Restaurants go to the wall at faster pace than during the pandemic
Restaurant insolvencies have rocketed over the past year, occurring at a faster rate than amid the Covid-19 pandemic.
The number of restaurants going to the wall has increased 59 per cent over the past year, amid dire warnings from industry voices about the months to come.
Insolvencies jumped to 1,567 in the year to 30 September 2022, compared to 984 in the previous year, according to audit firm Mazars.
The number of restaurant companies hitting the red increased by 15 per cent, in the last quarter.
Venues are facing high costs across the board, all while consumers cut back on spending on meals out.
“It is a very toxic mix of rising input costs, sharply rising finance costs and weak demand,” Rebecca Dacre, partner at Mazars, said.
Many venues have already slashed hours or opted to close for a couple of days a week to fight off rising costs.
Restaurants have also been struggling to fill vacancies, following an exodus of overseas workers after Brexit and Covid-19 lockdowns.
“The Christmas trading period is usually a bumper period for hospitality businesses,” Dacre said.
“However, restaurants will be bracing themselves for a very tough winter and many face a real battle to keep afloat,” she added.
Industry leaders have called on the government to introduce further financial aid for venues, including a reduction of VAT from the current 20 per cent rate.
However, “the chances of the Government fully turning on the taps is low,” Dacre added.
Last week, the chair of the Night Time Industries Association (NTIA), Sacha Lord, said he was afraid of venues closing at a faster rate faster than seen during the pandemic.
“Spending on luxuries such as dining out is naturally the first to go in times of cutbacks and the hospitality sector is wide open to be the first to suffer,” he added.