That wasn’t on the menu: restaurant insolvencies surge by 25%

Restaurants have been closing at the rate of more than 15 a week this year as the public tighten their belts and habits change.

It’s led to a 25% rise in restaurant insolvencies year on year as the likes of Jamie Oliver’s Italian and Gaucho hit the rocks. And if they don’t go out of business then restaurant chains in particular are closing large numbers of their less popular outlets to try and cut their losses.

Julie Palmer, partner at Begbies Traynor Begbies, said that it’s not just belt tightening that is hitting the casual dining sector.

She said: “A tightening of consumer’s belts has not helped as disposable income has decreased, while the rise of courier services such as Uber Eats and Just Eat is giving cheaper, more convenient options delivered straight to the door.”

Sophie Witts writing in Big Hospitality said in London landlords are increasingly nervous about offering long leases to restaurants due to the number of closures. She also highlighted the rise of the pop-up restaurant and an increasing number of so-called street food vendors as tastes and habits changed.

According to the Daily Mirror this time last year two eateries were closing each week but now the figure is 15 and rising with Prezzo closing 94 outlets in March and Chimichanga axing 33 restaurants with the loss of 500 jobs. Carluccio’s shut 34 of its restaurants following a CVA while Eat closed ten of its outlets although it did open a new one at Madrid airport. And it should be stressed there are new start ups each week such as True North Restaurant at Dean Clough Mills in Halifax and Tokii in Marylebone in London this month

Around 1,400 restaurants became insolvent in the UK in the last financial year and it’s not just the big chains who are suffering with the independents hit as well. It suggests a major shake-up in the industry is underway caused by economic uncertainty, changing habits and saturation. Accountants Hacker Young pointed to: ‘The Brexit related blow to consumer spending and a rise in raw material costs.’

A large number of restaurants and those in the hospitality industry are members of ICSM Credit which helps to protect them from collapsing firms said Ian Carrotte. He added: “We get news of problems from suppliers in the hospitality business who pass on credit intelligence about firms in trouble. It’s often the largest chains in hospitality that cause problems as people believe that because they are a famous name they are safe. That is clearly not the case in any industry which is why credit intelligence is vital.”

For details about ICSM Credit call 0844 854 1850 or visit the website www.icsmcredit.com or email Ian at Ian.carrotte@icsmcredit.com on how to subscribe and to join the UK’s credit intelligence network to avoid bad debts and late payers. Follow ICSM Credit on FaceBook, Twitter and YouTube and Ian Carrotte on LinkedIn.

To keep up to date subscribe to the FREE ICSM Credit Newsletter to hear all the latest insolvency news and to see who has gone out of business click on the orange panel on the top left of the 'About Us' page of the website www.icsmcredit.com or send an email to Ian.carrotte@icsmcredit.com