Feeling the pain
I was recently asked to contribute a few thoughts to a piece for Mirror Online on the challenges facing the restaurant industry, and particularly the middle-market, following the closure of 12 Jamie's Italian sites. As is my wont, I wrote far more than they could possibly use, so I thought I would reproduce my contribution in its entirety here, especially in light of this week's news that another chain, Prezzo, is to close around 100 sites.
When as high-profile a name as Jamie’s Italian announces that it’s struggling, it’s tempting – and not incorrect – to attribute it to the ‘perfect storm’ of problems facing the restaurant industry: soaring business rates and rents, staff shortages and higher supply costs due to Brexit, and reduced consumer spend.
But in the case of Jamie’s Italian and similar groups of this size such as Strada and Byron, I think it’s also attributable to consumers abandoning the ‘middle market’ having realised they can get better quality food from (say) their local Italian or burger joint at the same price or less, while also supporting a local business, or they’re eating out less but going to more expensive, ‘special occasion’ type places.
This I think is a problem afflicting a lot of mid-market chains; the food isn’t terrible (OK – in some cases it is, but I won’t name names), but nor is it good enough to justify the prices charged. Discerning consumers would rather pay more for better, or if they just want convenience and cheapness they’ll go for fast food, which they don’t have particularly high expectations of but are happy enough with because it fills a hole for a few quid. It’s why so many chefs will tell you that the Big Mac is the best burger; it might not be as good quality meat or bread as say one of the ‘better burger’ chains, but it is satisfying, filling, consistent – and £2.99.
Another possibility, which I think likely, is that in Jamie’s case his restaurants have been a victim of the success of other strands of his business, namely his books and TV shows which, it’s important to point out, are still hugely profitable. As soon as people realise how easy and satisfying it is to make simple, fresh Italian food at home, why would they pay to eat it in a restaurant? A pasta dish at a Jamie’s Italian averages around £13 but in any of his excellent books (I still use and swear by a dog-eared, sauce-splattered copy of The Naked Chef) a recipe can be found that feeds four for about half that.
Although because of the very famous name attached the struggles facing Jamie’s Italian have made national headlines, it’s just an example in macro of what’s been happening in micro in the restaurant scene for several months now. Namely, an as-painful-as-it-was-predictable adjustment to a hugely oversupplied market.
Cassandra-like, I’ve been saying for a couple of years that supply of restaurants was set to far exceed demand. This might sound like a turkey voting for Christmas considering my livelihood largely depends on new restaurants opening, but it’s been clear to me for a long time that the speed and scale of expansion at all levels of the industry was never going to be sustainable, particularly from a staffing point of view – there just aren’t enough people of a high enough calibre to fill all of the new roles being created.
Fortunately for the staff of Jamie’s Italian and other shrinking or struggling groups, I’m confident they’ll have no trouble finding new employment. The hospitality industry was already facing a recruitment crisis – too few people to fill, and stay in, all the new jobs being created as dozens upon dozens of restaurants opened – before the Brexit vote started driving huge numbers of talented staff to pack their bags and seek careers elsewhere. So a smaller pool of restaurants competing for the same number of staff can only be a good thing for the jobs market.
For customers, so many restaurants opening – and in the case of chains, so many of the same restaurant opening – creates fatigue; popularity breeds contempt, and when there are too many of something, the whole category ceases to be special. I’d rather see fewer but better restaurants opening, providing stable jobs and career progression opportunities for the amazing hospitality talent pool.
This isn’t to say that chains and larger groups don’t do this; on the contrary, Pret is just one example of a huge chain who recruit, develop and nurture some of the best staff in the business. And the Danish restaurant group Sticks’n’Sushi, one of my clients, have a fantastic track record of retaining and promoting great staff; their youngest general manager, who’s just 25, joined as a waiter when they opened their first UK restaurant in 2012.
Many groups and chains are bucking the trend and will continue to expand, but they’re still cautious about where, when and on what scale they do so. Overinflate a balloon, and it bursts.