Commercial property: Changing taste of the restaurant market

The restaurant trade has always been a notoriously fickle business, with rates of business failure among the highest in any industry.

More recently it has been even more volatile with a variety of challenges hitting owners and investors, from rising costs, to disruption of the traditional model from influences such as the delivery giants, Deliveroo and UberEats.

Josh Hill, business agent at Christie & Co says that the recent market troubles follow a decade of expansion as the public’s eating habits changed.

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He says: “In the last few years the casual dining market exploded as a result of more and more customers being comfortable with spending money regularly on an eating out experience.

“Over the past six months we have seen large restaurant groups such as Jamie’s Italian, Carluccio’s and Prezzo all turning to CVAs (company voluntary arrangements) to manage underperforming sites.

“It is to do with operating costs and outside factors, but there is definitely more volatility in this end of the market than previously.”

He reports that for restauranteurs and business owners the concerns are saturation and competition, but also the rising costs of energy, property, the recent rates revaluation and increases in the living wage, all of which hit a business’s bottom line.

Restaurants are experiencing costs of raw ingredients increasing too, possibly due to Brexit concerns.

But outside the cities, the Scottish restaurant market can throw up some interesting opportunities, not just for establishing a family business, but for worthwhile investments.

Hill says: “In Glasgow city centre for example, rents on places such as Five Guys or Nandos may be close to £200,000 per annum, before they have sold one burger.

“You have to add on wage bills and lighting, rates and heating of course, so it is a huge undertaking.”

In comparison, he points to the example of Café Fish in Tobermory which Christie & Co brought to the market last week.

Hill says: “It has a rent of £16,000 per annum and is a very profitable business, so if you have a good concept and can control the costs, you can turn something like this into an absolute gold mine.”

He says that the example of Café Fish is interesting. “Before seeing the place and the books, I would have thought that the purchaser would definitely be an owner/chef or experienced restauranteur looking to take on a new place and run it themselves.

“But given the profits it is making, investors will be interested. Even if they bring in managers to run it day to day, it will still be a profitable enterprise.”

Interest so far has been varied - from a super yacht chef looking to find land based premises, to a satisfied regular customer who already owns several restaurants and is considering Café Fish as an addition to his portfolio.

Situated on the upper floor of the CalMac Pier in picturesque Tobermory, the restaurant has spectacular views over the Sound of Mull, the islands and mainland.

It has an excellent reputation as a destination seafood restaurant and has gained accolades over the years. Most recently it was awarded the title of Scottish Food Awards’ Seasonal Restaurant of the Year in 2017.

The lease for the property is available until at least 2036.

Christie & Co is seeking an asking price of £500,000 for Café Fish.