Restaurant directors prop up their companies with £192m of loans

Money 1

The amount of money that restaurant directors have loaned to their own businesses to keep them afloat has reached an all-time high of £192m, it has been revealed.

The value of director loans among restaurant companies during 2017 was some 49% higher than the year before, when company bosses were forced to dip into their own pockets to the tune of £129m.

Companies House filings show that Gordon Ramsay Holdings Limited, for example, owed its directors £10.5m in loans.

Story continues below

It is understood that the majority of loans are from directors operating small and medium sized restaurants, who can often struggle to access traditional bank lending.

Analysts predict directors of smaller restaurant companies may be forced to increase their lending further in the near future in a bid to trade their way through a more challenging consumer environment and rising operational costs. The high-profile failures of some private equity-backed chains have also made it harder to get funding for other operators in the sector.

The size of the amount loaned by directors in the UK is double what it was as recently as four years ago, with analysts suggesting continued uncertainty around Brexit pessimism may have also made it more difficult for companies to get hold of cash.

Funding Options, which compiled the research, said there are alternative financing options for directors looking to bridge the funding gap, such as invoice finance and leasing.

Conrad Ford, founder of Funding Options, said: “Restaurant owners are having to put more of their own money into their businesses to save them. Recent news about some larger restaurant chains’ finances could have made banks even more cautious when deciding whether to lend to businesses in the sector.

“It is crucial that directors and owners of businesses that struggle to access bank lending are aware of alternative funding options available to them – instead of having to put their own hard-earned cash back into their businesses.”

Tags : directorsloansRestaurants
Andrew Seymour

The author Andrew Seymour

Leave a Response