Data shows that restaurant insolvencies jumped from 984 between September 2020 to 2021, to 1,567 in the year ending September 30 2022.
In the last three months alone, the number of restaurant companies becoming insolvent increased by 15% to 453, up from 395 the previous quarter.
“Insolvencies of restaurant businesses are now happening at a far faster rate than during Covid,” says Rebecca Dacre, partner at Mazars.
“It is a very toxic mix of rising input costs, sharply rising finance costs and weak demand. Most restauranteurs have not seen this combination of negative factors before.”
Restaurants across the UK have been dealing with the highest level of inflation since 1981 and a sharp slowdown in consumer spending. As well as increasing food and energy costs, restaurants have been hit by shortages of labour, particularly for skilled roles such as chefs, which has pushed up staff costs.
Many restaurants have already announced they will be cutting their trading hours in order to save on the cost of energy.
“The Christmas trading period is usually a bumper period for hospitality businesses. However, restaurants will be bracing themselves for a very tough winter and many face a real battle to keep afloat,” adds Dacre.
“There’s a certainty of further insolvencies if they don’t receive much more support from the Government, but the chances of the Government fully turning on the taps is low.”
