The UK’s Top 100 restaurant businesses have finally returned to profit, making £19.9m of profit in the last year, up from a loss of £673m a year ago, shows research by UHY Hacker Young, the national accountancy group.
That is a profit margin of less than 0.5% on a turnover of £5.2billion. UHY Hacker Young warns that even those slender profits could be challenged by the cost of living crisis which is pushing up restaurants costs and denting consumer spending on leisure.
Peter Kubik, Partner at UHY Hacker Young explains that the return to profits in the UK’s restaurant sector follows four years of losses and major restructuring amongst restaurant groups that had over expanded and then been hit hard by Covid. Many of those restructuring programmes, which incurred substantial write-downs have now come to an end.
He said, “The UK’s top restaurant chains finally posting a profit, however small, is a welcome surprise. The industry has done a good job in trimming costs and getting back on the path to profitability but it’s now facing a new challenge having to deal with increasing inflation and rising interest rates.”
“Other restaurant groups which were barely keeping afloat have now closed their doors. Despite their best efforts, some restaurants were not able to balance the books, leading to a 59% increase in restaurant insolvencies in the past year.”
Peter Kubik added, “It would be wrong to assume that the restaurant sector is now out of the danger zone. The many headwinds the sector is facing means they will still face further challenges.”