Peach Report

Two economies: two different opportunities

18 April, 2011

by Peter Martin

Without new competition it will be the big established groups that look set to consolidate their positions as venues of choice.

It is now a given that there are effectively two economies in this country – one in London, the other everywhere outside the M25. London is buoyant; at the same time much of the rest of the nation is bracing itself for the worst of the Government’s public spending cuts, writes Peter Martin.

Our capital city is different, not least because it is one of the world’s most important cultural and business cities – last year it was voted the World’s Leading Destination at the World Travel Awards for the fifth time. An article in Saturday’s Guardian summed it up, see Never has London's atmosphere as a rich city-state felt so extreme.

There simply aren’t many places on the planet like it, so perhaps we should accept it and make the most of it – even if that’s little help if you’re trading outside the capital’s immediate sphere.

One of the clear manifestations of this divide is in business investment, not least in the eating and drinking-out of home market. I’m not talking about the fact that Londoners eat-out significantly more frequently than the rest of the country, but the reluctance of those with money to sink it into projects based outside of the M25.

The point has been made succinctly by entrepreneurial investors like Luke Johnson, John Barnes and Paul Campbell in the most recent issues of Peach Report magazine - London is the market to invest in.

What this means is that the London market will remain vibrant, but also fiercely competitive with newcomers with bright ideas continuing to come out of the woodwork. It will be no place to standstill. Opportunities will abound but everyone will be chasing them.

In contrast, with little or no investment for new chains out of London, this market will look very different, though not to say without its opportunities. People are still going out to eat and drink outside the capital, just not in the number and as frequently – and without new competition it will be the big established groups that look set to consolidate their positions as venues of choice.

While London is likely to be an even more open and prosperous market, the rest of the country can expect to see pub groups like Mitchells & Butlers, Wetherspoon, Whitbread and Punch and big casual dining brands like Pizza Hut, Pizza Express, Frankie & Benny’s and Nando’s dig in – not to mention the fast food giants. The barrier to entry will be financial clout.

As the latest Coffer Peach Business Tracker figures show in contrast with last week's news that bars and restaurants are showing the biggest signs of financial distress amongst UK businesses, according to administrators Begbies Traynor, chains are already doing better than smaller operators and this will likely continue – outside of the M25 at least.

London, of course, will remain a law unto itself.