A massive shake-up is coming to Britain’s restaurant industry. According to a recent report by Price Bailey, a leading financial firm, approximately 12% of the nation’s 50,000 restaurants are at risk of shutting their doors in the next 12 months. These alarming numbers highlight the growing strain on the hospitality sector, with many establishments struggling to stay afloat due to crippling financial difficulties.
The report reveals that 20% of these restaurants are already operating with negative net assets. This means their financial situation is so dire that they are unable to cover liabilities with current assets. For many, the risk of defaulting on loans is imminent. Over half of the technically insolvent restaurants are expected to fail within the year.
What’s more concerning is that the 12% closure prediction may be an underestimation. The report doesn’t take into account those restaurants that may decide to close before reaching the point of default. This means the actual number of closures could be even higher.
Insolvencies are already on the rise. In 2023/24, 1,409 UK restaurants went bankrupt, a sharp increase from the 1,180 in the previous year. High-profile restaurants like Leroy in Shoreditch and Gusto Italian in Didsbury are just a few of the well-known casualties of this downturn.
The economic impact of these closures will be devastating. Job losses in an already struggling sector are inevitable, and consumer choice will be further diminished. For the remaining restaurants, securing additional funding may be nearly impossible given the widespread financial instability.
This crisis has been years in the making, exacerbated by inflation and rising costs. The restaurant industry is facing its highest closure rate in over a decade, with no signs of recovery in sight. Consumer confidence has been severely dented, further limiting revenue for struggling establishments.
Conservative voices are calling for urgent policy intervention to save the hospitality sector. They argue that without targeted support, the social and economic consequences will be severe, impacting thousands of workers and the broader economy. According to Matt Howard of Price Bailey, “More than one in 10 restaurants are technically insolvent with maximum credit risk scores, which means that roughly half of them will close in the next 12 months.” Celebrity chef Tom Kerridge added, “The biggest pressure, what has tipped people over the edge, is the cost of energy.”
If Britain’s restaurant industry is to survive this crisis, immediate action is necessary. Without support, the sector could collapse, leaving countless individuals without work and further deepening the country’s economic woes.
Sources:
https://www.thecaterer.com/news/restaurant-closures-price-bailey-prediction
https://www.standard.co.uk/going-out/restaurants/restaurant-closures-budget-b1196176.html
https://www.thecaterer.com/news/over-500-restaurant-closures-q4-2023-data