67% Of UK's Top Restaurants In The Red After Brexit, COVID
Debt repayments, staff shortages, and rising energy bills have pushed almost two-thirds of the UK’s top 100 restaurants into the red, according to research that reveals the impact of the pandemic, Brexit, and the cost of living crisis on the hospitality sector, Julia Kollewe reported for The Guardian.
Photo Insert: The UK restaurant sector had expected recovery in profits following the pandemic, but this has been jeopardized by spiraling food inflation and a fall in consumer confidence caused by interest rate rises.
With a recession looming and further increases in energy bills weighing on businesses, a separate report found that £700 million of business rates relief remains unpaid with only half of English councils paying out the support funds.
A record 64% of the biggest restaurant companies are now making a loss, according to the accountancy firm UHY Hacker Young.
Several have suffered heavy losses due to major restructuring programs undertaken following the pandemic, and because of debt repayments, particularly to landlords.
The restaurant sector had expected recovery in profits following the pandemic, but this has been jeopardized by spiraling food inflation and a fall in consumer confidence caused by interest rate rises.
Restaurants have also been hit by labor shortages, forcing them to restrict covers and therefore reducing the amount of revenue they are able to generate, especially at peak times.
Peter Kubik, partner at UHY Hacker Young, said many in the restaurant sector were anxious about further falls in consumer spending as Britain moves closer to recession. The Bank of England (BOE) forecasts a recession lasting longer than a year and inflation rising above 13%.
“It may be a case of ‘out of the frying pan, into the fire’ for many UK restaurant groups,” Kubik said.
“They expected, and needed, higher consumer spending as we put Covid further behind us, but this spending is now likely to fall when it is needed most.”