Christie & Co’s annual Business Outlook report says that, despite challenging trading conditions, casual dining operators are once again ‘looking for new sites and reporting an uptick in margins’.
While the number of full-service restaurants has fallen from 32,000 to 26,000, Christie & Co predicts there will be outlet growth in 2025 as profitability stabilises.
In contrast, the report singles out QSR as an industry ‘success story’, noting a 10% increase in the number of QSR outlets compared to a 26% decline in high street brand sites.
The report says this reflects ‘changing consumer dining habits’, as diners drop down in price from high street restaurants to take-away options.
Data also highlights an influx of proven international brands looking to enter and expand within the UK market, alongside the wider acceptance of the franchise model.
“The rapid expansion of the likes of German Doner Kebab and Slim Chickens, alongside the continued growth of McDonalds and Starbucks, is compelling,” says Stephen Owens, managing director of pubs and restaurants at Christie & Co.
“We are seeing more proven international brands entering the UK with the likes of Carls Jr. teaming up with Boparan, to open in the UK early this year.
“Wendy’s has re-entered the UK, and Chick-fil-A, the legendary US brand which opened in Reading in 2019 but subsequently quickly closed, is trying again this year, such is the prize.”
However, Owens adds that the growth and demand for drive-thru restaurants means there will be an ‘overheating of rents’ with prices for such sites now higher than for key city centre outposts.
Elsewhere, the report states that ongoing headwinds in the sector and evolving consumer preferences continue to impact transactional activity, which is reflected in a further drop of 7.9% in Christie & Co’s restaurant price index.
“With a reduction in profit margins and continuing closures of both high street branded sites and headline-grabbing fine-dining venues, investors were unwilling to take the risk,” says Owens.
However, the second half of the year saw many landlord-incentivised deals and food entrepreneurs coming back into the market, and Christie & Co believes that the sector ‘maintains momentum’.
“2024 proved to be a tipping point for many in the restaurant sector, as the well-publicised pressures mounted and support in most forms came to an end,” says Simon Chaplin, senior director of pubs, restaurants and franchise at Christie & Co.
“Those who are still here in 2025 are now in a prime position to take advantage of the continued appetite to spend on hospitality, which increased last year, as opposed to cooking at home as supermarket spend decreased.
“To date this has been focused on the fast-growing QSR market, but will filter into casual dining brands as the year progresses, who will expand carefully with great property deals available.”
Among the report’s other predictions for the restaurant sector this year, it expects fine dining to become ‘more exclusive and expensive’, driven by a downsizing of the space.
“Unfortunately, some high-end venues have already disappeared,” continues Chaplin.
“But this allows those who remain to become even more exclusive, ‘occasion’ restaurants, for the benefit of both customer and restaurateurs.”
To read the full report, click here.