In the final month of last year 188 restaurants companies became insolvent, an increase of 71% compared to December 2021, according to audit, tax and advisory firm Mazars. This was also the highest monthly number of insolvencies in the sector since at least January 2019, it says.
The data also shows that the last quarter of 2022 was the worst on record for restaurant closures with 504 restaurant companies entering insolvency in quarter four of 2022, an 11% rise compared to the previous quarter.
The last three quarters have all been the worst on record for UK restaurant company insolvencies, with 396, 453 and 504 insolvencies respectively, according to Mazars.
The rise in insolvencies has been attributed to restaurants having had to deal with the highest level of inflation since 1981 and a sharp slowdown in consumer spending, as well as strikes affecting pre-Christmas bookings. In addition to 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.
“Struggling restaurant companies often count on a strong Christmas period to keep their heads above water. Weaker than usual December trading will have persuaded many that they have no alternative but to shut down,” says Rebecca Dacre, partner at Mazars.
“With many households exiting fixed-rate mortgages and having to sign up to more expensive deals, consumer spending is likely to suffer. Unfortunately, this difficult period for restaurants is set to continue for a while longer.”