5/29/2019 | Restaurant Mortgages

Are banks still lending following the recent casual dining casualties?

Despite recent high profile problems within the sector, funding for restaurant businesses is still available – if you know where to look.

The recent string of high-profile casualties in the casual dining sector has been well publicised, the most recent example being the Jamie Oliver Restaurant Group. Comprising of 20 Jamie’s Italian sites and London based restaurants Barbecoa and Fifteen, the sale of this group is being handled by administrators, which our colleagues at Christie & Co have been instructed to advise on.

With these headlines dominating the press, you’d be forgiven for thinking that banks would temporarily retreat from lending within the restaurant sector. At Christie Finance however, we are seeing continued appetite from lenders willing to support both new entrants and experienced operators. We have also witnessed a significant increase in the number of business owners requesting a review of existing debts, with a view to re-financing onto improved terms, particularly as initial terms come to an end.

Since 2017 many of the big chains have been systematically closing underperforming sites, but it’s not just the household names who are affected. We’re hearing from smaller chains and family-owned restaurants facing all too familiar challenges; rents, business rates and staffing cost increases are all taking their toll. These increasing costs, coupled with an oversaturation of sites in some locations, have led some commentators to suggest the sector is facing a perfect storm.

Despite the headwinds, the underlying trends that attracted private equity to the sector, with people dining out more frequently, using restaurants as a place to socialise, and consumers’ desire for unique experiences means that businesses that crack the formula should continue to generate substantial profits. The lenders we work with understand this opportunity and are willing to make funds available to operators with well managed sites or a strong business plan.

In the last 18 months we have also seen a number of new lenders enter the market, bringing a fresh approach to funding in the sector. This has enabled us to negotiate alternative finance solutions for operators compared to those on offer by traditional high street banks.

Christie Finance has been arranging funding within the hospitality sector for over 40 years, giving us a unique perspective on the challenges and opportunities faced. Our role involves supporting clients throughout the application process, as well as sourcing and identifying the most competitive terms in the market. It’s not just about finding the cheapest rate; it’s as important to find a lender that understands an operator’s business, identifies with the potential and is willing to support their plans.

Our ‘whole of market’ approach and enviable network of bank and lender relationships allows us to match the right lender to your business needs.

To discuss how we can help please contact me on 07734 553659 or ed.brown@christiefinance.com.