The UK’s Top 100 restaurants made a £82m loss in the last year, down from a pre-tax profit of £102m a year ago, it has been claimed.
Pre-tax profits at the UK’s Top 100 restaurant groups have fallen from £345m since the first quarter of 2017, according to accountancy firm UHY Hacker Young.
The huge loss in profits has been caused by a number of restaurant chains going through radical restructuring in order to shut loss-making branches.
The cost of that restructuring has incurred dramatic short-term cash costs such as funding staff redundancies, exiting tenancy agreements and terminating contracts with suppliers.
Earlier this month, Jamie’s Italian went into administration, while last year Prezzo closed 93 restaurants and cut 1,000 jobs. Carluccio’s also shut 35 restaurants as part of a CVA.
48 of the UK’s top 100 restaurant groups are now loss-making, up from 37 last year.Peter Kubik, partner at UHY Hacker Young’s London office, said closures are being forced on the sector after it went through a period of rapid expansion funded by many of the biggest private equity funded firms.
He suggests that expansion far outpaced the growth in consumer spending on eating out, with higher staffing costs and a fall in sterling also pushing up input costs.
“Restaurant groups are having to undergo radical restructuring surgery just to stay afloat. Cutting down the number of branch chains is financially stressful for restaurant companies but in the long term it is essential they get to the right size.”
“Despite the gloom, there are a number of restaurants success stories which can give the sector some hope. For example, Nando’s, the South African restaurant chain recorded bumper sales last year, as it continues its global expansion and Wagamama has completed a successful sale.”