The turnover of the UK restaurant industry hit £21.6 billion (29.98bn) last year, rising by 39% from £15.5 billion since the recession, according to brokerage LDF.
LDF, based in Deeside near Liverpool, says as confidence and wage growth starts to recover there are reports that disposable income growth will surge to a 20-year high this year, meaning individuals now have more money to spend on eating out.
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It adds that deeper pockets among UK consumers are good news for the restaurants. The growth of the industry is being driven by a wave of new restaurant start-ups and expansions of smaller chain restaurants, such as Franco Manca, Chilangos, Wahaca and Honest Burgers.
Smaller chains such as these particularly target mid-market consumers for whom eating out in a ‘fast casual’ restaurant represents a luxury that has become more affordable since the recession.
LDF says that these new businesses are investing heavily into their assets, including kitting out new kitchens and restaurant interiors and as a result, the demand for alternative funding from these businesses has increased.
LDF points out that that the value of equipment assets in the UK restaurant industry, such as kitchen equipment, fixtures & fittings, have risen considerably over the past five years, increasing by 33% from £4.2bn in 2010 to £5.5bn in 2014.
LDF adds that the growth of asset values in the sector has also been driven by a sharp increase in pop-up and mobile restaurants, which open for a period of days or weeks, allowing chefs to test the market before taking on the financial commitment of opening a bricks-and-mortar restaurant.
Pop-up restaurants need to ensure that the equipment they invest in is mobile and lightweight, to make it quicker and easier to open and close a restaurant in an ‘unconventional’ location, such as a disused shop, or on top of a multi-storey car park.
Peter Alderson, managing director of LDF, said: "The restaurant industry is seeing a huge increase in demand for funding as it continues to benefit from the knock on effect of the economic recovery and low inflation."
"As more and more new restaurants seek to establish themselves in a highly competitive industry, they are looking to alternative finance to fund their growth and help to kit out new kitchens and restaurant interiors.The new entrants to the market are also forcing establishing players to increase capital investment in keeping their outlets looking attractive."
As rent is a substantial cost for new ‘fast casual’ restaurants, which are often situated in expensive prime central locations, they need to serve as many customers as possible each day to increase profits. Many new restaurants will invest in the newest equipment to help them produce meals quickly – top of the range hot plates, deep fat fryers and pizza ovens are on the top of many restaurants wish list.
Alderson said: "Asset finance allows for a quick turnaround, which means businesses don’t have to pause to get access to funding. This often proves extremely important for the success of start-ups, which need to act quickly to keep on track with rapid growth."
"Leasing to fund this investment also means that restaurants do not risk having to spend their valuable cash resources to acquire the equipment they need."
