There has been an 11% drop in the number of job vacancies in the UK’s restaurant sector over the last six months, according to research by Moore Stephens which suggests companies are cutting staff to save on costs.
The research indicates that the number of vacancies fell to 32,900 in April 2018, from 36,900 in November 2017. Insolvencies of restaurant businesses jumped 20% to 984 in the last year, up from 825 in 2015/16. The report says that although the sector is suffering from overcapacity after the rapid expansion of many restaurant chains in the last decade, many of the problems faced by the sector are not of their own making.
It has been hit hard by minimum wage increases, plus a number of other payroll-related costs over the last few years, such as pensions’ costs through auto-enrolment and the apprenticeship levy.
Simon Fowles, director at Moore Stephens, said “Heaping more and more labour costs on to employers can only work for so long – sooner or later the economy sputters and employers have to look at their employment costs. Many restaurants simply cannot afford to remain open at the current level of staffing costs and with consumer confidence so weak there doesn’t seem to be much relief in sight.”
“Five years ago, it was usual for around a quarter of revenue at most restaurants to go on wages for its staff. Now, if a restaurant spends 30% on staff pay, it is considered to be doing exceptionally well. Struggling restaurants would really like the government to start looking at whether payroll costs could be kept under control in areas like National Insurance”.