The world’s most popular cuisine is firmly on the menu at Christie & Co (www.christie.com), reports their senior director – corporate pubs & restaurants, Simon Chaplin.
Since our inception in 1935, Italian restaurants have featured heavily in Christie & Co’s activity when it comes to the buying, selling, and valuing of trading businesses. In recent years, 20% of the restaurants we have sold have offered Italian cuisine - more than any other food style. Its popularity appears to be timeless and while brand names may come and go, the cuisine remains ubiquitous and a go-to for the British public.
Certainly, the dynamics for selling an Italian restaurant are simpler than some, and due to the nature of the trade, more transferable to a new incoming purchaser. Whilst the branded high street restaurants such as ASK, Pizza Express and Strada take their name and goodwill with them when they sell and move on from a site, the typical independent owner-operated venue will normally be in a more accessible location with rents to match thus, the restaurant’s name and goodwill can remain.
Like all hospitality businesses, the last twelve months have been tough for restaurants across the UK due to the outbreak of COVID-19 and various lockdowns, which ordered businesses to close or trade with restrictions in place and directed people to ‘stay at home’. Subsequently, this has driven a shift towards localisation and as a result, our hospitality experts have observed a renewed demand for community-based operations over city-centre premises, which have seen huge declines in footfall due to many people continuing to work from and stay closer to home.
Additionally, the pandemic has driven the rise of takeaway and delivery services, with sales surging by at least 20% due to increased demand from consumers when they were unable to eat out, which has been sustained. The delivery sector was already booming prior to the virus outbreak and 2020 can be marked as the year it came into its own, with the market now reported to be worth over £8.5 billion.
With many restaurants occupying leasehold premises, survival throughout the pandemic has relied on operators working with landlords and pivoting the business by generating income through other means, such as takeaway and delivery. I know many businesses which have introduced this service and found it welcomed not just by their existing customers but also new ones who will hopefully become diners in the near future. Fortunately for Italian operators, the takeaway and delivery opportunity is a well-trodden route.
Despite a challenging twelve months, the transactional market has remained active and for us, 2020 ended with the sale of over 170 hospitality business of all shapes and sizes. We also valued and advised on over 800 businesses with an aggregate value of £2.6 billion.
This explosion in the takeaway and delivery sector has also led Christie & Co down a new route and into the world of franchising. In January 2020, before the realisation that COVID would turn the world upside down, we were asked by Yum! UK to seek a new franchisee who would bring new expertise and dynamics to 27 Pizza Hut Delivery stores across the Midlands and North West.
Yum!, a Fortune 1000 company which owns a multitude of international fast-food outlets (namely Pizza Hut, Taco Bell and KFC), currently has over 50,000 restaurants in more than 150 countries, 400 of which are in the UK. The sale offered the buyer the unique opportunity to become one of the company’s largest franchisees, with Starboard Hotels secured as the successful new franchisee partner.
The sale, named Project Topping, comprised a portfolio with net revenues of over £15 million, a strong online presence and trading position in a high growth sector that has been resilient to the current market disruption. This was challenging assignment in many ways, notably as it was a confidential process during the height of the pandemic and a new route to market for YUM! in its search for franchisees to partner with. However, the ever-improving sales figures coming from the estate helped to secure the new partnership.
Starboard Hotels is a well-known hotelier, with 21 hotels and over 2,000 rooms around the country. Originally venturing into the world of take-away in 2017, the partnership was viewed as an ideal opportunity and the brand are utilising their previous experience to work with Pizza Hut to enhance the existing 27 stores and develop further sites across the regions.
Excitingly, this successful result has led us on to further work with Yum! Our latest project, titled Project Vespa has tasked us with assisting the brand in seeking out ambitious entrepreneurs who wish to become a part of the household brand by converting existing owner-operated sites to a franchise store and becoming part of the world’s largest pizza brand.
The company has been initially seeking 125 new sites to expand its delivery and takeaway offerings throughout the UK. It is looking for either new partners who will are willing to convert their store and take on the Pizza Hut brand, the product and its customers, or to work with experienced and proven operators who are committed to company growth and who are willing to invest over the short, medium, and long term in all aspects of the business. With many existing established Pizza Hut franchisees having had such a great 2020, we are also seeking new store opportunities from those wishing to sell or landlords with suitable space to let.
Neil Manhas, general manager UK at Pizza Hut Delivery, commented: “Pizza Hut Delivery has been a beloved brand in communities across the UK for decades and we’re excited to build on this strength and continue expanding our reach in the UK. Pizza Hut Delivery was designated an essential service during lockdown and continued to operate, successfully feeding the nation during these difficult times and donating over 250,000 free meals to the NHS. We have always played a part in our local communities and we’re delighted to build on this as the demand for delivery services only increases.”
We are currently using our industry knowledge to seek out ambitious entrepreneurs who wish to become part of the Pizza Hut Delivery brand as regional franchisees through the conversion of their own stores. We are sure the support and benefits of being part of such an international operation will be of interest to many as it brings with it a wealth of advantages over the competition and ultimately the opportunity to grow in this fast-moving sector.
Opportunity for growth in the current climate is significant. With 2020 seeing more than half a million more takeaway orders compared to the same period in 2019, demand for takeaway and delivery is a trend we expect is here to stay. For business owners and entrepreneurs alike, working with the support of a global brand like Pizza Hut presents great profit potential and international know-how which can be extended through operational improvements, refurbishments, improved marketing, new store openings and in organic growth.
Within the wider restaurant market, the last Budget announcement and progress on the roadmap out of lockdown injected a renewed sense of confidence, with many investors remaining forward-looking and eager to acquire good quality assets ahead of the summer, when trading will return to normal. As a result, from 1 January 2021 to date, Christie & Co’s Hospitality team has exchanged on more than 160+ businesses, suggesting many opportunities exist for a wide range of investors.