Following the recent surge of insolvencies in the retail industry, it appears that the UK restaurant sector is heading down the same route. With more and more of us deciding to stay away, this has clearly had a major impact on several restaurants.

Could it be because we are uncertain as to the direction the country is heading in amidst the continued uncertainty surrounding Brexit and we want to spend less on eating out? This could be a good reason why more and more restaurants are struggling today. Alternatively, it could be being driven by the current desire to be health conscious, although based on recent health statistics which suggest that 62% off the UK population is overweight and that we are currently the ‘fattest’ nation in Europe, I doubt this is a solid argument as to why we are staying away. On that note, enough about the nation’s health and more on the health of the UK restaurant industry.

News about the difficult predicament the restaurant sector is facing is an area we have touched upon before. It was barely two years ago that we highlighted rising costs as one reason as to why the industry is struggling, as well as intense competition, with a report in the Financial Times highlighting that 200 new restaurants opened in London alone in 2016. One’s initial analysis on this would be positive as it points to more choice and variety for the consumer. However, on closer inspection, the reality was that of those 200 new restaurants, 76 of them had closed within a year, with people appearing less loyal to their favourite restaurants as well. The cost of labour increasing in line with the National Minimum and Living Wage rates also impacted the industry as did the fall in sterling, particularly with the UK importing almost half of its food, increasing costs of sale and squeezing margins.

Technology has also played a significant factor, and just like with the retail sector where online has impacted heavily on consumer footfall, companies such as Deliveroo and Uber Eats – excuse the pun have taken a bite out of the industry, causing fewer people to eat out. Whilst restaurants are still providing the food offering, they are not benefitting from the additional revenue from drinks for example. Supermarkets coincidently have also been an issue for restaurants and pubs as they have been stocking up on more diverse ranges at cheaper prices according to the British Beer and Pub Association. It is not a coincidence that this has led to an increase in pub closures, with consumers changing habits resulting in pubs losing even more trade.

Are the figures as alarming as they are made out to be?

With the well-publicised closures of popular restaurant chains such as Byron, Gourmet Burger Kitchen, Jamie Oliver’s restaurant and Strada, you may be forgiven for being oblivious to the closure of several other smaller, independent and less-known restaurants. However, the reality is that a staggering 1,412 UK restaurants collapsed in the year since June 2018, underlining the scale of the so-called “casual dining crunch”, as seen with customers turning their backs on popular chains. For those businesses which are suffering distress, aggressive management of cashflow will be pivotal in the coming months. However, can we really expect or rely on the banks to be generous with their lending, especially as the sector’s current problems are well documented in the press.

It has been highlighted that the rapid growth of the casual-dining sector since the 2008 financial crisis had resulted in an oversaturated mid-market, which is still going through a dramatic shakeout. Incidentally, the number of restaurants falling into insolvency in the year end of June 2019, culminated in the highest number of insolvencies since 2014.

PCR Graph Restaurants v1

A 25% rise in restaurant insolvencies over the past year, demonstrates that the sector will be facing an extremely challenging future. With ongoing changing consumer preferences, fierce competition and the advancement of technology and mobile phone app usage amongst a newer generation of ‘foodies’, it has created further obstacles for restaurants to deal with.

If you are the owner of a restaurant, PCR can assist you with solutions which may produce a turnaround or a recovery which could ultimately save your business going forward. If you are worried about the future of your business, then it is imperative that you seek professional advice as soon as possible as there will likely be more options available to you than if you leave it too late. In addition, we may also be able to assist you with understanding some of the legal and commercial complexities that may arise when dealing with businesses in the restaurant sector.

For more information, or to get in contact with a Licensed Insolvency Practitioner, please contact our PCR Head Office on 0208 841 5252 or alternatively you can email us at This email address is being protected from spambots. You need JavaScript enabled to view it. or use our Priority Contact Form. We treat every enquiry in the strictest of confidence.

Ahmed Ali
Practice Development Executive 

All contents Copyright © PCR (London) LLP unless otherwise noted. None of the elements on this website may be reused without permission.