Hospitality insights

Adapting business models in the hospitality sector

Trefor Griffith Trefor Griffith

Market conditions in 2017 required a real change in mindset from operators in the dining sector. Perhaps most disruptive is the continued rise in popularity of home delivery1. Thanks to players like Deliveroo and UberEATS, it is now easier than ever for consumers to order food to their home with many businesses rethinking their models to stay relevant and guarantee success.

The eating-in trend is affecting the casual dining space in particular, leaving many with large sites and fewer diners. As a result the high rent costs they pay are not generating the desired investment returns.

Jamie Oliver’s and Byron’s chains are two noteworthy casualties. The Handmade Burger Company was also forced to close a number of sites2.

To adapt, many operators are opting for smaller sites with facilities to accommodate both home delivery and on-site eating. Property agent Christie & Co saw a lowering of restaurant property prices as demand for larger spaces decreased, while we’ve heard from a number of contacts that smaller sites are starting to grow in value3. Leveraging kitchen production with lower payments on staff and rent delivers clear benefits.

London rotisserie group ClockJack was one of the first to open a delivery-only kitchen4. However, delivery operators themselves are picking up on the value of lone kitchens to satisfy the demand for delivery. Deliveroo has also been reported to be opening “dark kitchens” to service customers and avoid high rental costs5.

Premium brands, known for the high quality of their restaurants in combination with their food, are questioning whether the move towards delivery-first will impact their brand. With some foods not faring well in transit, areas of the food service sector may find it challenging to adapt their models.

Surviving in a highly saturated delivery market requires a strong brand. Deliveroo secured its leading position in the market early on after launching in 2013 but on-demand delivery app Jinn went into administration last year despite providing a similar service6.

Despite these challenges, it's clear that the drive towards delivery choices will continue to impact restaurant businesses in 2018. We're intrigued to see how operators will thrive as the year progresses.


  1. The Guardian, UK's appetite for gourmet takeaway fuels restaurant delivery boom, 3 March 2017 
  2. Birmingham Live, Birmingham restaurant chain Handmade Burger Company goes into administration, 7 July 2017 
  3. The Caterer, Restaurant property prices fall as consumers break away from chains, 18 January 2018
  4. Big Hospitality, Chicken brand Clockjack opens online order, delivery-only kitchen, 1 June 2016
  5. The Guardian, How Deliveroo's 'dark kitchens' are catering from car parks, 28 December, 2017
  6. The Next Web, On-demand delivery app Jinn has permanently shut down, 17 October 2017