Since June 2019 more than 1,400 UK restaurants have closed under what is being referred too as the “casual dining crunch”. Customers have been turning their backs on chains such as Byron, Strada, Gourmet Burger Kitchen and Jamie Oliver’s restaurant empire. According to research conducted by the accountancy firm UHY Hacker Young, the number of restaurants that close by June 2019 was 1,412 which is an increase of 25% since 2018.
It is the highest number of insolvencies since at least 2014 and is said to reflect tightened consumer spending on the back of concerns about Brexit and rising costs because of the collapse in the value of the pound. It is not just big chains that have suffered, the research found that hundreds of small independent restaurants had collapsed as well. UHY Hacker Young said the rapid growth of the casual-dining sector since the 2008 financial crisis had resulted in an oversaturated mid-market, which is still going through a dramatic shakeout.
Peter Kubik, a partner at UHY Hacker Young, said: “Good restaurants and bad have all struggled from overcapacity, weak consumer spending and surging costs. Having a loyal following is great but if that loyal following stops going out then you have a problem. The number of restaurants whose sales are at or near capacity is pretty small – they’re the exception.”
The research also found that the UK’s top 100 restaurants made a £82m loss in the last year, down from a pre-tax profit of £102m 12 months earlier. Experts predict that only restaurants with strong brand loyalty and a differentiated offering will survive.
“For those businesses that are suffering distress, aggressive management of cashflow will be key in the coming months,” Kubik said.
“Unfortunately, the sector can’t really expect banks to be as generous with their lending, especially as the sector’s current problems are so well known.”
The research also found that the UK’s top 100 restaurants made a £82m loss in the last year, down from a pre-tax profit of £102m 12 months earlier.