High Streets Initiative · 23 January 2020

Why are there more restaurants than retailers on Britain’s high streets?

High street restaurant
Retail outlets now account for just a quarter of high street premises as many businesses go online.

New research suggests a spike in the number of restaurants taking over the tenancy of the British high street as consumer appetites veer towards food and beverage over brick-and-mortar retail. Here’s why.

Retail outlets are increasingly being replaced by restaurants and takeaways on high streets across England and Wales, according tooNS research. Direct Line for Business dissected the June 2019 study and the trends suggest a death knell for Britain’s brick-and-mortar retailers angling for high street success.

Over the past five years, high street businesses have been closing at a rate of four every day

In 2018/19 two thirds (61%) of all change of use applications made to local authority planning departments were to change the use of shops, Class A1 (retail outlets), to another type of business.

More than a third of all change of use applications submitted to councils in the last financial year was to convert a shop into either a restaurant or caf? or a takeaway.

Despite the difficulties suffered by many high profile restaurant chains in recent months, demand remains high for these premises.

Analysing change of use applications for all types of business premises in 2018/19 revealed almost half of the requests were made to convert the building for use as a restaurant or caf? or a hot food takeaway. Eleven per cent of applications were to create drinking establishments such as pubs or wine bars and 6% were for financial and professional services businesses.

The remaining 17% of applications were for premises not included within other classifications, such as betting offices, payday loan shops or taxI businesses.

Retail outlets now account for just a quarter of high street premises as many businesses go online

Business class Share of conversions from class Share of conversions to class
A1: Shops 61% 18%
A2: Financial and professional services 13% 6%
A3: Restaurants and cafes 10% 34%
A4: Drinking establishments 4% 11%
A5: Hot food takeaways 2% 14%
Other 11% 17%

Source: Direct Line for Business 2019

London vs the rest of the UK

London, home to approximately 1, 200 high streets, ‘saw the highest number of applications for the change of use of business premises. Over the past three financial years, almost a third of Class A Town and Country Planning Order applications across England and Walescame from London.

The West Midlands, with 600 high streets, was second with 12% of applications and the South West, with 590 high streets, was third with 11% of applications. The majority of all applications across England and Wales were successful in 2018/19, with 85% being approved. However, the success rates in the East of England (80%) and London (82%) were lower than the national average.

with the internet making it so easy to run a successful business without the traditional overheads of a bricks-and-mortar business, it’s no surprise to see a decline in the number of physical shops on our high streets, ” Jemma Holloway, retail product manager at Direct Line for Business says.

“Shops are disappearing at an alarming rate, and with more than 10 million people living just a short walk away from a local high street, it is important for the estimated 100, 000 shops that remain operating in these locations that people take advantage of them to stop them dying out.

Shrinking retail outlets

Across Britain, there were around 7, 000 high streets in 2017, which are home to more than 404, 000 businesses.Five years prior to this there were 412, 000 as four shops closed every day.

Retail outlets account for just a quarter of businesses on the high street now, experiencing a decline in every region outside London and the North West over the past five years.

Meanwhile, the number of non-high street businesses has rocketed over the same timeframe, rising from 2.45 million to 2.61 million, which is an increase of 156, 000, or 6%. This is the equivalent of 86 new businesses every day.

To help support the high street, ?Direct Line for Business has partnered with Enterprise Nation, Amazon, and Square on the launch of?Clicks and Mortar, a series of high street pop-up shops across the UK.

The initiative encourages experimentation so that online businesses can grow and test physical retail while helping the high street by filling empty shops and driving footfall.

Why restaurants and why now?

With 1.7 million UK consumers visiting a restaurant at least once a week, the opportunity for independent restaurants and pubs to take a slice of the action is clear.An increasing number of them are targeting growth based on the growing consumer trend of favouring local, independent locations instead of large chains or out-of-town restaurants.

gone are the days of 2015 and 2016 when there were three new restaurant openings for every closure. Many new concepts have failed, whereas the tried-and-tested businesses have fared much better, 365 Business Financemanaging director Andrew Raphaely explains.

the need for business funding has increased due to rising costs and a requirement to take a competitive edge be that through expansion, redevelopment and refurbishment, or investment in staff and training.”

“The closures of homogenous chains in the casual dining sector, such as Prezzo, Carluccio’s and Jamie’s Italian, have given the independents an opportunity to get a stronger foothold in the sector.

?independent restaurants are telling us that their customers value the personal approach, knowing that their food is locally sourced and that the restaurant is part of the community, not a corporate machine, says Raphaely.


 
TAGS:

ABOUT THE EXPERT

Praseeda Nair is the editorial director of Business Advice, and its sister publication for growing businesses, Real Business. She's an impassioned advocate for women in leadership, and likes to profile business owners, advisors and experts in the field of entrepreneurship and management.

High Streets Initiative