CoronavirusNews

Petitions to wind up restaurants rocket 165% 

The number of petitions to wind up restaurants has rocketed 165% to 53 in the year ended 20 April, according to the latest figures from UHY Hacker Young

Such petitions, that have been brought forward over bills left unpaid by struggling restaurants, are expected to see a further surge once the nationwide lockdown is relaxed. 

The accountancy giant said that the surge in petitions “reflects the very earliest stages of the coronavirus crisis”, with restaurant businesses falling into insolvency amid the pandemic and consequent lockdown.

It added that the sector had “already been under considerable financial pressure” over the last two years, largely due to overcapacity, rising input costs, an increased minimum wage and a growing shortage of European workers following the Brexit vote. 

While the government’s temporary ban on winding up orders will give restaurants “important breathing room” during their ongoing closure, UHY Hacker Young warned that there is likely to be another “significant rise” in winding up petitions once the ban ends on 30 June.

Despite this, it said that many restaurants have “managed to hold on” through the crisis through shoring up cash and utilising the government’s furlough scheme. 

Peter Kubik, a partner at UHY Hacker Young, said: “The recent jump in winding up petitions against restaurants is unlikely to be the biggest increase we see this year. 

“Once lockdown measures are relaxed and the new temporary ban on winding up orders ends, a lot of restaurants will struggle to stay afloat for long.”

He added: “Restaurants will have an extremely small window to get customers back through the door before restart costs deplete cash and send them into insolvency. 

“They are especially at risk being one of the last sectors to return to normal activity.”

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