David Abramson speaks to MCA about his belief that premium casual could be the answer for operators to boost their profit margins.
Over the last 20 years in this business, I have seen so much change and so many trends in the restaurant market, from casual dining to high-end, QSR, cat emporiums and cereal cafes that now, no concept surprises me!
At a time when costs are increasingly under the spotlight due to rising inflation, minimum wage and rent and rates at record highs, the focus on profitability has never been more relevant and essential.
It is clear at the moment that bars and sports-led attractions are doing well, together with QSR operators, such as KFC and Chopstix, but the absolute crash in casual dining operators such as Prezzo, Jamie’s Italian, Carluccio’s and Byron, to name a few, clearly shows a genuine hole in the £12-16 spend per head formula.
For this reason, we want to highlight a burgeoning trend that we believe already exists but isn’t really being spoken about – premium casual, which offers food at a slightly elevated price point of around £25 to £35 a head.
Pubs and bars will continue to do well as they reflect consumer sentiment. When the nation is happy or sad, there is a reason to drink and socialise. Similarly, within the fast food market, expectations are limited and therefore less trying to meet. You wouldn’t expect a white tablecloth at McDonalds, in the same way you wouldn’t expect a free gin and tonic on EasyJet!
Conversely, the casual dining market grew by promoting itself as providing a stylish environment with great food at a great price. But the pressure on costs meant that in many locations this hasn’t been sustainable.
For operators to make the profits needed, they need to either have the scale to be able to do fast food or consider going premium casual at a higher price point, which allows for a real experience with a great quality product.
The investment that goes into premium casual brands is vast, including quality chefs, detailed fit-outs and highly trained front of house, as affluent customers in London want an experience to remember to justify the extra spend.
Operators we think are doing an excellent job in this space include Masala Zone, with their newly branded operations in Soho and Covent Garden, Balans, The Gate, Ivy Café, Bone Daddies and Granger & Co.
These concepts are offering the Londoners that want a higher experience true value. Albeit more expensive than the typical casual dining brands, the old saying goes: ‘anything that is too good to be true, is’. These concepts know that they have to provide great quality to their customers otherwise they simply won’t come back.
So, our forecast for the coming months is that it will be a great summer for grab & go options and the pubs, as England roll on to success in the World Cup (hopefully) and there will be sustained performance from the premium casual dining brands who know that their customers will pay a bit more for real quality.