Member Article

Bar and restaurant merger activity on the up

Confidence in merger and acquisitions (M&A) is rising in the restaurant and bar sector, with figures up across the North West, Midlands and Yorkshire.

According to business advisory firm, BDO LLP, a “renaissance” in burgers and good quality fast food has given a significant boost to the M&A market.

Brands such as brasserie Côte and burger specialist Byron have been predicted to change hands for over £100m, and this trend within restaurants is anticipated to continue throughout the next 12 months.

A strong appetite for a wide spectrum of foods has made innovative concepts a success in Leeds, after Mexican fast-food restaurant Barburrito opened this year, and New York-style restaurants are expected to open next year including Meat Liquor and Meat Market.

BDO’s corporate finance partner in Leeds, Jason Whitworth, said: “Four years of recession have seen people focus on value for money, but that doesn’t mean they won’t pay a premium price for a quality product.”

In the Midlands successful investments into chains such as Patisserie Valerie, Yo! Sushi and Pizza Express have yielded good returns, and excitement over a new Birmingham restaurant from young chef Adam Stokes has provoked further optimism.

Roger Buckley, Birmingham’s corporate finance partner for BDO said: “Gourmet versions of authentic street food classics, and concepts like artisanal bakeries have sprung up in the teeth of a recession and people still queue around the block.”

Barburrito, which gained finance from the Business Growth Fund, also did well in it’s hometown of Manchester, and BDO said that while the North West, Midlands and Yorkshire are not yet up to the investment levels of ten years ago, the outlook is positive.

London’s Meat Liquor and Meat Market, which will open in Leeds, will also have openings in Manchester, and BDO predicted improved demand and less mass discounting in the next year.

Across the regions the business advisors said there would be growth in “fast casual” dining concepts, and predicted that “Artisan” coffee brands would increasingly open their own outlets to showcase their products. BDO also anticipated a rise in the number of successful healthy chains with “light” menu options.

Kieran Lawton from BDO’s restaurant and bars team in Manchester said: “Investors see a clever idea backed by strong, entrepreneurial management teams and they know they won’t be the only suitor. There are plenty of reasons to be optimistic about the M&A in this sector next year.”

This was posted in Bdaily's Members' News section by Miranda Dobson .