Subdued consumer spending and fierce promotional activity in the restaurant sector has left 11,091 restaurant sites in ‘significant’ financial distress’, Begbies Traynor’s warns.
The number of struggling restaurants is 8% on the same stage last year, with commercial rent payments due on 25 March the sector’s upcoming Quarter Day.
Begbies Traynor’s said “perfect storm” of challenges could force many restaurant owners into the red ahead of this week’s quarterly rent day, with rising costs, increased competition and an over‐dependence on promotional offers to drive footfall, all adding to the industry’s woes.
Julie Palmer, poartner at Begbies Traynor, said: “The UK restaurant sector is facing a perfect storm of pressures ahead of this week’s quarterly rent day, with growing labour costs from the National Living Wage, subdued consumer spending and fierce competition from established high street chains, coming together to cause a spike in financial distress across the industry.
“As rising inflation continues to hit real wages, UK consumers are proving increasingly cautious when it comes to their discretionary spending, meaning that there is even more pressure on restaurants to put on margin squeezing meal deals to entice diners through their doors. Unfortunately for those restaurateurs experiencing both declining sales and rising costs, the upcoming quarterly rents payment this weekend could be too big a financial hit for many to swallow.”
