What does Jamie Oliver's restaurant collapse mean for casual dining worldwide?

Jamie Oliver in Sydney

Jamie Oliver's restaurant empire has collapsed, with almost all his restaurants now in administration. 

All but three of his restaurant group’s 25 eateries have closed, resulting in approximately 1,000 redundancies. Administrators attributed this to a changing dining market, and a competitive casual dining sphere. So what does this mean for mid-range dining in Australia?IBISWorld industry analyst Bao Vuong offers his take on the future challenges and opportunities for Australian restauranteurs. 

Foodservice: What is the future outlook for the Australian restaurant sector in revenue and growth?

Bao Vuong: Overall, revenue for the restaurants industry is forecast to grow at an annualised 0.8% over the five years through 2023-24, to be worth $19.6 billion.

What are the key factors driving this?

Rising interest in foodie culture is forecast to underpin revenue growth in the Restaurants industry over the next five years.

 Industry operators can look forward to further opportunities for growth, stemming from a projected increase in health consciousness, busier lifestyles and a greater focus on quality. 

These trends are anticipated to boost demand for higher margin premium products. However, significant competition from other hospitality industries, including takeaway food, pubs and cafes, is anticipated to limit demand and constrain industry revenue growth. 

Consequently, industry operators will need to control efficiency and respond to changes in customer demand to sustain profit. 

Jamie Oliver Restaurant Group administrators cited a tough casual dining market for the collapse of the business. What are your thoughts on this?

The dining market in general is always going to be a tough and highly competitive market with the huge number of options available out there for consumers to choose from.  

However, this is just one of the factors in play that led to the collapse of these chain restaurants. 

There are other factors at play there contributed to its downfall including rising rent costs, higher food costs and being a chain itself in an industry that tends to focus more on unique food experiences. 

What this last factor means is that chain or franchised restaurants are generally less popular that individual boutique restaurants, which already leaves Jamie’s already starting off on the backfoot.

Where are the key opportunities for restaurant owners? 

Consumers’ lifestyles are anticipated to become increasingly busy over the next five years, which will support demand for eating out as consumers dedicate less time to cooking at home. 

Operators willing to embrace new casual dining trends are likely to benefit from growth opportunities. 

Time-poor consumers are anticipated to increasingly transform mealtime into a leisure experience. With less time for formal sit-down dining with strict separation of courses, consumers are likely to opt for more casual dining. 

As a result, menus with smaller, tapas-style options, share plates and street food are anticipated to become more popular over the next five years. 

What are some of the threats or challenges? 

The projected ongoing rise in health consciousness represents a threat for restaurateurs over the next five years. 

Restaurants that fail to embrace these changing tastes risk falling out of favour, as consumers can easily switch to other restaurants that better cater to their needs. 

Less-healthy restaurants may be negatively affected as consumers turn to cuisines with a healthier image, such as Mediterranean and Japanese.

Rising external competition represents another threat for restauranteurs over the next five years. Pubs, cafes and fast-food operators are anticipated to improve the quality and diversity of their food offerings over the period. 

For example, more pubs are likely to rebrand themselves as gastropubs, employing successful chefs to create more appealing and eclectic menus. Demand for convenient and affordable food is anticipated to rise over the next five years, as consumers are likely to lead busier lives. 

This rising need for convenience has encouraged many fast-food operators to increase their range of restaurant-style food, placing further competitive pressure on the restaurants industry.

 Strong competition means that restaurants will need to highlight quality advantages and implement strict cost controls to maintain profitability and capture greater market share. The industry is also likely to face intensifying competition from supermarkets. 

The expansion of ready-made meal ranges from supermarket heavyweights, such as Coles and Woolworths, is anticipated to place pressure on industry revenue over the next five years.