The rapid and aggressive expansion of the casual dining market may be coming to an end, according to a top property agent, citing the recent collapse and sale of the Ed's Easy Diner chain.
Simon Chaplin, head of restaurants, London for commercial property agent, Christie + Co said that the recent sale of the group to Giraffe owner, Boparan Restaurants Holdings, was a sign that the market was cooling off.
American-style diner chain Ed's was originally put up for sale in 2015 for £90m. However it has been revealed that the company finally sold for £8.75m in October. Giraffe has taken 33 of Ed’s Easy Diner's 60 sites out of administration. However, 26 sites have closed, with the loss of 377 jobs.
According to papers filed at Companies House on November 7: 'Following a rapid expansion programme the group experienced an extended period of declining like-for-like sales, which resulted in cash flow difficulties. By the early part of October, the group was facing considerable cash flow and creditor pressures. It became apparent that additional funds would be required to support ongoing trading, which neither the shareholders nor the bank were willing to provide.'
The report goes on the state that the sale to Giraffe, would secure 644 jobs. Ed's 'expanded rapidly' over the past 18 to 24 months, with approximately 20 diners opened over the period.
Responding to the news, Chaplin said there may be a knock-on effect for other traders. 'Ed's [is] the first sign of a crack in casual dining growth, and there may be one or two groups next year who crumble,' he said.
'It would be a headline to say rents have peaked, but there will be pressure on rents in marginal sites to be decreased or tenants will just walk away.
'Rents that have been agreed to over the last 12-18 months have been driven by deals that were done two years ago. But things have been cooling off as the costs for operators have been increasing. However, prime sites will still attract good rents because operators with good footfall will make them work.'