The number of insolvent restaurant companies is increasing week on week it has been reported.
In new data, it has been revealed that the number of insolvent restaurant companies has has risen by 46% in the past year.
The total increased from 1,517 in 2021/22 to 2,214 in 2022/23, amid rising costs of servicing debt and the squeeze on consumer spending, according to advisory firm Mazars.
Associate director Paul Maloney said people were still being hit by rate rises and inflation so were cutting back on spending such as dining out.
Many restaurant groups have relied on debt finance to fund expansion and renovation, while the hospitality sector was also being affected by a continued shortage of staff, which has driven up wages.
These are all thought to be significant contributing factors to rising figure of insolvent restaurant companies.
Maloney said: “A lot of restaurants are beset with challenges well outside their control – many are struggling to keep their heads above water.
“The combined pressures of rising costs of staff, debt servicing and ingredients is shrinking margins and driving many businesses to breaking point.
“Restaurant insolvencies will continue until interest rates and inflation both come down substantially.”
The UK’s high streets are being devastated
Separately, former Dragons’ Den investor Theo Paphitis has warned over the shrinking number of shops on the UK’s high streets, as he said communities are being “devastated” by outdated taxes.
The businessman, who owns chains Ryman Stationary, Robert Dyas and Boux Avenue, said the collapse of groups like Wilko are leaving fewer surviving shops on the high street.
Paphitis told the PA news agency: “The burden is falling on those businesses that have managed to survive.
“Many haven’t. We saw the demise of Woolworths, British Home Stores, Debenhams, House of Fraser, Arcadia, and recently, Wilko.
“Every time a big player goes out the market, the remaining ones get some of that business – a proportion shared out among themselves – so they survive for a bit longer.
“As the burden increases, it’s self-fulling and then the next one’s done, and a smaller amount remains.”
Paphitis criticised the business rates – a tax on all domestic properties including shops, offices, pubs and factories – which he said the UK Government has failed to properly reform.
He argued it unfairly hits bricks and mortar businesses, while online and technology giants only face the tax on their warehouses.
“It’s another ridiculous tax which is unfair – it damages investment, damages business, and damages our communities.
“It is communities that have been devastated by a ridiculous taxation from the 1500s.”
The remarks come amid a number of big takeovers from high street retailers.
Earlier this month, Next revealed it was buying clothing brand FatFace for £115m, although it said it will continue to be run by its own management.