As a follower of the latest trends and changes in the hospitality industry, the range of opportunities now available to franchise has got to be one of the most compelling, and this coincides with the popularity of the UK as a location to open a new hospitality business. The UK is now one of the most culinary diverse dining-out nations in the world, with London recently voted “foodie capital of Europe”. Quite an honour when you consider the competition.
So, who is leading this charge to our shores to open? Currently heading the pack is the QSR (Quick Service Restaurant) sector. Whilst we have all witnessed the steady growth of the likes of McDonald’s, KFC and Burger King, we are now seeing a surge of new names vying for space both on the High Street and on the roadside. Some, such as Wendy’s, have tried before, but since the pandemic they and many others are seeking a piece of the action. Names such as Popeyes, Wingstop, Tim Hortons, Carl’s Jr and Dave’s Hot Chicken have got a foothold, and more are waiting in the (chicken) wings such as Bonchon, Chick-fil-A (again!) and Mary Brown’s. Some are holding back, such as In-N-Out Burger, who have a great following even without a site in the UK and the nearest restaurant 5,000 miles away!
Not a day goes by when the latest brand announces plans to expand from 5 sites to 50 in the next few years driven by franchising. For those that can lend the structure and support to their plans, then much is possible.
There are also “home grown” brands joining the party, and none are bigger or more British than the UK’s leading pub chain J D Wetherspoon. Christie & Co is acting on their behalf in a search for suitable franchise partners, as part of plans to grow to over 1,000 sites nationwide.
The search is specifically targeting hoteliers across the UK. As hotel operators look to maximise their profits and utilise spaces, the effort required to develop their bars and restaurants can be viewed as risky in the current environment, and even the best performing hotels can have underperforming bars and restaurants. Wetherspoon franchise partners will have the opportunity to create a highly effective bar/restaurant through the cost-effective conversion of an existing space to become a Wetherspoon site.
In addition to hoteliers enquires are welcome from other sectors, as already there are franchises operating in a range of locations. The first Wetherspoon franchised pub opened in January 2022 in Hull University’s student union, followed by a second at Newcastle University in September 2023, and third at Haven’s Primrose Valley Holiday Park in Filey, North Yorkshire, in March 2024. The company expects to open a further five franchise pubs in the second half of this financial year.
The viability of franchising is another significant reason for the growth in QSR businesses expanding. As a result of this model, overseas companies no longer have to spend time adapting to new laws and regulations; they can just franchise their brand to someone already based in the country and let them manage it. What was once a big problem for US brands has been removed with franchising. For instance, 20 years ago, it was labour laws: others couldn’t quite understand why somebody who was employed had many rights at all and should rely on tips, but with franchising they’ve accepted it because it’s not them who’s paying the wage, it’s the franchisee.
Another area of difference is property, as in recent years post-pandemic, we have seen a more conciliatory approach from landlords who previously took advantage of the over-heated sector. Today we have a much more encouraging environment, despite some of the government’s recent actions. Landlords have discovered that a let premises at a market rent is better than an empty premises relying on hope value. And in the last three years some have been contributing to the fit-out costs with extensive rent-free periods, encouraging new entrants.
Of course, such popularity is not confined to London. Key locations in the likes of Edinburgh, where Popeyes are soon to open, and Manchester, can be a draw with their high footfalls, dining-out culture and international audience. For example, the loud-and-proud Big Mamma group are opening in Manchester, adding to their international presence. In fact, many QSR brands are looking at the outliers as a better starting point. Who knew that the first KFC was in Preston, and that Woolwich was where McDonald’s entered the UK, with their first drive-through in Fallowfield Manchester back in 1986. This trend continues as Carl’s Jr have now opened in Cardiff, and Belfast has seen the first Chick-fil-A open this year. This can’t be a bad move, as Loungers proved: with 280 sites and only a dozen within the M25, their recent sale for £354 million shows that it’s not just the streets of London that are paved in gold.
However, a word of caution. With such rapid growth comes competition for sites, and we are already seeing an overheating of rents for out-of-town QSR drive-through sites. In fact, rents are higher for these sites than many city centres. From an agent to a client, my watch word is “caveat emptor” and do the maths… with all these brands jumping on the bandwagon it feels like another Casual Dining calamity could be around the corner. Nevertheless, as I have seen over the years, the British public remain keen to seek out new food styles, venues and experiences, so the UK will continue to be a major draw for those from overseas looking to make a mark.
