Bear in mind this family of successful restaurateurs if you are looking to invest in eateries -- they have their fingers in many pies.
Over six years ago I looked at the UK restaurant sector. At the time we Brits spent around £25b on eating out at restaurants. But according to the Office for National Statistics the amount that we spend dining out now tips the scale at almost £40b.
In theory that should be good news for restaurants. But significantly, none of the restaurants that were mentioned in the article exist in the same format, if at all, today. The likes of Oriental Restaurant Group, Belgo and Groupe Chez Gerard are but faint memories, save reminisces of severe indigestion that these businesses caused investors over the years. Others that included PizzaExpress and ASK have been rolled up and gulped down in their entirety by predators.
So what does the restaurant sector look like today?
For starters, it's bigger today than it was then. Pure-play restaurants today boast a combined market value of some £1.4b compared to around £849m in 2000. The table below lists in descending order of market value the main players in the sector.
| Company |
mkt. cap |
Price |
P/E |
Yield |
|
Gondola Holdings
(LSE: GND)
|
£552m |
410p |
13.6 |
2.9% |
|
Restaurant Group
(LSE: RTN)
|
£479m |
248p |
19.4 |
2.4% |
|
Prezzo
(LSE: PRZ)
|
£123m |
55p |
18.1 |
0% |
|
Carluccio's
(LSE: CARL)
|
£92m |
162p |
27.0 |
0.5% |
|
Clapham House
(LSE: CPH)
|
£85m |
250p |
23.9 |
0% |
|
La Tasca
(LSE: LAT)
|
£68m |
138p |
14.2 |
1.0% |
|
Tasty
(LSE: TAST)
|
£28m |
122p |
n/a |
0% |
|
Fishworks
(LSE: FSH)
|
£15m |
47p |
n/a |
0% |
|
Gourmet Holdings
(LSE: GRM)
|
£9m |
28p |
34.6 |
0% |
|
Food & Drink Group
(LSE: FDG)
|
£8m |
165p |
6.2 |
0% |
|
Bank Restaurant
(LSE: BKR)
|
£2m |
3p |
n/a |
0% |
Interestingly, Gondola Holdings, which owns Pizza Express and ASK, tops the list just as the two separately listed pizza parlours did six years ago. Only now, the combine is smaller than it was at the turn of the Millennium despite a takeover bid by private equity group Cinven. At the time PizzaExpress was valued at £476m and ASK at £129m.
At number two is Restaurant Group, which in its former guise as City Centre Restaurants, was also ranked immediately behind PizzaExpress and ASK. But unlike the two pizza restaurants, Restaurant Group has more than quadrupled in size.
Restaurant group was founded by former Golden Egg owner Philip Kaye, whose sons Adam and Sam went on to found ASK. It has grown by successfully by tapping into our hunger for burgers, Tex-Mex cuisine and fajitas through its rapidly expanding chains that include Chiquito, Frankie & Benny's and Garfunkel's.
Today the Kaye family is firmly entrenched in various parts of the restaurant trade. For instance, Philip Kaye is a significant shareholder in Gourmet Holdings, which owns upmarket teahouse Richoux. Meanwhile, nephew Jonathan Kaye is the boss of Prezzo, whose 72-strong chain of restaurants also include Chimichanga, Jonathan's and iMMO.
Prezzo also owns The Ultimate Burger, which vies with former PizzaExpress boss David Pages' Clapham House for a share of our pallet. Clapham house owns Gourmet Burger Kitchen in addition to Tootsies, Bombay Bicycle and The Real Greek, which in turn competes with Carluccio's and La Tasca for Brits' passion for a taste of the exotic.
The latest venture by the Kayes, and one that has caught my eye, is Tasty. It currently owns four Dim T dim sum restaurants, and two further openings are planned for this year. At the halfway stage, the recently-floated restaurant posted a pre-tax profit of £90,000, up from £84,000 last time. It has a market cap of £28m, which values each Dim T outlet at £7m a pop.
By almost any measure Tasty is very expensive. But let's not forget that the Kaye family is a past master of food for the masses, and I can't imagine Tasty will remain a bit-part player in a rapidly-growing market for too long!
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