Written by: Keith Tully
Published: 16th September 2019
There was around a 25 per cent increase in the number of restaurant businesses entering insolvency over the course of the year to June 2019, according to the latest figures on the subject.
As many as 1,400 restaurants are understood to have ceased being solvent in that period, which is up very sharply on the previous 12 months.
Constraints on consumer spending and rising costs relating to falls in the value of the pound are believed to have contributed notably towards making life difficult for restaurant operators across the country.
Issues around consumer spending and a lack of financial confidence are attributed in part to what’s come to be thought of Brexit-related uncertainties and anxieties.
The figures on restaurant business insolvencies have been compiled by the accountancy firm UHY Hacker Young, which says more eateries went out of business in the year to June 2019 than in any 12-month period since at least 2014.
Recent months have seen a number of well-known restaurant chains become insolvent, including the likes of Gourmet Burger Kitchen (GBK), Byron Burger, Jamie’s Italian and Carluccio’s.
There was a huge upturn in the number of ‘casual dining’ outlets to be found in towns and cities across the UK over the course of the past 10 years but many of them are now being closed down due to falls in demand and major financial problems at the companies behind them.
UHY Hacker Young has said that the casual dining sector came to be oversaturated with brands and outlets vying for consumer attention and customers.
However, the firm also notes that significant numbers of smaller independent restaurant operations are also finding it tough to cope with the financial pressures they’ve been put under in recent years.
“Good restaurants and bad have all struggled from overcapacity, weak consumer spending and surging costs,” said Peter Kubik, a partner at UHY Hacker Young.
“Having a loyal following is great but if that loyal following stops going out then you have a problem,” he added.
“For those businesses that are suffering distress, aggressive management of cashflow will be key in the coming months.”