Estate restructures and diversification is driving leading brand profitability, across restaurants, pubs and QSR brands.

Lumina Intelligence’s Eating Out Market Report 2024 shows that the top ten leading hospitality businesses are expected to achieve a combined turnover of £19.8 billion in 2024, growing +6.1% year-on-year.

Greggs is expected to lead this turnover growth in 2024F at +13.1%, driven by investment in supply chain capabilities, trading hour extension and strategic travel hub expansion. 

Mitchells & Butlers is also set to see growth of +8.3%, driven by its successful capex program & acquisitions. Meanwhile, JD Wetherspoon is optimising estate structures through disposals of underperforming sites to improve pub operating profitability, and will see +7.2% growth. 

In terms of outlets, the top 10 eating out companies have a combined total of over 20,000 outlets representing a 6.3% share. Outlet shares are expected to remain unchanged compared to 2023, as the sectors move towards consolidation, with companies optimising operations and scaling up through strategic restructuring, acquisitions and diversification. 

Among restaurant groups, Wagamama is expected to grow market share by +0.2ppts in 2024 driven by Apollo-backed expansion plans. Pizza specialist Franco Manca is set to see share growth of +0.1ppt as it targets underpenetrated locations in the UK.

Pizza Hut is forecast to see outlets decline by -12.7% due to franchisee Nine Food Group placing 38 sites on the market, resulting in a -0.5ppt loss in outlet share.

Lumina notes that strategic acquisitions alongside restructuring is optimising portfolios and supporting debt alleviation.

For example, Hostmore has agreed to acquire TGI Fridays’ US operations, consolidating sites for financial synergy. This aims to boost strategy, earnings, market valuation, while revitalising the TGI Fridays brand.

Additionally, Tasty Plc, operator of Wildwood and Dim T, plans to exit 20 underperforming sites to improve profitability and reduce costs amid tough market conditions. This reflects the industry’s shift towards leaner, more focused business models, says Lumina.

On the other hand, estate diversification is a key lever to profitability.

A number of restaurant groups venturing are into the drinks space, with Thai restaurant Busaba trialling a new wet-led concept at London’s Westfield Stratford, targeting a younger audience. The brand aims to cater to high tempo occasions pitched at a lower spend and short dwell times. 

Dishoom also entered the drinks-led space last year with its Permit Room bar concept and has two more sites lined up. This concept pays homage to Bombay’s historic permit rooms, offering a range of ‘drinking foods,’ breakfast options and a diverse drinks menu.

Meanwhile, breakfast drives QSR growth as operators extend ranges and trading hours to tap into the lucrative day part. Namely. McDonald’s aims to boost its breakfast market share in the UK by reintroducing its popular breakfast wrap and offering in-app price cuts on several breakfast favourites to compete with Greggs. 

Popeyes has extended of its hours for the launch of its breakfast range, including its signature Louisiana biscuits and Cajun-spiced rolls. Breakfast is a key focus for the rapidly expanding brand as it looks to capture on-the-go consumers seeking variety. 

For pubs, the top 10 pub and bar brands by outlets are expected to see a -1.0% outlet decline in 2024. The Lounges remains an outlier in the pub market, expected to grow its estate by +14.4% to over 230 sites in 2024F.

Beefeater is forecast to see outlet share decline -0.3ppts following Whitbread’s plans to exit 126 branded restaurants over the next 2 years and convert a further 112 restaurants into new hotel rooms.

Pub companies including Revolution Bars Group, JD Wetherspoon and Whitbread are optimising estate structures through disposals of underperforming sites. 

At the same time, the appetite for pubs with rooms continues to increase, allowing pubs to diversify revenue, enhance market positioning, and attract a wider consumer base. The trend also capitalises on the growing demand for staycations and supports profitability in a changing economic landscape.

Heartwood Inns has opened its first pub-with-rooms, The White Horse in Dorking, following a multimillion-pound refurbishment. Liberation Group has launched a new division, Butcombe Boutique Inns, to capitalise on the growing pub accommodation market. 

For coffee & sandwich brands, targeting on-the-go consumers and expanding into travel hubs and grocery spaces is a key growth driver. 

Greggs dominates and is set to grow outlet share by 1.2ppts in 2024. Starbucks is expected to grow share of coffee shops by 1.1ppt through drive-thru expansion, driven by continued focus on expansion of drive-thru and smaller format sites. This comes at the expense of Costa, which is forecast to see its share contract by -1.1ppts from 2023.

Greggs’ growth strategy focuses on enhancing accessibility and developing its estate. By extending trading hours and expanding beyond high street locations into key transport hubs and petrol station through its Sainsbury’s partnership, Greggs broadens its market reach and adapts to evolving consumer habits.

Also diversifying formats to extend reach, Gail’s Bakery is opening its first in-store takeaway site in Waitrose Canary Wharf, following on from the introduction of dedicated Gail’s bays in 64 stores last year. The move leverages established customer loyalty and increases brand presence among its core demographic.

Also, Caffé Nero is set to open its first ever drive-thru store at Stansted Airport, further strengthening its partnership with the airport and providing a template to expand its store format in the future.

Data from Lumina Intelligence UK Eating Out Market Report. To find out more, click here.