2016: The year of the IPO, the taco and Brazilian food

By Stefan Chomka

- Last updated on GMT

Possible exit route: Azzurri, among others, could offer shares in the coming year
Possible exit route: Azzurri, among others, could offer shares in the coming year

Related tags Minimum wage Brazil

The Rio Olympics, the continued rise of grab-and-go food and a growing number of restaurant groups weighing up their exit strategies will each have an impact on the eating-out sector in 2016, according to predictions from industry experts.

This year restaurant groups will turn to an initial public offering (IPO) as an exit route, with D&D the most likely to start the ball rolling, says accountancy company BDO. It believes that other likely eventual
candidates to take this route include Azzurri, owner of the ASK Italian and Zizzi brands, as well as Casual Dining Group, Côte and Prezzo.

The accountancy firm is also predicting a rise in secondary brands from some of the UK’s largest restaurant operators, whether through the creation of sister or sub-brands or through the purchase of smaller,
complementary businesses. Last year, Azzurri bought the six-strong Italian food and coffee brand Coco di Mama, an approach that is likely to be mimicked by other high-street casual-dining restaurant groups 
looking to get a foothold in the burgeoning grab-and-go sector.

Azzurri is also believed to be looking at purchasing yet another small-scale Italian business that will give it a presence in another area of the Italian market.

Mexican and Brazilian food is also expected to grow in prominence this year thanks to increased interest in the taco from some of the world’s top chefs and the forthcoming Olympic Games in Rio. Brands such as Las Iguanas and Cabana are likely to be joined by pubs in making the most of the media spotlight being turned on the South American country, says BDO.

Increase in the national living wage (NLW), with the minimum hourly wage rising to £7.20 from April this year and hitting £9 an hour by 2020, will also impact greatly on the restaurant industry this year. The introduction of the NLW is expected to be 3 per cent higher than the current median salary across the restaurants sector, according to property adviser Christie + Co, which believes that independent restaurants will be hit hardest by the rise in the cost of employing staff. 

“Over the coming year, we may well see a levelling off in values in the independent market as the minimum wage and other costs rise, such as rent,” says head of restaurants at Christie + Co Simon Chaplin.

The forthcoming business rate revaluation will also hit the bottom line and there is little doubt that some businesses will fail as a consequence. With central London seeing around 180 new restaurants open every year, yet 35 per cent closing down, it remains a sword of Damocles for many.”

More restaurant tie-ups with retail are also on the cards for 2016, following in the footsteps of Rossopomodoro’s link-up with John Lewis.

Harvey Nichols is continuing to ramp up its restaurant offer, with Scott Hallsworth’s Kurobuta recently joining Burger & Lobster on the fifth floor of its Knightsbridge store. Polpo will add to this mix when it opens two sites next month in Harvey Nichols stores in London and Leeds.

Debenhams is also looking to build on its link up with restaurant brands. The company has introduced in-store concessions from Ed’s Easy Diner, Patisserie Valerie and Chi Kitchen during the past year, and intends to grow food sales from 3 per cent of its total sales to 10 per cent in the next few years with the introduction of more restaurants at its department stores.

This article first appeared in the January 2016 issue of Restaurant magazine, out today. Subscribe here​ or read the digital edition here​. 

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