The top 100 UK restaurants groups saw their losses soar by 112% to £571m last year, rising from reported losses of £269m at the end of last March, according to UHY Hacker Young.
The firm said these losses only run up to the start of the lockdown and are therefore expected to worsen again in the coming months.
It comes as restaurants have been forced to repeatedly shut their doors over the past year following three separate national lockdowns.
While the government has provided assistance to the industry through the EOHO and furlough scheme, UKHospitality has since urged the government to do more by extending the reduced 5% rate of VAT on the sector until the end of 2021. VAT is currently scheduled to revert back to 20% at the end of March.
UHY added that restaurants have become even more reliant on home delivery services over the past year, which could be a “double-edged sword” as commissions of up to 35% plus VAT are taken from the restaurants by the platforms.
In addition, alcohol sales are also sharply lower through these apps than for in restaurant meals where diners are more highly likely to buy alcohol with their meal.
The firm added that a wave of restructuring is likely to continue in the restaurant sector, particularly the use of Company Voluntary Arrangements (CVAs) to keep businesses afloat.
The Restaurant Group, owner of the Wagamama, Frankie and Benny’s and Chiquito chains recently announced plans to use a CVA to restructure the business, including closing 125 restaurants, while CVAs have also been used by Leon, Pizza Express and Yo! Sushi, among others.
Peter Kubik, partner at UHY Hacker Young, said: “These figures reveal how seriously the UK restaurant industry was already struggling pre-pandemic. The most worrying part is the restaurants will be still having to absorb the impacts of lockdowns for weeks or months to come.
“The government has stepped in to help but it’s likely that even more will need to be done – very few industries have been hit as hard as restaurants. At the very least the hospitality VAT cut will almost certainly have to be extended.”
He added: “The hospitality industry is on a knife edge – it’s survival is largely dependent on people feeling safe and returning to restaurants which could be potentially months away.”