Lessons from the collapse of Jamie’s Italian

Business News News

Jamie liver’s restaurant group has gone into administration and the business’s failure is expected to lead to the loss of more than 1,000 jobs. The group includes the Jamie’s Italian chain, Fifteen and Barbecoa restaurants.

It is thought that out of the 25 restaurants that currently exist within the group only three will continue to operate.

The closure of Jamie’s Italian is part of a wider trend within the hospitality, food and drink sectors, where it is estimated that up to 15 restaurants a week go under.

A decline in customer spending brought on by changes in tastes is thought to be part of the issue with chain restaurants such as Jamie’s Italian, as well as the rise of online ordering services such as Deliveroo.

The sudden change in fortunes for chain restaurants comes after a decade of growth for the restaurant sector, but data shows that the number of restaurants contracted for the first-time last year.

The fastest restaurant closure rate of 2.8 per cent has been recorded in southern England, with London seeing a closure of around 1.3 per cent of its restaurants in the last year.

In the north of England, the closure rate is just 0.4 per cent, while in Scotland, more chain restaurants were opened than closed last year, according to data firm CGA.

During this 10-year period, rent rates grew quickly as chains attempted to buy up prime High Street properties as part of their expansion, which in some cases led them to overpay for spaces and left them burdened with onerous costs that they cannot meet.

Restaurants also face tighter profit margins due to rising food and staff costs, while uncertainty over Brexit has knocked value off the pound that has further reduced consumers’ spending power while also increasing the cost of importing food and drinks.

Karl Chessell, Business Unit Director for food and retail at data firm CGA told the BBC: “The difference is this huge increase in the supply of the market. Unless you know your customers really well, there’s a pretty crowded market.”

As well as fiercer competition, food price inflation, staff costs and business rates have all added to the pressure eateries face, he confirmed.

Paolo Aversa, Senior Lecturer in strategy at Cass business school, has also shared his thoughts with the BBC. He said: “I think the problem is the market has changed and Jamie’s Italian has not been able to respond quickly enough. A lot of hype was connected to his persona.”

He added that customers were looking for something new and healthy, which big chains like Jamie’s struggled to offer due to their commercial requirements to offer a consistent menu across the chain that appeals to differing tastes.

Value for money, a slew of competitors in the market for Italian food, and demand for new experiences through pop-up restaurants were also factors that affected the collapse of Jamie’s restaurants.