Restaurant profits plummet by 80 per cent as overfed chains struggle to fill tables
Britain’s top restaurants have seen their profits devastated in the past year after several dealt with branch closures and the casual dining sector struggled to attract customers.
Pre-tax profits at the UK’s top 100 restaurants fell by 80 percent to £37m, down from £194m twelve months ago, according to data compiled by accountancy network UHY Hacker Young based on company accounts released to the end of September.
Out of the top 100 restaurant groups, 37 are now making a loss, the firm found.
A swathe of restaurants have been forced to downscale in recent months, as the sector battles against headwinds including the rising cost of rents and staffing, and an increasing overextension of the market that has left restaurants fighting for a limited customer pool.
Peter Kubik, a UHY Hacker Young partner, said: “The downward spiral in profits of restaurant groups reflects the severe difficulties that continue to impact the sector.”
“Despite the long-term benefits, closing down restaurants is often hugely expensive in the short-term. For some struggling restaurant groups that means things will get worse before they get better.”
The crisis in casual dining has already claimed several high-profile victims: chef Jamie Oliver was forced to inject £13m of his own money into his Jamie’s Italian restaurant venture as it struggled with dwindling sales, and last week Gourmet Burger Kitchen announced it was looking to close almost a fifth of its 100 outlets, with its owner saying it had faced “adverse trading conditions and sustained underperformance”.
Other victims include Italian chain Prezzo and burger restaurant Byron, both of which have closed restaurants. Last Monday, Argentine-inspired eatery Gaucho bounced back from the doldrums after successfully negotiating with its debtors, exiting administration in a rare turnaround.
Kubik added that some restaurants were still finding a way to grow and expand. “[S]uccess stories such as Wagamama, which opened seven new UK restaurants this year, show that consumer demand for casual dining is still present,” he said.
“Similarly, ethically-sourced fast food chain Leon is expanding into Europe. The restaurants that are doing better are those who are innovating by offering their customers something more unique.”