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Restaurant Insolvencies At Highest Level Since 2010

DiningThe number of UK restaurant closures has reached a record high since 2010, according to research by accountancy firm Price Bailey, which has revealed that 1,123 restaurants across England, Wales and Scotland have closed so far this year, up by 35% from last year.

Price Bailey insolvency and recovery head Paul Pittman said: “Chain restaurants are particularly vulnerable to changing consumer fads. What was once flavour of the month can quickly go out of fashion. The cost of acquiring leases and outfitting restaurants can run into the millions per site in prime city centre locations. You need a sustainable customer base to absorb that risk. The upper end of the sector in London is facing less pressure than the mid-range casual dining market. There was a huge private equity fuelled expansion in the mid-market, which led to over-saturation, leaving too many restaurants competing for customers. With margins still being squeezed we will continue to see the less viable businesses and sites in the sector under threat of closure.”

Several high street restaurant chains including Prezzo,  Jamie’s Italian, Strada, Gaucho, Carluccio’s  and Byron closed sites this year , with some seeking creditors voluntary arrangements (CVA’s).

Price Bailey’s data identifies that 1,123 restaurants across England, Wales and Scotland have closed so far this year, up by 35% from last year.

The report cites a number of contributing factors to the casual dining crunch, including changing social media trends.

Price Bailey insolvency and recovery head Paul Pittman said: “Chain restaurants are particularly vulnerable to changing consumer fads. What was once flavour of the month can quickly go out of fashion. The cost of acquiring leases and outfitting restaurants can run into the millions per site in prime city centre locations. You need a sustainable customer base to absorb that risk.”

ONS figures from earlier this year revealed that consumer spending on restaurants and hotels fell by 3.5% between 2016 and 2017, which has also contributed to the rising cost of running a restaurant chain.

Pittman added: “The upper end of the sector in London is facing less pressure than the mid-range casual dining market. There was a huge private equity fuelled expansion in the mid-market, which led to over-saturation, leaving too many restaurants competing for customers. With margins still being squeezed we will continue to see the less viable businesses and sites in the sector under threat of closure.”

Chancellor Philip Hammond has recently announced a business rates cuts, which he claims could help 90% of on and off-trade establishments save up to £8,000 a year. The business rates cut will be reevaluated in 2021.

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