35 of the UK’s Top 100 restaurant groups are loss making

35 of the UK’s Top 100 restaurant groups are now loss-making, up 75% from just 20 last year, new research shows.

Chartered accountants, UHY Hacker Young, found that trading conditions have become increasingly difficult for restaurant chains dealing with oversaturation in the market as well as rising costs.

Casualties include Jamie’s Italian, started by Jamie Oliver, which has closed 12 branches as part of a Company Voluntary Arrangement (CVA) to restructure its £71.5m debt. Prezzo, the Italian chain, which is expected to close some of its 300 branches as part of a restructuring and Strada, another Italian chain, which closed 11 branches over the festive period.

Research shows that pressures of competing with numerous similar ‘fast casual’ restaurants in an overcrowded high street are a major driver of many large restaurant groups registering losses over the past year.

Peter Kubik, partner at UHY Hacker Young London office comments: “More than a third of the biggest companies in the restaurant sector are losing money, and there is little respite on the horizon.

“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% rise in April. That will be tough for a lot of restaurants to absorb.”