Number of restaurants going bust increase by 20%


Research produced by Moore Stephens has shown that the number of restaurants going bust has increased by 20% in the past year.

Stephens’s figures show that in 2016, 825 restaurants were listed as insolvent compared to 984 in 2017.

These figures come after one of the UK’s biggest sandwich chains; EAT announced this week that due to its struggle to manage the pressure from its competitors they will have to consider closing some of its stores.

At the end of January, burger chain Byron signed a company voluntary arrangement (CVA) with its creditor to close up to 20 restaurants – nearly a third of all its stores.

With an exceptional number of new restaurant chains opening quickly and many on the same street has a radical impact on competitiveness and created an ‘over crowded’ market over the last ten years.

Along with the rising cost of imported produce caused by a falling pound, the national minimum wage is set to rise in April 2018 to £7.83, up from £7.50, for those aged 25 and over. This will hit the profitability of restaurants and increasing staff costs.

Jeremy Willmont, Head of Restructuring at Moore Stephens, said “Pressure on the restaurant sector is now hitting even the biggest names on the high street. The jump in insolvencies over the last year demonstrates just how tough the current economic conditions are for the restaurant trade.

“Running a restaurant business is becoming increasingly challenging. Employment costs are rising and the market in areas such as London is becoming ever more saturated. Under such tough trading conditions, restaurants should be cautious about building up debt. They can very quickly become overextended as costs continue to rise.”


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