Restaurant insolvencies up by 60% as operators fall to crippling costs

Restaurant company insolvencies have increased by almost 60% (59%) over the past year, rising from 984 in 2020/21 to 1,567 in 2021/22, according to figures from Mazars.

Data from the international audit, tax and advisory firm revealed that the number of restaurant companies becoming insolvent over the past three months has increased by 15% to 453, up from 395 the previous quarter.

It comes as hospitality businesses across the UK face record-breaking food price inflation, soaring energy bills, widespread staff shortages and falling consumer confidence.

Despite a protest held by HospoDemo last Monday, the Autumn Budget did not address the industry’s calls for a reduction in VAT.

Some hotels have already decided to close for the winter months.

Rebecca Dacre, partner at Mazars, said: “Insolvencies of restaurant businesses are now happening at a far faster rate than during COVID. It is a very toxic mix of rising input costs, sharply rising finance costs and weak demand. Most restauranteurs have not seen this combination of negative factors before.”

“The Christmas trading period is usually a bumper period for hospitality businesses. However, restaurants will be bracing themselves for a very tough winter and many face a real battle to keep afloat.

“There’s a certainty of further insolvencies if they don’t receive much more support from the Government, but the chances of the Government fully turning on the taps is low.”