The number of restaurant companies becoming insolvent has risen by 46% in the past year, research suggests. The total increased from 1,517 in 2021/22 to 2,214 in 2022/23, amid rising costs of servicing debt and the squeeze on consumer spending, according to advisory firm Mazars.
Associate director Paul Maloney said people were still being hit by rate rises and inflation so were cutting back on spending such as dining out. Many restaurant groups have relied on debt finance to fund expansion and renovation, he said. The hospitality sector was also being affected by a continued shortage of staff which has driven up wages. Mr Maloney said: “A lot of restaurants are beset with challenges well outside their control – many are struggling to keep their heads above water.
“The combined pressures of rising costs of staff, debt servicing and ingredients is shrinking margins and driving many businesses to breaking point. Restaurant insolvencies will continue until interest rates and inflation both come down substantially.”