December 15, 2019

What does the collapse of Jamie Oliver’s restaurant group mean for the UK dining sector?

The troubles of Jamie Oliver’s restaurant group are indicative of a wider trend within the UK dining sector, demonstrates findings from CGA and AlixPartner‘s latest Market Growth Monitor, published today (Tuesday 21 May).

As of the end of March, Britain had a total of 5,785 group restaurants—1.1% fewer than at March 2018, and equivalent to nearly six net closures a month. Although in the longer term, group restaurants have seen huge growth: their numbers have increased by more than a quarter in the last five years, or by an average of nearly five a week – it is  becoming clear that those boom years are over.

The rate of closures is not uniform around Britain. The number of group restaurants has fallen in the areas where their density is highest: by 2.8% in South England and by 1.3% in London. The rates of decline in North England (0.4%) and the Central / Wales region (0.5%) are markedly slower—probably because saturation in towns and cities here has not been quite so apparent. Scotland, meanwhile, has actually added to its number of group restaurants in the last 12 months.

“It is little surprise to find that high streets are bearing the brunt of closures,” commented CGA Director, Karl Chessell. “Group restaurants here fell by 2.4% in the 12 months to March 2019, in sharp contrast to net openings of 1.8% in suburban areas. And the Italian sector has been a notable casualty: its group restaurant numbers have tumbled by 84 in the last 12 months, following moves by several firms to close swathes of under-performing sites.”

AlixPartners Managing Director, Graeme Smith, said: “These latest figures are a reminder that the casual dining sector is a survival of the fittest, and that brands need to have a better quality offer and a closer understanding of their consumers than ever before. As restaurants close, capacity eases and there is more room for surviving operators to breathe. And when restaurants shut, they are often taken on by ambitious smaller brands in particular—and often on better terms.”

With the news that Jamie Oliver’s restaurant group has called in the administrators, thoughts have turned to the job prospects of workers across its various sites, which includes the Jamie’s Italian chain, Barbecoa and Fifteen.

Unite national officer, Louisa Bull, said:  “News that Jamie Oliver’s restaurant group has gone into administration, putting 1,300 jobs at risk is a devastating blow for the chain’s hardworking and loyal workforce.

“This is another dark day for the UK high street, following hard on the heels of the collapse of Patisserie Valerie early this year. Restaurants are not being helped by the current economic uncertainty, although those businesses like Jamie Oliver’s that dashed for expansion in recent years seem particularly precarious.  As ever, it is the workers at the restaurant and in the supply chain who bear the heavy cost of boardroom decisions.

“Unite, which has some members working in the Jamie’s Italian chain , is seeking urgent assurances that the staff will be protected and paid all the money they’re owed, including wages, holiday and redundancy.” 

Ian Dodds, Managing Director of KERB, echoed these sentiments: “It’s incredibly sad and we feel for all the staff who are likely to lose their jobs and the suppliers who’ve worked with the company for many years. It’s a lot of jobs to lose and a lot of people impacted across their business ecosystem. We also see no joy in the demise of the high street but do recognise a number of the factors at play that are impacting not only Jamie’s but a wide range of mature operators who struggle to excite the customer to the same level as today’s successful small restaurant group, food hall or street food market manage to. 

“Very few of these big chains manage to last forever, and the freshness, theatre and price competitivity of much of the new school of fast casual is currently the differentiator. But we must learn from the mistakes of these mature behemoths who are now in decline, remaining dynamic, customer and experience focused and concentrate hard on how to continually excite and engage customers to remain relevant.”