Cedar Dean Group Managing Director Morris Greenberg discusses the Soho Restaurant Revolution for MCA Insight.
Let’s be clear, the Soho restaurant revolution continues. Independents and groups like Bone Daddies and Hoppers have continued to thrive. Bigger chains like Maxwell’s choosing to come to Old Compton Street and Be At One signing on Greek Street are also clear demonstrations that there is no better place to get Londoners excited about concepts.
But the issue is operators have to be on top of their game. In a highly competitive market where margins are being squeezed there is no place for half-baked concepts, only the winners will succeed.
Long established restaurants are having to keep up or sell up. While it is no surprise that rents have been steadily increasing - combined with the first business rates revaluation in seven years, in April 2017 – operator costs have jumped dramatically.
This is the first time, in the 20 years I have worked in the leisure industry, that Cedar Dean Group is finding so many long-standing restaurants selling sites.
The huge pressure to refurbish to match the competition, coupled with the real estate costs, has meant that Soho is becoming a less accommodating climate for small, independent owners who have been historically successful in the area.
Over the last nine months, we have seen an influx of stock coming to market, not only in Soho but in areas like Covent Garden and Marylebone, bucking the historic trend of operators fighting for space in prime London locations.
But there is a silver lining. In the past, independents have had to compete against multiple national operators such as Byron and Prezzo for space. Now the power is shifting. With the large chains also being forced to sell units, there has never been such opportunity for exciting new independent restaurateurs to take advantage of this climate. Additionally, the excess of supply is also likely to lead to the softening of rents and premiums in some areas.
The availability of finance is also getting easier; the establishment of private funds to invest in leisure concepts, and a renewed enthusiasm from banks should make way for a wealth of international concepts looking to make a mark among London’s most iconic cluster of restaurants and bars.
It is also important to consider that while many restaurants can blame rents and business rates for their lack of success, having a good product is key. CDG predicts the next few months will be a case of “hello to the new and goodbye to the old” in an exciting period of evolution. Strong concepts, bolstered by polished fit-outs and high-quality staff should give restaurants the edge when trying to succeed in a market as unforgiving as Soho.
So, what concepts can we expect to flourish in Soho and central London? There is no doubt that a healthy spin on the traditional fast food concepts at affordable prices are making a big impact: chicken, wraps, juice bars, burger and sushi concepts such as poke bars are among the type of operators expanding and entering the market. Once in, their trade is good, evidenced by the hunger for opening more sites. The 21-service rule also matters; offering breakfast, lunch and dinner, seven days a week, maximising service. For those operators - no matter the fit out or the concept - rents and premiums will stay strong.