Restaurant insolvencies rise to 354 in Q4

Restaurant insolvencies jumped by a fifth to 354 in the last quarter of 2021, rising from 296 in Q3, according to UHY Hacker Young, the national accountancy group.

UHY Hacker Young said “despite the end of coronavirus restrictions, the sector faces considerable challenges”.

The invasion of Ukraine and resulting sanctions on Russia are already causing a sharp spike in oil and gas prices. With Russia and Ukraine both major exporters of crops, such as wheat and corn, UHY predicted that food prices are likely to increase dramatically.

It said restaurants will also have to contend with the upcoming hike in National Insurance rates, which means employers will be forced to pay an extra 1.25% per employee, per month from April 6.

The Commercial Rents Bill, which is due to come into effect on March 25, will enable commercial landlords to take action against tenants that have fallen into rent arrears during lockdown. UHY said that restaurants” could be forced to pay rent for the periods in which they were unable to open, putting many in a financially precarious position”.

Peter Kubik, partner at UHY Hacker Young said: “The restaurant sector has emerged from one crisis only to face an onslaught of other challenges.”

“Covid restrictions may have ended but higher loan repayments, National Insurance increases and potentially lower demand as the cost of living crisis starts to bite could see an even greater number insolvencies within the sector.”

He added: “Restaurants could at least rely on Government support during the worst of the pandemic. Now that these protections have come to an end, they’re having to face multiple challenges with zero help.”

“Given the enormous pressures the restaurant sector is under, the Government should seriously consider scrapping or at the very least postponing, the Health and Social Care tax.”