The recent Budget has brought to a halt much of the international investment activity into the UK restaurant sector. We have witnessed a significant change of tone with the many international investors and overseas brands considering the UK, which had been experiencing peaked interest in the year leading up to the Budget. This is particularly concerning given the momentum we had been building in sourcing and analysing substantial deals for Middle Eastern investors, including sovereign funds, and facilitating market entry projects for various North American and Middle Eastern brands. Unfortunately, the brakes have been applied, with almost all activity halting due to mounting concerns over profitability, mid-term disposable income levels and consumer confidence.

I am aware of at least three major deals that have fallen over directly due to the Budget, with many more pausing earlier stage processes. The immediate outlook appears bleak as we grapple with an overbearing tax regime, shrinking economy and a government that seems detached from the realities of business. The hope for a change in government was seen as a potential catalyst for restoring certainty after the tumultuous period marked by a succession of Conservative governments and the fallout from Brexit. Regrettably, the reality is quite the opposite.

While the restaurant sector has encountered numerous challenges, North American quick service restaurant (QSR) brands remain optimistic about expanding into the UK, inspired by the perceived success of well-known names like Tim Hortons, Slim Chickens, Popeyes, Five Guys and Wingstop. However, it’s important to recognise that these brands are benefiting from a strong US dollar and generally adopt lower-risk entry strategies, often choosing franchise agreements or joint ventures with established European and UK-based private equity firms. They view success in the UK as a gateway to broader European opportunities.

Yet, for many investors we speak with, there is a palpable sense of caution. They are adopting a wait-and-see approach, looking to gauge any potential policy changes that could influence the market. Others are keen to observe how existing businesses respond to these new fiscal realities. If the anticipated effects materialise, resulting in casualties among businesses, a silver lining could emerge from this turmoil. We may see increased availability of property and opportunities in distressed assets from otherwise strong brands. Such scenarios often present an attractive long-term investment play, where returns could be realised through overseas expansion or by capitalising on distressed assets.

London has long been regarded as one of the few global cities of choice for fine and contemporary dining brands. This reputation will certainly endure, albeit with more caution from investors and roll-out brands. As we navigate these uncertain waters, the city’s unique culinary landscape continues to attract attention, though the current environment may cause potential entrants to proceed with increased scrutiny.

Despite the current climate, it is encouraging to note that there remains a long-term interest in the UK restaurant market by overseas investors, viewed as a leader in innovation and entrepreneurship, particularly in the mid-market food-led concepts and experiential leisure sectors.

For the UK to reclaim its position as a preferred destination for investment, it will require a concerted effort from both the government and industry stakeholders. We must advocate for a more favourable tax environment, one that encourages investment rather than deters it. The current trajectory is unsustainable and could lead to long-term detrimental effects on our economy if left unchecked.

Perhaps unsurprisingly, we’ve seen a significant uplift of UK brands looking to seek growth in overseas markets, not just through franchising arrangements but also considering developing directly managed overseas operations.

In conclusion, we need to hammer home the message to the government that these recent policies are detrimental not only to small and medium-sized enterprises, but also to inbound foreign investment. Operators must consider globalisation as a way to mitigate and spread the risks associated with operating in a single market. We should embrace our global leading position as innovators in the mid-market and actively pursue opportunities to export our brands abroad.

Terrified that an order placed any later than, say, April may arrive too late, I do all my Christmas shopping on foot. And I am a very bad shopper, a wizard of dither, lurching from shop to shop before finally settling on a purchase, and more often than not, deciding to give it up and go for a pint.

So it was that on 23 December, I found myself bewildered in Waterstones, a vast branch over four storeys occupying what seemed like the whole block. There was a book someone had asked for but, not finding it in the fiction section, I had no idea where to look.

It was Virginia Woolf, I think, who, standing in the British Library, suddenly started to imagine how many words surrounded her, all pressed together on those pages, and I was feeling the same sort of vertigo when, sensing my distress, up came a staff member, who asked if I needed any help.

On mention of the title of the book, she immediately knew it and had even read it. “It was a couple of years ago, and parts of it still stay with me,” she said as she steered me straight to the correct shelf. At the till too, a young man did not merely take my money, but remarked that my purchase looked interesting.

I left the shop slightly elated and, like the geek I am, wondered about Waterstones’ employment practices and how they get their staff to engage with customers so naturally. I’m convinced it wasn’t an act. They must recruit people who genuinely love books; who’ve read a surprisingly high number of the tens of thousands of titles they’re selling and want you to share their enthusiasm for the printed word.

This must be part of the reason why bookshops are thriving, at least in comparison to much of the high street. At the beginning of this century, it was widely believed not only that print books would be supplanted by the likes of Kindle, but that online purchasing would, in any case, render the bricks-and-mortar shops that sold them obsolete. That hasn’t happened. Over the past decade, the number of bookshops in the UK has, in fact, risen.

Yet they face similar challenges to pubs in terms of rising costs and staffing issues. I’m not sure anyone has compared bookshops to pubs before, but there seems an affinity between them. There’s a place in Falmouth, Cornwall, called Beerwolf Books, which is half bookshop and half pub (with some very good beer on the taps) – the two gently blending into each other as people read by the bar or browse the shelves with a pint.

Down where I live, we have an organisation called The Smallest Bookshop in Brighton, which has installed bookcases in several pubs around the city selling second-hand titles.

And the modern bookshop does a form of hospitality. Not only do they often incorporate a café, but browsing the shelves is perhaps a kind of slow shopping in which the experience of being there is as important as actually buying a book, in the same way that people don’t visit a pub just to drink and eat.

Interactions with staff are a part of that. At Waterstones – and the effect is probably stronger at a smaller, independent bookshop – I had experienced what’s known as the ‘weak tie’. That’s nothing to do with being tied for beer, it means those brief encounters with another human being that somehow contribute to our wellbeing.

The shop assistant is not going to be a friend for life, I’ll probably never meet her again. But research has shown that where the engagement with staff is more than a mere monetary transaction, customers come away happier, with a sense of belonging, and are generally more satisfied and likely to return.

This echoes a great pub experience, of course. Much has been said about the public health benefits of a social life at the local, especially since pandemic lockdowns stole that away from us, and the weak ties, as well as the long conversations and deep friendships, play their part – notably when you’re not a regular.

If bar staff take time to express a genuine interest in the products they are selling – say something knowledgeable about the beer, for instance – the customer experience is enhanced. They feel a part of things, and the grey days of January feel a little brighter and warmer.

Slow shopping is at the heart of hospitality. Fast, efficient transactions are not always the best way to make money. We need to take a moment to be human.

 

In the halcyon days of the craft beer revolution, a trip to the Beavertown Brewery on an industrial estate in Tottenham for its beer festivals was a real treat. They became increasingly popular, and queues down the road to enter became commonplace as growing numbers of drinkers were attracted by the impressive range of beers they had sourced from breweries around the world.

 

When we’d run out of steam trying high-strength hoppy and sour beers, my friends and I would retreat to a nearby dishevelled looking pub on the corner of a main road linking Seven Sisters to Tottenham Hale. Mannion’s Prince Arthur was a welcome retreat from the specialist beers at the festival and the mayhem of the crowds. We could relax and decompress while enjoying pints of Guinness in a calm environment with the mixed clientele of locals.

 

The contrast between the two drinking experiences could not be more marked. Whereas the appeal of the Beavertown festival was obvious, the attraction of Mannion’s was less so. It had no notable features as such. With no classy menu, it stocked only a modest choice of beers (Guinness was the default for beer fans), and there was an absence of any architectural merit. It was difficult to put your finger on its appeal.

 

Regardless of this, it has found itself in the recent Top 50 best pubs in London list, published by Time Out, in the impressive position of number 11. It sits alongside many other pubs that Time Out defines as ‘proper pubs’, with the publication highlighting that the list eschews places renowned for fancy food, high-end wine lists, impressive historical back-stories and any other fripperies.

 

It strikes me that there is something of a renaissance taking place for old school boozers that sit at the heart of communities. When studying the list, it is noticeable how many of these pubs only offer modest amenities and are frequently situated in backstreet locations. Another unusual common characteristic is the number of the pubs with carpets. JD Wetherspoon has been ridiculed over the years for its carpets, but this Time Out list positively celebrates those venues with soft (sometimes worn and sticky) furnishings underfoot.

 

Just as with Mannion’s, it is tough to put your finger precisely on the specific attributes that makes these pubs attractive to drinkers – especially the younger end of the market that are just discovering them. I’d suggest there is a move towards less pressured environments, where no demands are placed upon those people visiting and high expectations don’t really figure. These pubs are all about inclusivity and relaxing.

 

The appeal of such community-led pubs is also reflected in the US, judging by an experiment that was undertaken recently in Manhattan, where a journalist visited the 11 bars on the island that had achieved scores of 4.8 stars from 90 or more responses on Google Reviews. The expectations were that these would be flash trendy establishments with rooftop terraces, high-end drinks lists and other exotic characteristics. In total contrast, all the bars turned out to be low-key, small places with no outlandish elements. The common aspect was their welcoming community feel, where people could bump into their neighbours and the bartender knows your name.

 

In a hospitality landscape that seems increasingly driven by influencers placing content on Instagram and TikTok, the expectations of customers have been cranked up. They are all too often pushed up to unrealistic levels and disappointment is undoubtedly prevalent. Beyond replicating the money shot, what has the customer derived from the experience? When I recently questioned some people queuing outside a noodle bar in London’s Soho, their reasoning for waiting in line on a cold winter’s night was solely because they had all seen the venue on social media. A recipe for disappointment for many, I’d suggest.

 

Meanwhile, pubs like Mannion’s and the other unique gems in the Time Out list don’t promise anything even remotely worthy of going viral on TikTok. But whatever it is they do provide, there is a growing appetite for it, and that can only be a good thing for traditional pubs, communities and the wellbeing of society in general.