New research published by the firm and reported by The Guardian reveal that 1,412 UK restaurants collapsed in the year to the end of June 2019.
It is the highest number of insolvencies since at least 2014, and is believed to reflect tightened consumer spending on the back of concerns about Brexit.
The research found that hundreds of small independent restaurants have collapsed in addition to big chains such as Jamie’s Italian, which was forced to close all 22 of its high street locations earlier this year after the business entered administration.
UHY Hacker Young says the rapid growth of the casual-dining sector since the 2008 financial crisis had resulted in an ‘oversaturated mid-market’.
Restaurant insolvencies have risen steadily since 2014-15, when about 750 closed per year, with the largest increase seen between 2017-18 and 2018-19.
“The crisis in the restaurant sector has been presented as a problem only for the chains that had lost touch with their customers,” says Peter Kubik, a partner at UHY Hacker Young.
“That’s overlooking the hundreds of small independent restaurants that have become insolvent.
“Good restaurants and bad have all struggled from overcapacity, weak consumer spending and surging costs.
“Having a loyal following is great, but if that loyal following stops going out then you have a problem.
“The number of restaurants whose sales are at or near capacity is pretty small – they’re the exception.”
Experts predict that after the shakeout only restaurants with strong brand loyalty and a differentiated offering will survive, with Kubik adding that for businesses suffering distress, aggressive management of cashflow will be key in the coming months.
“Unfortunately, the sector can’t really expect banks to be as generous with their lending, especially as the sector’s current problems are so well known,” he says.