In the last year, insolvencies in the restaurant industry have increased by 20 per cent as chains and independent businesses face higher staff costs, business rates and fierce competition on the UK high street. New research has indicated that 1,410 restaurants entered insolvency proceedings in the year to the end of June, a rise of up to a fifth on the previous 12 months.
As well as the challenges of rising costs, restaurants have also faced a slowdown in consumer spending, the uncertainty created by Brexit and an oversubscribed sector.
The most high-profile insolvencies in this sector in the last year have been the collapse of Carluccio’s, Jamie’s Italian and Byron but the research shows that the difficulties of the market have also affected lots of smaller restaurateurs.
The study says that “cashflow will be key in the coming months” and that “renegotiating payment terms with creditors and cutting unnecessary expenditure” were some of the steps that restaurants could take to improve trading conditions.
Insolvencies in the casual dining sector will most likely mean that restaurants that “combine the right cost base with strong brand loyalty and a unique offering” will survive, according to the report. Similar research has previously indicated that the UK’s top 100 restaurants made an £82 million loss in the last year, down from a pre-tax profit of £102 million 12 months ago.
If you know of a failing restaurant or have a client that has been affected by the slowdown in consumer spending, why not contact our team for advice.
