A fifth of restaurants at risk of failure

01 Nov 2017

The number of restaurants declaring insolvency has risen by 13 per cent in the year ending March 2017 to 1,544 from 1,363 in 2015/16, according to Insolvency Service data.

20 per cent of restaurants, amounting to some 14,800 outlets, are threatened with closure, as rising staff costs and the increase in food prices brought about by the fall in the value of the pound is putting pressure on businesses.

Since 75 per cent of the UK's food is imported from the EU, restaurants have had no choice but to either increase their prices or reduce their profit margins. The National Living Wage, which went up to £7.50 an hour in April (£6.70 in 2015), and will rise to at least £9 an hour by 2020, is also squeezing businesses, as is the recalculation of business rates.

Commenting on the latest findings, a spokesperson says: “Restaurants have been particularly impacted by rising costs linked to the weak pound, and will continue to face difficult decisions over how much of their increased costs they try to pass on to consumers.

“In such a competitive market, restaurants need to be wary of building up losses and debt now in the hope of future profits, as the industry looks to be facing a prolonged period of tough trading conditions."

At Beavis Morgan, we have extensive experience of working with clients in the hospitality sector and our professionals are acknowledged experts in issues affecting pubs, bars and restaurants.

Through our partner businesses, BM Structured Finance and BM Advisory, we are able to help with sourcing and restructuring debt finance for SME businesses, as well as assisting with resolving issues which can impact on business performance and success, and finding innovative solutions for businesses and individuals in distress.

Contact Matthew Burge or your usual Beavis Morgan Partner for further information about how we can assist you and your hospitality business.