In an increasingly competitive restaurant scene, midmarket brands are under pressure to keep hungry diners flowing through their doors.
Affordable, casual restaurants such as Jamie’s Italian, Byron Burger and Strada have become a familiar sight on British high streets, enjoying vigorous expansion in the last few years. Yet as dining trends evolve to favour restaurants that specialise in particular food – such as vegan eateries or fast-casual chains – and fine-dining groups branch out with more accessible “fast fine dining” experiences, midmarket restaurants are facing a crunch.
“Casual dining brands are finding themselves in an awkward middle ground,” says Florence Graham-Dixon, Head of Innovation, Foodservice Consulting at JLL. “The challenge is now to drive footfall – and maintain it.”
A strength of casual restaurants lies in the range of their menus – but being offered ‘something for everyone’ doesn’t always suit with consumers increasingly opting for specialist, high-quality offerings for meals out. “Midmarket brands should re-examine their value proposition, and innovate in their menus,” Graham-Dixon says. “Simplification is key – rather than adding new items, it should be about focusing on what they do well, and making innovative substitutions in order to feel fresh without stretching the kitchen too thinly.”
On busy high streets, midmarket brands could focus on further differentiating from their fast-casual competitors by investing in their sit-down experience, from on-brand décor and the style of customer service to the size of the space.
“With so much choice, brands must up their customer experience,” Graham-Dixon says. “One issue has been that many of the recent midmarket expansions have been backed by private equity investors, which puts a lot of pressure on the budget. Yet investment in healthy numbers of well-trained staff should cover itself, since it opens up the opportunity for incremental spend such as second drink orders or having the time and patience left for a dessert.”
Location is another key factor, especially with rising business rates, requiring chains to attract more diners to stay in the black.
“There is a trend towards smaller units on the high street, which is certainly a safer strategy,” Graham-Dixon says. “Areas need to have high footfall during prime eating times – and smaller units are easier to fill, creating a buzz, which in turn helps to draw more customers in.”
While high street locations may be feeling the pinch, midmarket restaurants continue to thrive in key airports, transport hubs and shopping centers. “The brand familiarity that the midmarket chains enjoy is a major positive in these places,” Graham-Dixon says. “People are generally short on time and want food they know and like. The mindset tends to be less experimental.”
Yet it’s also important to understand the habits and preferences of the local audience – the people who live and work nearby and can become repeat customers. For example, restaurants near office towers might perform best at lunchtime over evenings while those near cinemas could pull in more of an early evening crowd.
“Brands must have an overarching identity built on factors like quality and integrity but chains can still target different audiences by developing different formats with different seating, service styles and communications.” Graham-Dixon says.
Taking an innovative approach
It’s not just ensuring the best use of physical space that today’s casual restaurants have to contend with; advances in food tech such as delivery apps have applied further pressure. “Though being available on platforms like Deliveroo certainly helps on the marketing front, the commission paid to the apps does eat into profit margins,” Graham-Dixon notes.
As such, some well-known chains are considering other out-of-restaurant options to reach new consumers and boost sales. Pizza Express sells its products in supermarket chains across the UK, while others are setting up stalls in the country’s growing number of food halls or running pop-up stalls at popular festivals.
Many brands are also rethinking their marketing efforts. Though experiments in discounting haven’t drawn enough footfall to mitigate rising labour costs and food prices, midmarket restaurants can use social media to target customers more intelligently. “Rather than offering large discounts to all customers, for example, brands might target customers by profile, or send offers to lapsed customers, maintaining their margin on opportunistic walk-ins,” Graham-Dixon says.
The future of the midmarket eatery
Better marketing, however, will not ease the issues caused by the over-supply of similar casual dining outlets in many areas. “We have already seen a number of CVAs and expect some more major closures from midmarket chains by the end of the year, emptying large high street spaces that landlords may have to split into smaller sites in order to attract leasers,” Graham-Dixon says.
This could see large chain restaurants replaced by smaller independent eateries as consumers seek out new types of dining experiences. “Many midmarket chains have had so many cost pressures that they have cut the quality of product and service, which has lost them customers,” Graham-Dixon says. “In this crunch, I believe the brands that will be left, will be those that have really invested in consistency.”
In today’s crowded marketplace, the crucial areas to keep consumers coming back for more come down to food quality, value for money, service and location. “Brands that maintain or can afford a slight hit on profits without eroding these will continue to do well,” concludes Graham-Dixon. “Those that panic and make short-termist cuts with suffer. Now is the time for restaurants to make strategic sacrifices, think long-term and hold their ground. Profit levels loose relevance if you have no customers left to serve.”