Number of UK restaurants in ‘significant’ financial trouble up 8%


The number of UK restaurants in big financial trouble has surged  over the past year as a ‘perfect storm’ is hitting the sector, new research suggests.

The latest ‘Red Flag Alert’ from finance firm Begbies Traynor, which monitors the financial health of UK companies, has revealed that the number of restaurants experiencing ‘significant’ financial distress surged to 11,091 in March – an 8 per cent increase compared to a year ago.

The findings come as a raft of restaurants, including chains Jamie’s Italian, Prezzo, Byron and Strada, have all been forced to announce closures over recent months with more considering restructuring.

Another restaurant by Jamie Oliver, his upmarket Barbecoa, collapsed last month leading to the loss of 78 jobs as its site in London Piccadilly was forced to close. 

Jamie's Italian is among a raft of chains forced to announce closures over recent months

Jamie's Italian is among a raft of chains forced to announce closures over recent months

Jamie’s Italian is among a raft of chains forced to announce closures over recent months

The report adds to similar data published earlier this month which shows that nearly 400 UK retailers, including big high street names like New Look and Mothercare, could struggle to make higher debt repayments if interest rates go up as expected this year.

Begbies said quarterly rent bills due this week could tip many restaurants into the red as they also face soaring costs and weaker consumer spending. 

Julie Palmer, a partner at Begbies Traynor, said: ‘The UK restaurant sector is facing a perfect storm of pressures ahead of this week’s quarterly rent day, with growing labour costs from the National Living Wage, subdued consumer spending and fierce competition from established high street chains, coming together to cause a spike in financial distress across the industry.’

She added: ‘Unfortunately for those restaurateurs experiencing both declining sales and rising costs, the upcoming quarterly rents payment this weekend could be too big a financial hit for many to swallow.’

Restaurant chains and retailers are among firms that have been hit hardest following the Brexit vote, with surging inflation and weak consumer confidence adding to higher wage costs and eye-watering business rate rises since last year’s revaluation.

This has come after many restaurants expanded rapidly to cater for a pre-Brexit jump in demand for eating out, which has since tapered off.

‘UK consumers are proving increasingly cautious when it comes to their discretionary spending, meaning that there is even more pressure on restaurants to put on margin-squeezing meal deals to entice diners through their doors,’ said Palmer.


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