Restaurant insolvencies rise by 25% in just one year

According to research carried out by chartered accountants Hacker Young, the number of restaurant businesses who entered insolvency in the past year has risen by 25 per cent.

Restaurant Business Insolvency Cases 2018/2019

Number of insolvent restaurants in the UK

UK chartered accountants, the UHY Hacker Young Group has just revealed the findings of research carried out on restaurant businesses who entered insolvency proceedings in the last year. Results showed the following:

  • 1,410 restaurants in the UK entered insolvency in 2018/19
  • the number of insolvent restaurants rose by 25 per cent when compared with 2017/2018 (1,130 cases)
  • the UK’s Top 100 restaurants made an £82 million loss in the last year, down from a pre-tax profit of £102 million twelve months ago

Why are more UK restaurants entering insolvency?

According to Hacker Young, the steep rise in restaurant insolvencies can partly be attributed to the ‘over-saturated’ casual-dining sector created since the last recession. This, coupled with ‘the Brexit related blow to consumer spending and a rise in raw material costs’, has precipitated the sector’s crisis.

Ultimately the latest figures indicate that the restaurant industry in the UK is going through a ‘dramatic shake-out’, according to the accountants.

Smaller restaurant businesses are suffering too

While much of the focus on restaurants going out of business has been on big name, multi-chain restaurants such as Jamie’s Italian, Byron Burger and Strada’s dining outlets, problems have also been seen at thousands of smaller restaurant businesses, according to Turnaround and Recovery partner at Hacker Young, Peter Kubik:

“The crisis in the restaurant sector has been presented as a problem only for the chains that had lost touch with their customers. That’s overlooking the hundreds of small independent restaurants that have become insolvent.”

How restaurants can survive the difficult climate

To make it through the turbulent climate, management of cashflow is the key piece of advice offered by Hacker Young. They suggest renegotiating payment terms with creditors and cutting unnecessary expenditure but also warn that businesses may not be able to easily secure bank loans with the sector’s struggles so well publicised.

See also

What are your employee rights when your company is insolvent?

Scottish company insolvencies up by 46% in six months

Find out more

Restaurant insolvencies jump 25% in the last year alone (Hacker Young)

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