The ‘calm before the storm’ is a phrase that perfectly portrays the period of peace before a disturbance or crisis.
But what about the calm after the storm? It’s a question that restaurant bosses will be pondering in their boardrooms and kitchens as they wish for 2019 to be significantly more buoyant than the conditions they’ve encountered in the past 12 months.
Figures just out confirm that the number of restaurants that went insolvent last year breached 1,000 in a year for the first time since data was first tracked in 2010.
Some 1,219 restaurants fell by the wayside, which to put that into further context marked a 24% increase on the prior year.
Accountancy firm Moore Stephens, which crunched the numbers, said the jump in insolvencies reflects the restaurant industry’s grapples with overcapacity, noting that an influx of private equity investment into restaurant businesses led to some chains opening too many sites that failed to break even.
It described the closures in the restaurant sector as reaching “epidemic levels”, pointing to the empty shops on British high streets as evidence of the purge.
Restaurants have always been prone to high failure rates but vacant restaurants used to be rapidly replaced by a new contender. For now, that process seems to have stalled.
There are still plenty of examples of chains expanding, but restaurant bosses will be concerned that the pain might linger on for some time yet, particularly in the wake of Brexit uncertainty and interest rate rises. The first quarter of the year, at least, is certain to bring some trepidation.
Some restaurant chains have already rolled the dice with much-publicised Company Voluntary Arrangements aimed at cutting costs and reducing unprofitable sites. There is every chance we haven’t seen the last of those yet.
I am sure there will be a period of calm following the storm, but it would take a brave person to declare it’s here just yet.