New research has revealed that the UK’s top 100 restaurants recorded a collective £93 million pound loss in the last year, down from a profit of £37 million for the 12 months previously.
The study was conducted by accountancy firm UHY Hacker Young, who revealed that there are multiple factors contributing to the change in fortunes, including falling sales and rising overheads such as rent, wages and raw materials.
Over the last year, several of the biggest restaurant names on the high street have suffered closures. Back in March, the owners of Giraffe and Ed’s Easy Diner revealed that 27 of its sites will close, while in September it was announced that up to 88 Chiquito and Frankie & Benny’s sites will shut their doors over the next six years. The downturn has also affected celebrity chefs such as Jamie Oliver, who saw the collapse of his restaurant empire earlier this year.
As well as the big names, smaller restaurant groups have also suffered losses. Pocket-friendly steakhouse Flat Iron closed its Notting Hill site this summer after just two years due to rent increases, while all-day restaurant Foxlow (a spin-off of steak supremo Hawksmoor) closed its last two remaining sites in June.
Speaking about the research findings, Peter Kubik, partner at UHY Hacker Young, blamed Brexit for causing an increase in the cost of importing goods. “The restaurant sector in the UK is still suffering from the sharp chop in profitability earlier this year,” he said. “Many restaurant groups are finding it difficult to raise capital from their shareholders – they are finding their patience for putting in more money has run out.”
The research also took into account the popularity of home delivery services such as Deliveroo and Uber Eats, which Kubik has labelled a “mixed blessing” for restaurants. Delivery services are useful in that they can introduce a restaurant to a new audience and offer an additional channel through which to make sales, but they also can lead to a decline in in-person visits, where restaurants are able to make more money through up-selling and the large mark-ups on alcohol.
According to Kubik though, there is still reason to be hopeful. “Despite all the bad news there is still opportunity in the market for restaurants that can meet a clear consumer demand. There are plenty of big success stories in the market – it’s just more challenging than ever to maintain success as tastes and budgets change.”
Although restaurants may be facing tough times, it seems that festive dining is on the rise. Find out why the number of people dining out on Christmas Day has risen by 139% in five years.