer delivery from his Covent Garden site.

So while UK consumers work out whether they can handle Jollibee’s Jolly Spaghetti concoction – described as fresh noodles topped with meaty spaghetti sauce, hotdog slices and creamy grated cheese – we’ll see how well the company can stomach the UK’s current harsh trading climate as it looks to expand.

Glynn Davis, editor of Retail Insider

This piece was originally published on Propel Info where Glynn Davis writes a regular Friday opinion piece. Retail Insider would like to thank Propel for allowing the reproduction of this column.