UK restaurant insolvencies surge 64%

UK restaurant insolvencies have jumped 64% year-on-year from 856 in 2020/21 to 1,406, as rising inflation, decreased consumer spending and labour shortages are driving restaurants out of business, according to new data from UHY Hacker Young.

There were 431 restaurant insolvencies in the last quarter alone (in the three months to 31 May 2022), marking a 29% increase on 334 in the previous quarter. This is reportedly the largest number of restaurant insolvencies since the Insolvency Service began reporting monthly statistics during the Covid pandemic.

UHY Hacker Young said that insolvencies within the restaurant sector are even higher than in the wider hospitality industry, which has seen a 56% increase in company insolvencies in the past 12 months, rising from 1,407 to 2,193.

Previous research by UHY Hacker Young recently found that restaurants have already seen losses widen to over £800m in the past six months as they felt the effects of “major” restructuring programs following the pandemic.

Peter Kubik, partner at UHY Hacker Young, said: “Pressure is rising on the restaurant sector every day. More and more of them are shutting their doors as a result.

“Restaurants that only just managed to survive the pandemic thanks to government support are now facing fresh challenges in the form of rising inflation, a post-Brexit labour shortage and consumers who simply cannot afford to spend as much.”

He added: “Smaller restaurants are suffering the most from a shortage of EU staff post-Brexit. Many are finding that they simply cannot hire enough staff to serve the number of covers they need to stay profitable. That’s one of the reasons for the raft of closures we’re seeing.”