Restaurant trade faces mounting financial pressure
An increase in costs – fuelled by the outcome of the EU referendum – has put more than 5,000 restaurant businesses at risk of insolvency, new research has suggested.
It was revealed this week that a sizeable proportion of UK restaurants have at least a thirty per cent chance of failing in the course of the next three years.
The trade was already facing a number of financial pressures, including higher costs and reduced consumer spending.
But the dramatic drop in the value of Sterling – which followed the vote for Brexit during the summer – has placed further strain on many premises.
Part of the reason that currency fluctuations have hit the restaurant trade hard is that the UK imports almost half of its food. As the pound has fallen in value, it has meant additional costs for the businesses buying in products from overseas.
Of equal concern is the cost of labour, a factor which has been exacerbated by the introduction of the National Living Wage.
The new wage floor came into force in the spring and the Government confirmed in the recent Autumn Statement that there would be a further increase (to £7.50 an hour) as of next April.
While this rise isn’t as significant as some forecasters had predicted, senior figures in the hospitality industry have made it quite clear that it will mean an additional drain on the resources of many restaurants.