The number of restaurants collapsing into insolvency has risen by 20 per cent in the last year amid tough competition on the UK high street.
Roughly 1,410 restaurants went insolvent in the year to the end of June, up by a fifth on the previous 12 months, according to figures compiled by accountancy firm UHY Hacker Young.
Restaurant businesses have been battling against a perfect storm of rising costs, a slowdown in consumer spending and an oversaturation in the market.
But while troubled big-name chains such as Jamie’s Italian, Byron and Carluccio’s have attracted the most attention, the challenges have also impacted thousands of smaller businesses, according to the report.
“Good restaurants and bad have all struggled from over-capacity, weak consumer spending and surging costs,” said Peter Kubik , partner at UHY Hacker Young.
“Having a loyal following is great but if that loyal following stops going out then you have a problem.”
Many struggling restaurants have turned to company voluntary agreements – also popular with ailing retailers – in order to shut loss-making sites and renegotiate leases.
“For those businesses that are suffering distress, aggressive management of cashflow will be key in the coming months,” Kubik added. “For example, renegotiating payment terms with creditors and cutting unnecessary expenditure.”
The report stated that insolvencies in the casual dining sector would ultimately leave behind restaurants that combine the right cost base with strong brand loyalty and a unique offering.
Previous research by UHY Hacker Young found that the UK’s top 100 restaurants made an £82m loss in the last year, down from a pre-tax profit of £102m 12 months ago.
Main image credit: Getty