MORE than 11,000 restaurants are fighting to survive amid a ‘perfect storm’ hitting the £5.9billion sector, according to new research.
The latest Begbies Traynor Red Flag Alert, which monitors the financial health of UK companies, has revealed that 11,091 restaurants experienced ‘significant financial distress’ this month — up 8 per cent on a year earlier.
Julie Palmer, a partner at Begbies Traynor, said: ‘The UK restaurant sector is facing a perfect storm of pressures ahead of this week’s quarterly rent day.’
She said growing labour costs, subdued consumer spending and fierce competition from established high street chains had ‘come together to cause a spike in financial distress across the industry’.
Ms Palmer said: ‘Unfortunately for those restaurateurs experiencing both declining sales and rising costs, the upcoming quarterly rents payment this weekend could be too big a financial hit for many to swallow.’
Surging inflation and eye-watering business rate rises since last year’s revaluation have added to the pressure.
Ms Palmer added: ‘UK consumers are proving increasingly cautious when it comes to their discretionary spending, meaning that there is even more pressure on restaurants to put on margin-squeezing meal deals to entice diners through their doors.’
The grim news follows a raft of rescue deals being struck to save chains across the industry, including celebrity chef Jamie Oliver’s Jamie’s Italian and upmarket burger bar Byron. Prezzo is voting on a deal this week.