The number of restaurants filing for insolvency in the UK has nearly doubled over the last eight years, according to accountancy firm Moore Stephens, with the uncertainty over Brexit and rising business rates contributing to a cocktail of pressures.
Accountancy firm Moore Stephens says in 2017/18 there were 1,219 restaurant insolvencies, up 24% on the year before and nearly double the rate seen in 2010/11. It blamed overcapacity at a time when Britons are eating out less.
Corroborating a steady decline throughout the restaurant sector, last week a report by Market Growth Monitor from CGA and AlixPartners revealed that the number of restaurants in Britain fell by 2% in 2018, the equivalent of more than 10 closures a week.
Up until 2018 the dining scene had shown a year on year increase, with the number of restaurants totalling 26,892 from January to September 2018. From January to September 2018, 539 restaurants in Britain have closed.
Of those closures, independently-owned restaurants bore the brunt, with numbers falling by 2.6% from the start of 2018 to September, with family-owned Chinese, Indian and Italian restaurants seeing the most closures.
As reported by Sky News, Jeremy Willmont, head of restructuring and insolvency at Moore Stephens, said closures in the restaurant sector were now at “epidemic” levels, and at their highest level since it began tracking the sector in 2010.
“The impact is visible on almost every high street of a major town or city,” he said. “In the wake of Brexit uncertainty and interest rate rises, it seems consumers are tightening their belts and discretionary spending is the first thing to go.”
In 2018, a spate of big restaurant chains were forced to strike rescue deals – known as company voluntary arrangements (CVAs) – with their creditors as they faced unsustainable debts.
Jamie’s Italian, Strada and Byron have all closed branches amid challenging trading conditions, while the Gourmet Burger Kitchen has said it would shut 17 sites. Carluccios is shutting 34 outlets, while Prezzo has said it would close 94, as well as all 33 outlets of its Tex-Mex brand Chimichanga.
Willmont blamed an influx of private equity investment into restaurant chains leading to some opening too many sites which fail to break even for the over saturation of the cast-casual market, as well as a general slow-down in consumer spending.