The road from first site opening to national coverage for restaurant operators is long. It is littered with opportunities and hazards along the way and is, in many cases, punctuated by multiple different owners.
This week's Caterer highlights 2017 as being 'the year of the spin-off' after the Harden's London Restaurant review published its findings on recent trends in restaurant openings. A 'spin-off' is defined as part of a chain which is at the early stages of a roll-out. A current example is The Ivy, which is a part of Richard Caring's Caprice Holdings Group and is now rolling out at a rate of knots.
The gourmet burger chain Byron, which grew out of the Gondola stable alongside Ask Italian, Zizzi and Pizza Express, was a starlet of the casual dining market when it was bought by Hutton Collins for £100m in October 2013. It had grown to 34 sites over six years and planned to grow by a further ten sites per annum by 2018. Today it has over 65 sites and has recently been rumoured to be encountering challenges, albeit to a lesser extent than its peer Handmade Burger Company, which went into administration in July this year.
One might argue that Byron's roll-out has been too aggressive, despite not achieving its plan to get to over 80 by 2018 or that the UK burger market is heavily over supplied, partly through the arrival of the American giant chains such as Shake Shack and Five Guys. However, roll-out success has been hard to achieve consistently for brands in a variety of cuisines, such as Busaba, Gaucho and Cote where similar competitive dynamics have been present yet less pronounced.
It is undoubtedly a huge operational challenge for an enthusiastic management team with a few branches to achieve scale and maintain quality and appeal. However, one can always find an excuse to pay a visit to Wagamama or Pizza Express and still enjoy it. At the sub-30 site end of the market the likes of Pho and Giggling Squid appear to have cracked it; both are under private equity ownership.
Spin-offs by their very nature will benefit from some early stage motherly love and support, which will engender operational practices that will assist with a roll-out plan and make the journey from one to ten sites and beyond comparatively easier than it is for independent peers. Fleeing the nest and flourishing is never a foregone conclusion, and is as much the subsequent owner’s responsibility as it is the management team presented with the task.
The guide’s founder Peter Harden said: “You only have to look to the Ivy, to see a restaurant that was once a stand-alone icon, now being rolled out at a rate that would do McDonald’s proud. The old cliché that ‘independent = good, chain = bad’ is being challenged at an incredible rate, with the duplication in the last year of concepts rated very highly in the Harden’s survey, such as Dinings, the Frog, Hoppers, James Cochran, Smoking Goat and Temper, all turning this traditional presumption on its head.”