Are UK restaurants struggling to ‘keep their heads above water?’
The number of restaurant insolvencies in the UK has jumped 46 per cent in the last year as rising costs and a downturn in consumer spending pummel the hospitality industry, according to Insolvency Service numbers.
The number of restaurants becoming insolvent has risen from 1,517 in 2020/21 to 2,214 in 2022/3 — a 46 per cent jump, according to the figures.
A dent in consumer spending due to inflation along with rising costs were the most prominent factors cited by audit firm Mazars in analysis of the figures.
“A lot of restaurants are beset with challenges well outside their control – many are struggling to keep their heads above water,” Paul Maloney, associate director at Mazars, said.
A combination of “pressures” could also be to blame, Maloney noted, such as costs of staff, debt servicing, and shrinking margins.
“Restaurant insolvencies will continue until interest rates and inflation both come down substantially,” he added.
Additionally, a UK government spokesperson said: “Restaurants are key drivers of local economies and this report does not take into account the fact that many start-ups naturally enter the restaurant industry each year. We’re supporting those businesses with 75 per cent business rates relief, freezing alcohol duty rates, and reducing employer national insurance.
“In 2021 we established a Hospitality Sector Council to work closely with the industry to tackle the challenges they face, and we’ll continue helping them to grow and thrive in their local communities.”