Restaurant Closures At Epidemic Levels As Consumer Belts Tighten

Posted: Dec 17, 2018

The uncertainty of Brexit, a rise in business rates, and the growth of street food are factors in restaurants failing.

The number of restaurants filing for insolvency in the UK has nearly doubled over the last eight years, with Brexit concerns, business rates and over expansion among the top reasons.

Accountancy firm Moore Stephens says in 2017/18 there were 1,219 restaurant insolvencies, up 24% on the year before and nearly double the rate seen in 2010/11.

Jeremy Willmont, head of restructuring and insolvency at Moore Stephens, says closures in the restaurant sector are at "epidemic" levels.

"The impact is visible on almost every high street of a major town or city," he said.

"In the wake of Brexit uncertainty and interest rate rises, it seems consumers are tightening their belts and discretionary spending is the first thing to go."

He says an influx of private equity investment into restaurant chains has led to some opening too many sites which fail to break even and also blames a slow-down in consumer spending.

Edson Diaz Feuntes who runs Santo Remedio is bucking the trend but says there are challenges.

In recent years Jamie's Italian, Strada and Byron have all closed branches amid challenging trading conditions.

In London, independent restaurant owner Edson Diaz Feuntes runs the Mexican eatery Santo Remedio. Business is thriving, but he admits launching a restaurant is not easy.

"As an independent restaurant owner I think the biggest challenges are the current situation with Brexit, the VAT and the rates which are very high for us as an independent and the lack of staff as well - the fact the staff are thinking of leaving the UK as well because of the uncertainty."

To avoid the sky-high bricks-and-mortar costs, many budding restaurateurs are starting multiple street-food stalls.

The number of restaurants filing for insolvency in the UK has nearly doubled over the last eight years,

More people are choosing to dine at home than on the high street

At Victoria Park market in east London, owner of Little Leaf Pizza Matthew Smith says the flexibility of food markets is a far more affordable and enjoyable option.

"There's a lot of costs to incur when you open a shop, a lot of hours of your life you're having to put into it. With street food you get to work in the day, you get the transitory nature of things with a lot less costs and the engagement between the customer and business owner, I really enjoy it."

There is help on the way for some restaurants.

By Dan Whitehead
December 17, 2018

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