‘It's tough out there’

Brexit, COVID and high inflation have all taken their toll on investors. “It's a much harder funding market than we've seen in a long time,” said Chris Miller, founder and CEO of White Rabbit Projects. “There are a lot of people who didn't make money over the last few years, and private equity in general has taken a step back from this industry.” “It’s definitely tough out there… there are a lot of reasons not to invest in the UK right now,” said Ashton Crosby, co-founder and MD of Capdesia.

‘Deals are still being done—and valuations are more sensible’

Nevertheless, deals for big groups like The Restaurant Group, Big Mamma and Fulham Shore show there is still an appetite for acquisitions. “Deals are still being done, and one could argue that valuations are somewhat more sensible than they were several years ago, during the boom of cheap money and fast roll-out,” said Ashton Crosby.

‘Finding new money is harder than ever’

While raising funds is hard, seasoned investors know that hospitality is still a great place to play, said Sarah Willingham, CEO of Nightcap PLC, which has acquired several businesses lately. “Finding new money is harder than ever… It's the more seasoned investors—the ones that have been in this industry for a long time, who have seen it and done it—that will come back to the table if you've got an exciting opportunity.” She added: “Where there's a good deal there's always money. But there's no doubt that the people who are picking up the phone are the ones who have been around the block a bit.”

‘We’re a lot better than we think’

For distinctive and well-run concepts, the future’s bright, said Jane O’Riordan, chair of Caravan, Turtle Bay and Red Engine and host of the panel. “It's not all doom and gloom. We've been through so much trauma and change that we're really match-fit now. Imagine how good we could be with a bit of a following wind.” Rod McKie, executive chair of New World Trading Company and non-executive chair at Megan’s, said hospitality needs to sing its praises louder. “We sometimes do ourselves a disservice here in the UK. We're good, and a lot better than we think… We've got through some tough times and come out well on the other side.”

‘Going global is a positive’

Domestic brands haven’t often gone far beyond the UK, but Rod McKie thinks that’s changing. “In the old days, going global was perhaps not the thing to say—it was more about sticking with the core business. But I think global is now is a positive—as it should be.” Chris Miller said White Rabbit has international ambitions for brands like Lina Stores and Island Poké. “The ability to cross borders is a huge part of our investments. if you’re able to successfully open in new markets like France, Germany, Japan and especially the US, that gives you a much larger size of the prize without oversaturating London or the UK.” At Capdesia, franchising is the way forward for Ashton Crosby. “It’s the most sensible way to internationalize, because you can leverage other people's capital and operating expertise.”

‘Cash is king’

Nightcap has gone from nought to nearly 50 sites in just two years after the acquisition of four businesses, and Sarah Willingham said the priority now is to bed in the brands and generate the cash for growth. “We need to let the dust settle and make sure we get these four businesses working well together and creating the cash. I wouldn't have it any other way, because the fast growth then gives you the critical mass to hire really good people and do lots of things.” Focus on the cash and everything else will follow, said Rod McKie. “I’m a firm believer that it’s all about growing EBITDA—cash is king.”

‘Mediocrity is fatal’

Encouragingly, everyone on the Leaders Summit was upbeat about the future of hospitality. “We’re going to see a lot more shake-out… but that leaves a lot of empty units and a host of opportunities for new concepts doing exciting things,” said Chris Miller. “The British consumer is extremely resilient—they just batten down the hatches and push on. Our sector isn’t going anywhere—it’s just going to evolve,” added Ashton Crosby.

But there’s no doubt that it’s a survival of the fittest. “I’m optimistic, but you've also got to add in realistic. You've got to be nimble and good at what you do. It’s boring, but you’ve just got to be really good at the basics,” said Rod McKie. Sarah Willingham added: “In any downtown there's no place for mediocrity—that's fatal. Consumers want to go out and they love our industry… but we've got to give them what they want.”

Peach 20/20 thanks its headline partners on the Leaders Summit: CGA by NIQ, Diageo, Fourth, Nutritics, Wireless Social and Zonal. Premium partners were Chapman Ventilation, Coca-Cola Europacific Partners, Harri and Uber Eats. Event partners were Airship, Brakes, Cardlytics, Freeths, Fresh Direct, Greene King, Lucky Saint and Toggle.