New restaurants are struggling to launch and expand in London as demand for space has outstripped availability, says DeVono Property director Adam Landau
London is a victim of its own success. The losers, in this case, are a raft of existing, recently launched and aspiring international restaurant brands desperate for their strategic spot within one of the Capital’s busy footfall zones. Without spending money on marketing, simply having a decent position in central London guarantees customers will come in to sample your food. This has allowed many restaurants to survive and thrive for decades, until now.
What’s rung the alarm bells? Our retail and leisure division has had an influx of more than 300 new international restaurant launch enquiries in 2014 alone. As we solely act for occupiers we’re at the receiving end of daily enquiries from these restaurants directly. Enquiries have tripled since March 2013.
We’ve also had many enquiries from existing brands looking to open their second crucial site. The problem is that there are near to no spaces available.
How did this happen?
We’re spoilt for choice compared to a decade ago before the mass franchise of popular brands such as Pret A Manger and the increase in coffee-culture began to monopolise every available West End corner.
We’re now in a position where we’re having to advise new restaurant brands that they may have to wait up to a year to find suitable leisure premises.
The lack of availability is partly down to the expansion, in the past five years, of a number of hugely successful restaurant high street brands such as Cote, Bills and Byron or Le Pain Quotidien, for example.
The industry is a victim of its own success which feels very much like a chicken and egg scenario for the retail and leisure sectors of the commercial property industry. There are also very limited prime retail A1 and restaurant A3 in London’s development pipeline, which is chocking supply.
The upside is that London has never had such a buoyant restaurant and drinking scene, with every conceivable cuisine now on offer, from Korean, Ecuadorian to Ethiopian – a complete change compared to a decade ago.
Why the money always talks
Many landlords are attracted by the security provided by the larger restaurant brands. They may be in better positions to put down larger deposits or pay premiums to secure sites. Landlords see them and less financially vulnerable compared to the independents. For example, Five Guys, the burger and fries brand, recently paid huge sums to secure prime central London sites in the past 18 months. Niche and independent operators cannot compete on this level making the problem worse.
Any ‘good guys’ landlords out there?
The outlook isn’t entirely bleak. There are a few institutional landlords who look out for diversity, such as Shaftesbury, who control many parts of the Carnaby Estate, Soho and Covent Garden.
So who’s the aspiring Nandos of tomorrow?
Location: Fitzrovia (since 1 December 2014)
Owners: Barry Hilton
About: Levantine cuisine: Freshly prepared mezzo style food from Cyprus, Turkey, Lebanon, with a contemporary twist.
Expansion dream: Sites in Soho and Southwark / Borough Market area
Challenge: “Many of the restaurant groups (even the smaller ones with 5/6 units) have private equity behind them, where as independents like us do not. Agents in the wider market place tend to only look out for the interests of their clients, the landlords and are less inclined to show independents like us everything available, be creative and open to the next big thing. So, either you become a ‘destination’ dining experience, or you get yourself closer to the areas of footfall. We’re aiming for both!”
Restaurant: Café Caldesi
Location: Marylebone (12 years)
Owners: Chef, Giancarlo Caldesi
About: Traditional Italian focusing on different regions of Italy giving more variety. Giancarlo his wife travel around different regions of Italy every year ingraining themselves in the local cuisine bringing back produce, ideas and new menu items beyond the tried and tested. They publish books on their experiences with recent publications on the Amalfi Coast and Venice.
Expansion dream: Another one to two sites around the West End
Challenge: “Lack of availability, and if you do find something it’s outpriced. We’re up against the big chains with larger buying power. We take issue with them as they occupy sites which may not even be profitable simply because ‘they need to be there’ – this hampers our ability to expand, but we’re still hopeful!”
Restaurant: Boopshi’s (just over a year)
Location: 31 Windmill Street, W1
Owners: Brothers, Ben and Ed Robson
About: “Schnitzel and Spitz” – Austrian / middle European style cuisine.
Expansion dream: To open their second site in the West End
Challenge: “We’ve been searching for nearly two years for an additional site mostly due to lack of availability, so in the interim we’re doing street food and pub popups until we do.”
Adam Landau is director of DeVono Property, which exclusively represents tenants.