Restaurant insolvencies rise 7%

Restaurant insolvencies jumped by 7% in the three months to the end of 2013, despite signs of an economic recovery.

That's according to accountancy and business advistory firm Wilkins Kennedy, which said 182 restaurants became insolvent in Q4 2013, up from 170 in Q3.

Meanwhile, insolvencies for Q4 2013 were up by nearly 9% on the same period a year ago.

Wilkins Kennedy attributed the situation to extreme weather conditions, as well as banks withdrawing funding from restaurants that were failing to garner sufficient bookings.

Anthony Cork, partner at Wilkins Kennedy, said: "The Christmas period should be a big earner for most restaurants, and a healthy restaurant should have plenty of advance bookings for office Christmas dos and family celebrations.

"An empty reservation book in this crucial period is likely to be a sign of a wider failure to draw in the crowds."

He added: "The recent flooding will only have exacerbated the problem. Trading in many rural restaurants will have been decimated."

Wilkins Kennedy said that the rise in restaurant closures showed that the economic recovery has not fully fed through to significant wage growth, which means that discretionary spending in restaurants outside of London is struggling.

Cork said: "With the economy just returning to form, individuals may not yet be enjoying the benefits of growth. It may take a while before improved consumer confidence is firmly established and spending in restaurants increases."