Losses at top 100 UK restaurants groups up 112%
According to accountancy group UHY Hacker Young, which has published the findings, these losses only run up to the start of the latest national lockdown and therefore are expected to worsen again in the coming months as a result of restaurants across the country currently being forced to remain shut.
As a result of the enforced closures and restrictions, restaurants have become reliant on home delivery services like Deliveroo and Uber Eats over the past year to generate sales and stay afloat.
However, this can be a double-edged sword as commissions of up to 35% plus VAT are taken from the restaurants by the platforms.
Alcohol sales – traditionally a key high-margin offering for restaurants – are also sharply lower through these apps than for in restaurant meals where diners are more highly likely to buy alcohol with their meal.
UHY Hacker Young adds that the wave of restructuring seen in the restaurant sector over the last year is likely to continue, particularly the use of Company Voluntary Arrangements (CVAs) to rebase rental costs.
Many UK restaurant groups have had to launch a CVA, while others have been sold via administrations.
The Restaurant Group, owner of the Wagamama, Frankie & Benny’s and Chiquito chains announced plans last year to use a CVA to restructure the business including closing 125 restaurants.
CVAs have also been used by Leon, PizzaExpress and YO!, among numerous others, since the start of the pandemic.
"These figures reveal how seriously the UK restaurant industry was already struggling pre-pandemic," says Peter Kubik, partner at UHY Hacker Young.
"The most worrying part is the restaurants will be still having to absorb the impacts of lockdowns for weeks or months to come.
“The hospitality industry is on a knife edge – it’s survival is largely dependent on people feeling safe and returning to restaurants which could be potentially months away.”
Trade body UKHospitality has urged the Government to do more to help the sector by extending the reduced 5% rate of VAT on the sector until the end of 2021 to prevent a wave of redundancies. It is currently scheduled to revert back to 20% at the end of March.
