UK restaurant insolvencies jump 64% in a year

UK restaurant insolvencies have jumped 64% from 856 in 2020/21 to 1,406 in the past year as rising inflation and labour shortages drive restaurants out of business.

Data from accountancy firm UHY Hacker Young showed 431 restaurants insolvencies were registered in the three months to 31 May 2022 alone, a 29% increase on 334 in the previous quarter.

Insolvencies within the restaurant sector were even higher than in the wider hospitality industry, which has seen a 56% increase in company insolvencies in the past 12 months, rising from 1,407 to 2,193.

Previous research by UHY Hacker Young recently found that restaurants had already seen their losses rise to more than £800m in the past six months as they felt the effects of major restructuring programmes following the pandemic.

Peter Kubik, partner at UHY Hacker Young, said restaurants were facing major threats from spiralling inflation, decreased consumer spending and a shortage of labour.

He said: “Pressure is rising on the restaurant sector every day. More and more of them are shutting their doors as a result.

“Restaurants that only just managed to survive the pandemic thanks to government support are now facing fresh challenges in the form of rising inflation, a post-Brexit labour shortage and consumers who simply cannot afford to spend as much.

“Smaller restaurants are suffering the most from a shortage of EU staff post-Brexit. Many are finding that they simply cannot hire enough staff to serve the number of covers they need to stay profitable. That’s one of the reasons for the raft of closures we’re seeing.”

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