The UK restaurant industry is reportedly going bust more quickly than during the Covid crisis due to rising energy prices, shortage of workers, and declining bookings.
According to research by the consultancy company Mazars, closures in the sector increased by 60%, going from 984 insolvencies in 2020–21 to 1,567 in 2021–22. The number includes 453, an increase from 395, over the last three months.
Rebecca Dacre, a partner at Mazars, claimed that insolvencies of restaurant enterprises are currently occurring at a greater rate than during the Covid. It is a toxic situation of growing input costs, drastically rising borrowing costs and, poor demand. Most restaurant owners have never encountered this confluence of problems.
According to lobbying organizations like the British Beer and Pub Association and UK Hospitality, over one-third of the hotel industry may become bankrupt by early 2023.
While the industry saw a recovery in business this summer following a string of forced closures due to Covid lockdowns, restaurants are currently facing challenges due to soaring inflation, which has pushed up the price of energy, food, and beverages while also reducing the amount of money that customers have to spend on going out.
As per Barclaycard, more than half of Britons intended to reduce spending on necessities, which raised concerns about holiday season sales, which account for the majority of profits for many companies.
It has been reported that some businesses are also having trouble filling jobs due to the post-Brexit immigration laws that prevent EU citizens from working in the UK. This has fueled a rise in wage inflation.
Despite the upcoming holiday season, Mazars predicted that the industry would face difficult times over the next few months due to the confluence of factors.
In addition to this, hospitality firms typically experience a boom during the Christmas season. However, Dacre warned that this winter will be particularly difficult for businesses, and many may struggle to stay afloat.
Source credit: https://www.theguardian.com/business/2022/nov/21/uk-restaurants-bankrupt-faster-rate-covid-closures
