A new study by the accountancy firm UHY Hacker Young has found that over a third of the UK’s top restaurants are now loss-making.
The study found that 35 of the UK’s top restaurants are making a loss, which is a 75 percent increase from this time last year.
“More than a third of the biggest companies in the restaurant sector are losing money, and there is little respite on the horizon,” said Peter Kubik, a partner at UHY Hacker Young.
“Pressures on the restaurant sector have been building for years, and the last year has pushed a number of major groups to breaking point. With Brexit hanging over consumers like a dark cloud, restaurants can’t expect a bailout from a surge in discretionary spending.
“Consumers only have a finite amount of spending power when it comes to eating out, and the oversaturation of the market means that groups that fall foul of changing trends can very easily fail.
“The government has ratcheted up costs with a series of above-inflation rises in the minimum wage and we are just weeks away from another 4.4 percent rise in April. That will be tough for a lot of restaurants to absorb.”
UK restaurants are facing a tough time amid the increasing minimum wage, rising business rates and the falling consumer confidence. This has forced Prezzo to close 94 of their UK restaurants and Jamie Oliver’s Barbecoa to fall into administration last month.
Strada also announced plans to close 10 sites and Square Pie have fallen into administration.
Director of the restaurantFat Duck, Peter Moody, acknowledged the impact that rising minimum wages were having on the restaurant’s profits.
“We are aware of the threat to the company’s future profitability that is posed by current global uncertainty, national living wage increases and supplier price inflation,” he said.