Restaurant insolvencies increase by 41% in a year

The number of restaurant businesses going bust has jumped by 41% in the last year following the expiry of Covid-19 support measures.

In the year to 31 March 2022 1,302 restaurant businesses became insolvent, up from 926 the previous year, according to data obtained by accountancy firm Price Bailey.

The first quarter of 2022 saw 378 insolvencies, the highest in a three-month period since Q4 2019.

The accountancy firm said the end of Covid support measures combined with a “perfect storm” of adverse trading conditions were to blame.

Matt Howard, head of insolvency and recovery said: “Restaurants are facing bracing economic headwinds. Soaring inflation is leaving consumers with less money to spend on eating out, which is hitting restaurants just as government support is being phased out.

“Restaurants are struggling with rising wages and food costs. Many are finding it difficult to pass those costs on to diners who are feeling the squeeze from rising energy and food bills themselves.

“The upper end of the sector in London is facing less pressure than the mid-range casual dining market. Many high streets are over-saturated with chain restaurants, which are competing for a dwindling number of customers. With margins still being squeezed we will continue to see the less viable businesses and sites in the sector under threat of closure.”

The firm has warned that insolvency figures are likely to increase further along with inflation and interest rates.