UK Restaurant insolvencies rise by 46% in last 12 months
Restaurant Insolvencies will continue to grow until interest rates and inflation fall considerably.
In October 2023, we reported on research that showed that only 50% of pubs are making a profit, and that the number of pub insolvencies had increased by 835 in the year to February 2023. Now, research commented online by AJ Bell, and others, has shown that this experience is replicated in the restaurant sector, with the number of UK restaurants becoming insolvent between 2021/22 and 2022/23 rising from 1,517 to 2,214 – an increase of 46%.
This is a significant increase and shows that the hospitality sector is one of the hardest hit by the current general inflationary and energy cost upwards spiral, and the squeeze on consumer spending. In addition, these other factors have played their part:
- A continued shortage of staff, especially in the hospitality sector has driven up wage costs significantly
- The increasing cost of servicing debt caused by on-going interest rate rises, which given that many restaurant groups had relied on debt finance to fund renovations and also expansion plans, has hit the sector hard.
How can Insolvency Practitioners help?
These are very difficult times for many business sectors, but especially the restaurant sector, which had already been extremely hard hit by the Covid-19 pandemic. There is no doubt that current conditions are driving many more of them to breaking point and further insolvencies are inevitable.
As with all businesses, our advice is for directors to act as soon as possible if financial difficulties are mounting. Some of the main options are:
- Negotiating a Time to Pay Arrangement with HMRC. These structured payment plans with HMRC give businesses time to pay back what they owe. We are experienced in dealing with HMRC in such matters.
- Additional Finance. We have professional contacts with multiple lenders who could help find the right deal for extra funding.
- A Company Voluntary Arrangement. If creditors are demanding the money they are owed, the CVA process allows for an insolvency practitioner to propose to them a structured repayment plan for a percentage of the debts. This means you can write off part of your debt and avoid liquidation. A CVA is a recovery process that can buy a company time to turn things around.
Our advice is that if you know that the underlying position of your company is weak, then act now. The sooner you contact the Licensed Insolvency Practitioners at Antony Batty & Company, the sooner we can recommend a solution. We will talk you through all the options available, so that you know exactly where you are, helping you to make the best possible decisions.
In the meantime, if you need our help and advice in any of our specialist insolvency areas, please contact us or call any of our offices, below, for a FREE initial discussion on the phone or over a coffee, with one of our Licensed Insolvency Practitioners.
Also, K&W Recovery, trading as Antony Batty and Company, Thames Valley: