Advertisement
UK markets closed
  • FTSE 100

    7,952.62
    +20.64 (+0.26%)
     
  • FTSE 250

    19,884.73
    +74.07 (+0.37%)
     
  • AIM

    743.26
    +1.15 (+0.15%)
     
  • GBP/EUR

    1.1707
    +0.0013 (+0.11%)
     
  • GBP/USD

    1.2622
    -0.0000 (-0.00%)
     
  • Bitcoin GBP

    55,799.12
    +644.00 (+1.17%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • S&P 500

    5,254.35
    +5.86 (+0.11%)
     
  • DOW

    39,807.37
    +47.29 (+0.12%)
     
  • CRUDE OIL

    83.11
    -0.06 (-0.07%)
     
  • GOLD FUTURES

    2,254.80
    +16.40 (+0.73%)
     
  • NIKKEI 225

    40,340.46
    +172.39 (+0.43%)
     
  • HANG SENG

    16,541.42
    +148.58 (+0.91%)
     
  • DAX

    18,492.49
    +15.40 (+0.08%)
     
  • CAC 40

    8,205.81
    +1.00 (+0.01%)
     

Restaurant closures at 'epidemic levels' as consumer belts tighten

The number of restaurants filing for insolvency in the UK has nearly doubled over the last eight years, with Brexit concerns, business rates and over expansion among the top reasons.

Accountancy firm Moore Stephens says in 2017/18 there were 1,219 restaurant insolvencies, up 24% on the year before and nearly double the rate seen in 2010/11.

Jeremy Willmont, head of restructuring and insolvency at Moore Stephens, says closures in the restaurant sector are at "epidemic" levels.

"The impact is visible on almost every high street of a major town or city," he said.

"In the wake of Brexit uncertainty and interest rate rises, it seems consumers are tightening their belts and discretionary spending is the first thing to go."

ADVERTISEMENT

He says an influx of private equity investment into restaurant chains has led to some opening too many sites which fail to break even and also blames a slow-down in consumer spending.

In recent years Jamie's Italian, Strada and Byron have all closed branches amid challenging trading conditions.

In London, independent restaurant owner Edson Diaz Feuntes runs the Mexican eatery Santo Remedio. Business is thriving, but he admits launching a restaurant is not easy.

"As an independent restaurant owner I think the biggest challenges are the current situation with Brexit, the VAT and the rates which are very high for us as an independent and the lack of staff as well - the fact the staff are thinking of leaving the UK as well because of the uncertainty."

To avoid the sky-high bricks-and-mortar costs, many budding restaurateurs are starting multiple street-food stalls.

At Victoria Park market in east London, owner of Little Leaf Pizza Matthew Smith says the flexibility of food markets is a far more affordable and enjoyable option.

"There's a lot of costs to incur when you open a shop, a lot of hours of your life you're having to put into it. With (Other OTC: WWTH - news) street food you get to work in the day, you get the transitory nature of things with a lot less costs and the engagement between the customer and business owner, I really enjoy it."

There is help on the way for some restaurants.

Next (Frankfurt: 779551 - news) year business rates are being cut by a third, but Craig Beaumont from the Federation of Small Businesses says more needs to be done to help growing restaurants.

"Making it easier to expand into a second premise. At the moment if you open a second premises your business rate starts afresh - we think that the discount should be more of an allowance which can be spread across two premises rather than stopping that business to expand."