Northern cities lead UK growth in hospitality outlets

Neighbourhood Leeds

The bar and restaurant sector in Liverpool, Manchester and Leeds is growing at rates more than double those of London, according to new data from research specialist CGA.

Northern cities dominate a new league table of hospitality growth, occupying six of the top eight places, with independent operators leading the surge as some casual dining chains struggle.

The CGA analysis, published today by the organisers of next week’s Northern Restaurant & Bar show in Manchester, showed that the “M62 corridor” spanning Liverpool, Manchester and Leeds was a hotspot for new restaurants and bars.

The number of city centre outlets within those locations increased by over 20% over the last five years – a percentage double that of London, which had a 10.4% increase during the same period.

The data, from CGA’s Outlet Index, covered the central business districts of every major city that contained over 100 licensed premises. Liverpool topped the chart with 25.2% growth over a five-year period, with Manchester close behind on 24.9% and Leeds in third place on 20.5%.

Southampton was fourth with a rate of 20.5%, York was on 19.5%, Cardiff 17%, Newcastle upon Tyne 15.7%, and Bradford was in eighth place on 15.1%. London was in 14th place on 10.4%.

Jamie Campbell, retail business unit director of CGA, said: “Of course London is a much bigger restaurant and bar scene in absolute terms, but percentages don’t lie. The change in the cities in the north is more pronounced and has a proportionally greater impact on diners, whether residents or tourists.

“Moreover we are working on additional data which shows that growth in the region is indeed being driven by independents, with the featured northern cities showing an increase in independent outlets at over twice the national rate.”

Openings in the north in 2017 included Neighbourhood (pictured), Manahatta Greek Street, Cosy Club, Cuckoo, Dirty Martini, Red Door and Be At One in Leeds, Mahiki, Roxy Ballroom, The Botanist MediaCityUK and Dirty Martini in Manchester, and Lock and Key, Berry Street Bar, Elixir, Gino D’Acampo’s prosecco bar and Crazy Pedro’s in Liverpool.

Thom Hetherington, CEO of Northern Restaurant & Bar, added: “We’re delighted but not surprised by the data/ We have seen the changes first hand – new restaurants and bars are opening almost every day.

“Despite this being a challenging period for hospitality businesses, the growth is being largely driven by ambitious regional independents, and we’re proud that NRB can help to inspire and inform them.”

However, on a national basis, there was less positive news today in the latest Hospitality Insights review of merger and acquisition activity published by business advisory group Grant Thornton UK.

It has reported a decline in deals within the hospitality sector, blaming it on the triple challenge of rising business rates, an increase in the National Living Wage and a weakening pound.

The number of deals fell by 11.5%, from 78 in 2016 to 69 in 2017. Disclosed deal values also declined, reaching £1.55 billion – less than half of 2016’s value of £3.6 billion – although the 2016 figure was significantly inflated by the £1.77 billon sale of pub company Punch Taverns to Patron Capital.

Last year saw a significant boost in private equity investment in the hospitality sector, rising from just over a quarter in 2016 to almost half of deals in 2017 (25.6% to 47.8%).

Will Baxter, head of hospitality at Grant Thornton UK LLP, said: “With private equity investors having already invested in the majority of sizeable assets in the UK, and the timing of the investment cycle, 2017 was always going to see investment in the smaller brands with ambition and potential for expansion.

“Whilst appetite in the hospitality sector remains healthy, private equity buyers are becoming more discerning as to where to invest in line with consumers’ behaviour.”

Synonymous with the overall decline in deals in 2017, the number of deals in the bars and pubs sector dropped significantly, from 32 in 2016 to 19 in 2017.

As part of the buy-and-build strategies where investors seek to grow by acquisition after buying a stake, 58% of deals involving bars and pubs saw private equity-backed entities make acquisitions.

Photograph by Michelle Roberts.

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