The owner of a premium hospitality investment group which is targeting revenue of £100m over the next three years has said operators in the casual dining market have gotten “lazy” because of private equity backing.
Restaurateur and marketing expert Andrew Fishwick – who this month launched Hestia a £50m restaurant fund alongside former Sainsbury’s boss Justin King – told City A.M. the market had become “really lazy” and “poor value”.
He said: “There will always be a need for that sector. I think what it had done is probably because of its private equity backing, [it] got very lazy. A lot of it was very, very lazy and it’d become really poor value”.
Britain’s casual dining market chain boomed in the 2010’s, expanding rapidly beyond city centres and into towns in Middle England with the help of private equity backers and cheap debt.
But many are struggling to recover from the lows of the pandemic, with rising costs and labour shortages making matters worse.
In 2021, the former finance chief of TGI Friday’s private equity owner Electra told The Daily Mail that private equity played a “significant part” in a “very real oversupply situation” in the sector.
The aftermath of this oversupply coupled with diners unwillingness to spend has been playing out for a number of years.
Last year, TRG said it would reduce its estate by about 30 per cent, as it looked to cut loss making sites to boost profit, shifting focus to its cash cow Wagamama.
Fishwick said these no-frills chains “had it away” for a long time and a focus on having affordable prices may no longer work with consumers who now seem to favour experience and ‘Instagrammable’ moments when eating out.
“Value is more than a price, value is an experience, value is the service you have [in] the environment,” he explains.
“That’s what those guys need to realise that it’s not about shaving 50p off of the pizza or the burger. It’s about how we can add value? Why would you leave your kitchen or your couch to come to my casual dining chain.”
While the likes of Pizza Express have invested in modernising their sites, the restaurant scene, especially in London has come to favour businesses which not only please their pallet but also their social media following.
Chains such as Big Mama Group, which owns the Italian restaurant Gloria in Shoreditch, has shot to stardom in recent years, thanks to its fancy set up and lavish menu.
Fishwick has noticed a “really educated demographic” of diners coming through who will “vote with their feet” if a meal is substandard.
“We are seeing a whole lot of people who have placed a higher value on their own personal brand and align themselves with fine dining and premium dining.”
Fiswick’s new venture Hestia will be working to appeal to this new ear of restaurant goers.
The company is backed by a collection of private family offices and high-net-worth individuals who are on the hunt for “premium, multi-site restaurant brands with growth potential”.
So far, the firm has completed three small deals and is poised to buy two larger restaurants as it targets £100m in revenue within the next three years
It is Fishwich’s second attempt at launching this idea, having failed to get it off the ground in 2021.
Last year they raised £1m in seed funding and have acquired three businesses, including the Native restaurant conceived by established chefs Ivan Tisdall-Downes and Imogen Davis.
The businessman won’t give an exact number on the amount of sites they will targeting but said he is looking for “personality”.
He said: “Good operators, whether they are chefs or whatever they might be, who want to drive their personality and their business through that. That is my philosophical vision for Hestia.”
