Restaurant insolvencies increase by 60%

22nd November 2022

Restaurants in the UK are going bankrupt at a faster rate than during Covid-19 due to rising energy costs, staff shortages and a lower level of bookings according to research by Mazars.

The research found that closures in the sector rose by 60 per cent over 2021-22 compared to 2020-21. Restaurants in the UK are going bankrupt at a faster rate than during Covid-19 due to rising energy costs, staff shortages and a lower level of bookings (The Guardian). Closures in the sector rose by 60 per cent over 2021-22 compared to 2020-21, according to advisory firm Mazars.

Industry groups including UK Hospitality and the British Beer and Pub Association said last month that more than a third of hospitality businesses could be bankrupt by early 2023.

Data from the international audit, tax and advisory firm revealed that the number of restaurant companies becoming insolvent over the past three months has increased by 15% to 453, up from 395 the previous quarter.

It comes as hospitality businesses across the UK face record-breaking food price inflation, soaring energy bills, widespread staff shortages and falling consumer confidence.

Despite a protest held by HospoDemo last Monday, the Autumn Budget did not address the industry’s calls for a reduction in VAT.

Some hotels have already decided to close for the winter months.

Rebecca Dacre, Partner at Mazars, said “Insolvencies of restaurant businesses are now happening at a far faster rate than during COVID. It is a very toxic mix of rising input costs, sharply rising finance costs and weak demand. Most restauranteurs have not seen this combination of negative factors before.”

“The Christmas trading period is usually a bumper period for hospitality businesses. However, restaurants will be bracing themselves for a very tough winter and many face a real battle to keep afloat.”

“There’s a certainty of further insolvencies if they don’t receive much more support from the Government, but the chances of the Government fully turning on the taps is low.”