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On-trade mergers and acquisitions set to surge in 2012

Published:  12 December, 2011

Mergers and acquisitions in the UK bar and restaurant trade are expected to surge in 2012, according to BDO's 'Restaurant and Bars Report'.

The forecast is due to a combination of private equity (PE) interest, thriving chains looking to cash in, and banks offloading repossessed assets before a predicted growth in 2013 and beyond.

The report states high street favorites such as Pizza Express, Côte, Giraffe, Yo! Sushi and Jamie Oliver's chain of eateries could change ownership.

Campbell, head of BDO's restaurants and bars team, said PE houses with "money to burn" were eying up a sector whose star performers have achieved stellar growth over the last few years.

He adds tired venues serving overpriced food are living on borrowed time, but thriving chains will continue to do so next year.

"While the economic climate is not great, going out is part of the fabric of our society."

"The difference is when people do go out now, they are more demanding about the quality of the experience they receive.

"Food prices are starting to fall and many high street landlords see food and drink businesses as a safer bet than retailers.

"The good operators are in a great position for when financial pressures start to ease in 2013 and consumers start to feel they have more disposable income.

"This makes them a very attractive prospect - especially if they have a concept that is proven to work outside the capital."

As well as demand stimulated by PE money, Campbell added, banks saddled with assets - particularly pubs - acquired in the downturn would be looking to offload them.

Other predictions for next year from BDO's 'Restaurant and Bars Report' include an increase in calorie and alcohol information on menus and big changes on the high street as 'pop up' and mobile units increase.

Technology will also be a major factor as free wifi becomes the norm in restaurants and bars, and targeted promotions via mobile technology become the most potent marketing tool in the sector.