and two years of uncertainty giving us another year of certainty. Whatever happens it’s certainly going to get more difficult. The cost of living is going to continue in an upward trajectory. The cost of electricity and shortage of water has DOUBLED the price of ice cubes can you believe? 4€ a bag from 2€. Olive Oil is better value that Sunflower Oil. Speaking to an hotelier friend of mine at the weekend who told me that their electricity bill has gone from 10.000€ to 17.000€ and that’s without the increase in this month’s bills. The UK hospitality industry is also suffering.
Debt repayments, staff shortages and spiralling inflation have pushed almost two thirds of the UK’s top 100 restaurant companies into the red, new research claims.
Several restaurant groups suffered heavy losses due to major restructuring programmes undertaken following the corona virus pandemic, according to accountancy group UHY Hacker Young.
It said debt repayments, particularly to landlords for rent accrued during the past two years, have pushed many groups to a loss.
The restaurant sector had expected a post-pandemic recovery in profits, but this has been hampered by spiralling inflation impacting food costs and energy bills. Staffing shortages (mainly caused by Brexit) and energy bills have also caused some sites to restrict covers and cut opening hours cut opening hours to cope.
Peter Kubik, partner at UHY Hacker Young said the restaurant sector was fearful of a further drop in consumer spending after the Bank of England put interest rates up warned that last week warned the country was facing a recession.
He added: “It may be a case of ‘out of the frying pan, into the fire’ for many UK restaurant groups. They expected, and needed, higher consumer spending as we put COVID further behind us, but this spending is now likely to fall when it is needed most.”
The restaurant sector was facing difficulties before the pandemic and many groups took on large amounts of debt to fuel aggressive expansion plans, meaning many were trading at a loss in pre-lockdown conditions, UHY Hacker Young said.
However, Kubik said there are signs things could improve for the sector.
“Promising signals for the sector are coming through, despite the current difficulties restaurant companies are facing,” said Kubik.
“The success of restructuring campaigns being undertaken, unprofitable branches closing, and debts shed through CVAs brings hope for a sunnier future for the restaurant sector.”