According to the study, which takes research compiled from Bureau van Dijk’s ‘Fame’ database of company information, Yorkshire is one of only two regions that has seen a fall in high risk businesses in the sector over the past year.
Just under 35 per cent of Yorkshire’s restaurants have a higher than normal risk of insolvency, making it the best performing region in England and Wales.
The West Midlands was the worst performing region, with nearly half (43 per cent) of restaurants facing a higher than normal risk of insolvency.
Hotels and pubs
Yorkshire’s hotel sector has also seen a fall in the number of businesses deemed at higher than normal risk of insolvency, and is now one of the best performing sectors in the region.
However, R3 said Yorkshire restaurants are still showing higher levels of distress than other businesses, with only pubs and IT performing worse.
“The pub industry still has some headwinds to deal with: they generally run on tighter margins than most other businesses, meaning they’re often likely to be treading a financial tightrope,” said William Ballmann, chair of R3 in Yorkshire and partner at national law firm Gateley LLP.
“An overall decrease in High Street footfall and the smoking ban have created challenges for the pub industry too. The 1p cut in beer duty announced in the Budget will be welcomed by pubs in our region though.”
Improving outlook
According to a separate R3 report, the number of British businesses showing signs of distress across all sectors is now at a record low of 33 per cent, signalling some recovery in the economy.
R3 said that all five indicators it used to track business distress – including decreasing profits, sales volumes, or market share, the regular use of maximum overdraft facilities, and new redundancies – are all at record or near record lows.
It also noted that signs of business growth remain close to the record highs hit last year, with 65 per cent of all UK businesses showing at least one sign of growth.
Ballmann said economic recovery would help drive further improvement to Yorkshire’s leisure industry because people in the region would have more money to spend on going out.
“It is encouraging to see that restaurants in our region are already starting to feel the benefit of returning consumer confidence and this is likely to be further boosted by the much-heralded arrival of the Yorkshire Grand Depart in July,” he added.
“Not only will businesses benefit from a general feel good factor, but the influx of thousands of visitors will also have a positive impact on demand for the region’s hospitality sector, particularly hotels and local restaurants.”