Restaurant insolvencies jumped 20 per cent, according to the latest data published from accountancy group UHY Hacker Young
It revealed that insolvencies rose to 354 in the last quarter of 2021, – up from 296 in the previous three-month window.
UHY Hacker Young argues that despite the end of coronavirus restrictions, the sector will continue to face considerable challenges.
The invasion of Ukraine and subsequent Western sanctions on Russia are already causing a sharp spike in oil and gas prices.
Meanwhile, Russia and Ukraine are both major exporters of crops, such as wheat and corn, which could cause food prices are likely to increase dramatically.
Alongside geopolitical tensions, restaurants will have to contend with the looming Commercial Rents Bill, which is due to come into effect on March 25.
This will enable commercial landlords to take action against tenants that have fallen into rent arrears during lockdown.
Consequently, restaurants could be forced to pay rent for the periods in which they were unable to open, putting many in a financially precarious position.
Hospitality will also face the upcoming hike in National Insurance rates, which means employers will be forced to pay an extra 1.25 per cent for every employee on a monthly basis from April 6.
Rising interest rates will also make borrowing generally more expensive for restaurants, alongside increasing the amount venues will need to pay back on existing loans.
Peter Kubik, Partner at UHY Hacker Young says: “The restaurant sector has emerged from one crisis only to face an onslaught of other challenges. Restaurants could at least rely on Government support during the worst of the pandemic. Now that these protections have come to an end, they’re having to face multiple challenges with zero help.”
In response to the current difficulties, the accountancy group called for the government to halt future levies hitting hospitality.
Kubik concluded: “Given the enormous pressures the restaurant sector is under, the Government should seriously consider scrapping or at the very least postponing, the Health and Social Care tax.”