MARKET INSIGHT LEISURE PARKS - Fleurets
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MARKET INSIGHT LEISURE PARKS
Monday this week saw the The CVA, amongst a host of
approval of the proposed Company other proposals, provided for
Voluntary Arrangement (CVA) of the exit of 148 leases identified
The Restaurant Group (UK) Limited as Category 4 by no later than
by its creditors and shareholders. March 2021. Alongside this, the
More than 82% of all creditors parent plc company also placed
voted in favour of the proposal, into administration Chiquito
with 75% approval required for Limited in April 2020, including
the CVA to proceed, giving clear 61 restaurants trading under this
support to the managements’ brand across the country.
plan to take a large cut through
the company’s leisure estate Whilst not all are located within
which comprises about 313 leisure parks, the vast majority of
branded restaurants, including 236 the restaurants within Chiquito and
restaurants operating under the within Category 4 of the proposed
Frankie & Benny’s brand. CVA are located in out of town
Cover image: Woodside Leisure Park, Watford
This page: Valley Leisure Park, Croydon
leisure parks. The consequences are 35 7%
that it is not inconceivable that over
30 6%
200 substantial restaurant premises
formerly operated by The Restaurant 25 5%
Group will remain closed long after
other competing businesses have 20 4% However, this conclusion would be not
Number of New Leisure Park Sites
reopened post Covid-19. These only overly simplistic and convenient,
% Like for Like sales growth
units will sit empty, untenanted and 15 3% but also staggeringly myopic as it
with many institutional landlord’s would overlook key issues of excessive
10 2%
scratching their heads as to what supply, over development of leisure
they can do with previously highly 5 1% park schemes within locations and
rented units. The head scratching catchments which simply never
will not be happening in a small 0 0% provided sufficient population to
number of property companies. The enable even the most successful
list of landlord companies reads like -1% operators to trade profitably. The fault
a list of Who’s Who in the world of is collective. Developers, planners,
-2%
commercial property, with pension tenants, investors, and even central
funds managed by Threadneedle, -3% Government for over seeing planning
Prudential, Legal & General, Aviva, policy which enabled fundamentally
Standard Life and Canade Life all hit. -4% poor schemes to be given permission
As are the pension funds of some in the first place.
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
of the best known companies in the
UK including Tesco, BAE Systems Source: Annual Report & Accounts A review of the location of the 200+
and Associated British Foods, owner restaurants identifies 20 parks where
of Primark. Throw in seven Council multiple restaurants from within
for good measure. Even the Queen the Group will now lie fallow and
via the Crown Estate is lamenting No doubt these latter additions to with a consistently disappointing potentially long term vacant. The
the decline of the leisure park as we the estate will form the majority trading performance exposing position is most pronounced at two
know it. of those which will now lie vacant. fundamental issues across our three parks where three restaurants will fall.
Whilst many landlord’s and observers main Leisure brands”. Jarman Park in Hemel Hempstead is
Only as recently as 2015 did the will apportion blame for destruction one of these two parks.
impressive trading performance of The of value for all stakeholders firmly Roll forward, it is perhaps hardly
Restaurant Group warrant continued at the feet of the now replaced surprising that the new Executive The Frankie & Benny’s, Chiquito’s
acquisitions. A cursory glance through Executive Management Team, a review Management Team have sought to and Coast to Coast are interspersed
the Annual Report for this year of Annual Report only 12 months not only right the mistakes of previous by Nandos and Bella Italia, leaving a
highlights the opening of 31 new later illustrates frank awareness of the management but also position the terrace of 5 large restaurant units with
restaurants within the Leisure Park problems self-inflicted with Chairman, business with the best chances of only two in occupation.
division of the company, amongst them Debbie Hewitt only 12 months into recovery and without a tail so heavy
14 new Frankie & Benny’s and 9 new her role, commenting that “2016 and long that it brings down an A significant rental void is already
Chiquitos units. was a challenging year for the Group otherwise sound business. accruing for the landlord, Tesco
Jarman Park, Hemel Hempstead
Pension Fund. We estimate total
previous rental commitments of
£400,000 per annum (c£30 psf).
Whilst short term liabilities in relation
to service charge will continue to
be met, beyond March 2021 these
liabilities will fall to the landlord. Add
in a combined Rateable Value of
£403,000 for these three units, and
soon the landlord will be swallowing
hard to accommodate a net income
decline of close to £650,000 from
rent, rates and service charge.
The immediate outlook for new
occupation and fresh optimism is
difficult to find. The Restaurant Group
themselves have been seeking over
a number of prior years to dispose
individually of significant number of
their leisure park estate. The scale of
the CVA indicates that they were not
wholly successful in this programme.
The lack of a material number of
purchasers being a key issue.
As supply of opportunities have maybe only a handful of sites will be branded restaurant sector. Greggs, Tim already have a drive thru restaurant
exponentially increased, the pendulum picked up by these operators. Hortons and Creams in addition to a and many may also have restricted
between supply and demand has further number of coffee operators seeking to covenants prohibiting the landlord
swung in the direction of would be Imaginative asset management tap into the drive thru market, led by from developing further units for a
potential tenants and the phrase ‘buyers initiatives will be needed. Perhaps the Costa, provide comfort that the longer competing drive thru operator.
market’ has perhaps never been so apt. easiest to execute would be the sub- term reoccupation is indeed possible,
division of the units. Most of the units even though income voids might be Extending the net wider, the locations
Landlord’s will need to look beyond the likely to fall back into the landlord’s lengthy (either from marketing or rent with readily accessible and plentiful
most obvious relet as a branded casual hands will be around 4,000 sq. ft. free) and investment required by the car parking will appeal to many of the
restaurant. Whilst perhaps Nando’s, Sub-division into two, or perhaps even landlord’s to reconfigure the units. low cost gym operators. However at
TGI Friday’s and Five Guys are the three units greatly widens the potential rent of probably half of that previously
most likely to acquire out of a rather occupier pool into a market which is, Appetite from the wider drive contracted when occupied as a
shallow pool of potential acquisitive perhaps not firing on all cylinders, but thru market will remain constant restaurant, re-letting to the gym/D2
restaurant operators, the reality is that infinitely more competitive than the although many of these sites will occupier pool will come at a priceTamden Centre, Colliers Wood
are split to the rear leaving the front suggest that in a relatively short period
portion of the unit with 100% of the of time a few Frankie & Benny’s could
retail frontage, whilst the rear portion well be replaced by Amazon Go.
hides away in the “cheap space”,
providing ideal space and with ready The approval of the CVA has left many
access to delivery aggregators. landlords with much to ponder. Whilst
the last four months have given time
Salvation may also come in the unlikely to consider a strategy, those landlord’s
guise of Aldi and Lidl. The constant wishing to take swift and proactive
expansion plans of both supermarket action are more than likely to reap the
operators have seen acquisitions on reward in this supply saturated market.
out of town retail parks, taking up With so many potential units available,
space previously occupied by Toys inaction may well lead to years, rather
R Us and the likes. Whilst there may than months, of income void.
be planning hurdles to overcome,
and these operators again provide a
potential lifeline, not least given their
typical size requirements from c15,000
sq. ft. upwards.
For further information
to landlord income. Nonetheless it We have also witnessed the explosion Lastly a personal hunch. Much has been please log onto fleurets.com
represents one of the more realistic of street food halls in urban locations written about our shopping habits, or contact
opportunities with space requirements in the UK following the success of many saying they have fundamentally
often in the region of 10,000 sq. ft., the original Time Out food market changed during lockdown with the
there will no doubt be many a landlord in Lisbon, Portgual and the opening acceleration towards online retailing.
chasing such covenants. of three in London by Market Hall However, could the world’s largest
including their largest in part of the online retailer help salvage bricks and
Prior to lockdown, there was significant former BHS department store on mortar retailing in the UK?
growth in the experiential leisure Oxford Street. The concept could
market, with activities ranging from easily transfer to a leisure park, and Amazon Go reportedly acquired their Graeme Bunn
golf, to football, to live events and why not replace a single arguably tired first high street store in Notting Hill, Managing Director
virtual reality concepts providing strong branded restaurant with a host of London in March this year. Having
020 7280 4740
demand for large leisure space up to innovative exciting food offers which trademarked the slogan “No lines. No
50,000 sq ft, which could provide a would instantly save all family outings check out. (No, seriously)”, it is clear that 07776 208085
reconfigured solution to the restaurant an argument of whether Mum, Dad their corporate objectives for the UK graeme.bunn@fleurets.com
voids left on leisure parks. Many of or the children pick where to eat – all extend from way beyond a single store
these concepts combine a customer could be happy under a single roof! in Notting Hill. Competing alongside
experience with a food and beverage Aldi and Lidl for new A1 retail space
offer, which indicates where the future Dark kitchens may also make an and with a significant covenant to
of leisure park demand could lie. appearance, particular where units be offered, it would not be absurd toLondon North West East North
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