Top 100 restaurant groups see profits dip to £244.1m in 2024
UHY Hacker Young said that the slight dip in profits is a ‘creditable performance’ considering the challenges the sector has faced from the cost-of-living crisis and years of losses
The UK’s top 100 restaurant groups have seen their profits dip from £246.5m in 2023 to £244.1m in 2024, new research by UHY Hacker Young shows.
UHY Hacker Young said that the slight dip in profits is a “creditable performance” considering the challenges the sector has faced from the cost-of-living crisis and years of losses the sector has suffered from during the pandemic. The top 100 UK restaurant companies reported a loss of £673m in 2021.
The turnover of the UK’s top 100 restaurant groups also increased sharply in the past year, reaching £9.6bn in September 2024, a 21% increase from £7.9bn in the previous year.
However, the benefits of that increase in turnover have been largely eroded by the impact of inflation on food and drink costs and a higher interest burden on debt.
The return to reasonable levels of profits amongst the UK’s top 100 restaurant groups comes after years of cost cutting that has seen many chains shrink their branches and cut staff numbers. This lower cost base has enabled many restaurant companies to maintain profits, despite the cost-of-living crisis leading to flat or falling expenditure on restaurants when adjusted for inflation.
Martin Jones, partner at UHY Hacker Young, said: “The sector’s ability to maintain profitability despite the impact of the spike in inflation and weak consumer confidence is a very encouraging sign for the hospitality sector. It highlights the resilience of restaurant groups in adapting to both volatile trading conditions and rising overheads, which have had a huge impact on the industry overall.
“The industry has done a good job of stripping out excess capacity. That has been a really painful process for everyone concerned but the industry is in a better place for it.”
Jones also identifies several key measures which restaurant groups have undertaken to increase profitability, including shifting more sites to suburban areas to reduce overheads and renegotiating lower rents with landlords, negotiating short-term contracts with food and drink suppliers to benefit from falling inflation, investing in technology to reduce reliance on labour as well as incentivising consumer spending with use of loyalty programmes.
Jones concluded: “Over the last few years, many operators in the sector have become much more focused on their cost base rather than just hoping that a growth in sales would eventually repair their margins. As a result many of the UK’s biggest restaurant groups are now in good financial health.
“With overheads beginning to ease and softening inflation, UK restaurant groups can now focus on growing their revenue, which understandably is what restaurateurs have much more passion for.”
