The Takeaway: A Q&A With Sam Fuller on the U.K. and European Leisure Market

How would you summarise current investor sentiment in the leisure sector? Are there particular subsectors that are attracting the most interest?

Investor sentiment is highly selective. We have seen firsthand that for the right assets, the market is very much alive; the succession of recent sales we’ve advised on—Mission Mars, Alice Pizza, Flat Iron, and Loungers— proves that while the deals require hard work, quality assets are still commanding attractive valuations. The reality, however, is that there is currently no price for mediocrity. Below that top tier of strong, resilient brands, the market falls away until you hit the distress, pre-pack end of things, where there remains activity.

In terms of where capital is flowing, the overriding theme is value—but that doesn’t mean cheap. It means finding that sweet spot where a differentiated, high-quality product and experience intersect with an accessible price point that consumers feel good about. The subsectors drawing the most interest are QSR and Fast Casual, which cover the value theme and combine it with efficiency and accessibility, which particularly appeal to a younger generation. Then it’s about white space, and this is where we see heightened interest in European operators. The continent is, by any measure, less penetrated and therefore perceived as less competitive than the U.K., and we are seeing some exciting lunchtime operators, mixing healthy food with speed and value, and the pizza and burger premiumization trends that have already played through in the U.K. start to present some interesting M&A opportunities. Franchise also appeals to investors; yes, you share the economics with franchisees, but the trade-off for an asset-light, lower-risk investment is appealing.

Against a challenging macroeconomic backdrop, what are the key characteristics that define a premium asset? What are investors looking for?

The current environment makes it easy to distinguish premium assets. Defining KPIs include resilient like-for-like (LFL) growth driven by volume rather than just price increases, consistent site-level EBITDA margins, and strong return on capital employed. Investors are looking for cohort consistency across different vintages and geographies, backed by a clear pipeline and demonstrable white space. Because of the challenging backdrop, operators are being forced to run at the absolute peak of their powers. The intense micro-focus we are seeing on labour efficiency, margin preservation and consumer experience means there are no flukes. The best-performing businesses in the sector are as tightly run as they have ever been.

In terms of how these KPIs play out across subsectors then, there are no rules; every subsector at present has winners and losers. For a period, QSR chicken was bucking all the trends, delivering near sector-wide volume growth and strong margins; this saw Wingstop trade at a rumoured 14x EBITDA. Since then, KFC has upped its game, new brands have arrived, and the U.K. has seen a chicken wings arms race leading to gradually diluting metrics for the majority of operators.

How is the buyer landscape evolving? Are private equity firms or strategic players the most active, and how do their approaches to the sector differ?

Private equity, while cautious, is still leading dealmaking right now. In the U.K., many of the large strategic buyers, particularly the major pubcos and restaurant consolidators, have for now adopted a more inward-looking posture. They’re focused on optimising their own estates through investment in sites and systems and navigating their balance sheets, which has given PE a clear opportunity. Should some of the larger strategics achieve their own exits, be it pub, restaurant or other leisure operators, then any new backer will likely turn to M&A to bolt on new growth brands and boost white space, but in the short term the dominoes are still standing.

PE funds are hunting for scalable businesses, but with a clear preference for multi-geography exposure. Get above a certain EBITDA threshold, typically £30 million, and a lot of PE houses just won’t sanction that level of exposure to a single consumer economy, especially if it’s the U.K.

When it comes to experiential leisure, it really feels like the sector needs a wave of consolidation, but, as yet, PE are not biting. There is a pervading worry that the sector is already saturated with concepts, with no clear market leader and no barrier to entry outside of capex.

Where do you see the next big opportunities in U.K. and European leisure?

While a broader increase in transaction volume depends on macroeconomic stabilisation and the easing of pressure on consumer wallets, compelling opportunities exist right now. The first is a classic cyclical play we see every decade or so. Some of the large pubcos, having struggled to raise cash, are being forced to sell off some of their best freehold assets. For a well-capitalised buyer, this is a prime opportunity to acquire high-quality, asset-backed pubs.

Additionally, we are seeing some outstanding performers in QSR in the U.K. and on the continent, delivering great product, often healthy, at speed and disrupting the lunchtime, delivery, and coffee subsectors.

The final theme to explore is disruption. The oldest trick is to pick a big established player and eat their lunch, and we are seeing this in coffee, where premium operators are the natural evolution for seasoned chain-brand coffee drinkers. It wasn’t that long ago where we used to think instant coffee was a treat and it feels inevitable that consumers will decide to pay 50p more for a coffee they consider twice as good as that on offer from the older chains.

What’s your outlook for the sector over the next six to 12 months? Is it really all doom and gloom, as the press would have us believe?

This is a classic yes/no answer. In short, at a top-line level, it’s nowhere near as bad as the doom-mongers would have you believe. LFLs, while under pressure, are largely holding up; there is pressure on volume, but given the amount of price that has gone into the sector, demand is proving remarkably resilient. People still want pints, pizzas and parties—who would have thought. It’s EBITDA LFLs that are the challenge. Dealing with the steady rise of inflation, especially energy, would be hard enough, but it’s the changes to the National Minimum Wage, in a sector that prides itself on employing young people, National Insurance, and, despite the recent tweaks, Business Rates that have all compounded to hurt profits.

Unfortunately, I think the sector has accepted the best it can hope for in terms of future economic policy is neutrality rather than help, so as ever operators will have to do the hard work themselves.

Being realistic, it will likely remain a grind for both operators and consumers over the next six to 12 months as macroeconomic headwinds persist. However, my medium-term outlook is fundamentally positive.

Unlike other consumer segments, hospitality and leisure are uniquely insulated from direct displacement by AI. At its core, this is a human-centric industry that relies on physical experiences, direct interaction, and social connection. While AI and back-of-house technology will be heavily adopted to optimise supply chains, labour scheduling, and margins, the consumer-facing proposition will always require people. The fundamental human drive for eating out, shared activities, and live experiences remains inexorably positive.

So, what’s The Takeaway?

M&A will inevitably switch back on—it always does.

Until then, if you identify a business that is successfully winning and expanding in today’s environment, imagine how exponentially it will perform once these gale-force macroeconomic headwinds finally begin to ease.