December was worst month for UK restaurant closures in four years
UK restaurant company insolvencies in December of last year were the highest in at least four years says Mazars, the international audit, tax and advisory firm. 188 restaurant companies became insolvent in December 2022, 71% more than the 110 companies that failed in December 2021 and the highest monthly number of insolvencies in the sector since at least January 2019*.
The data also shows that the last quarter of 2022 was the worst on record for restaurant closures. 504 restaurant companies entered insolvency in Q4 of 2022, an 11% rise compared to the previous quarter. In fact, the last three quarters have all been the worst on record for UK restaurant company insolvencies, with 396, 453 and 504 insolvencies respectively**.
Restaurants across the UK have been dealing with the highest level of inflation since 1981 and a sharp slowdown in consumer spending, as well as strikes affecting pre-Christmas bookings. In addition to increasing food and energy costs, restaurants have been hit by shortages of labour, particularly for skilled roles such as chefs, which has pushed up staff costs.
Some restaurants have already revealed they will be cutting their trading hours in order to save on the cost of energy.
Rebecca Dacre, Partner at Mazars says: “Struggling restaurant companies often count on a strong Christmas period to keep their heads above water. Weaker than usual December trading will have persuaded many that they have no alternative but to shut down.”
Rebecca Dacre adds that falling consumer spending will have been a significant factor in the plight of restaurants.
“With many households exiting fixed-rate mortgages and having to sign up to more expensive deals, consumer spending is likely to suffer. Unfortunately, this difficult period for restaurants is set to continue for a while longer.”
* The Insolvency Service, Year Ending December 31 2022 – monthly data goes back to January 2019
** The Insolvency Service, Year Ending December 31 2022, quarterly data goes back to Q1 2012