A third of the UK’s top 100 restaurants are lossmaking, according to a new report published in the Guardian.
The study suggests that the number of lossmaking establishments has increased by 75 per cent year-on-year, as higher staffing costs, rising business rates and reduced consumer spending hits the high streets.
The report comes shortly after Jamie’s Italian, the restaurant chain owned by celebrity chef Jamie Oliver, announced it would be closing 12 of its 37 UK branches as part of a rescue deal with creditors to continue trading.
Court documents show that the chain had debts of around £71.5 million – £30.2 million in overdrafts and loans and £41.3 million owed to HMRC, landlords, suppliers and other creditors. Meanwhile, staff were due more than £2.2 million in wages.
A spokesman for Jamie Oliver Restaurant Group confirmed the business was “exploring plans to restructure its Jamie’s Italian restaurant estate in the UK, to ensure the business is in good shape for the future. As part of this review, we are in conversation with our stakeholders, but no final decisions or proposals have been made.”
Among others, pizza chain Prezzo has also fallen victim to rising costs, announcing that it would close a third of its 300 UK branches in February.
Stefan Chomka, editor of Restaurant magazine, suggested the casual dining industry has become hugely oversaturated, with establishments battling with one another to keep prices low while paying increasing overheads.
“If you’re operating 100 sites, your margins are being squeezed and squeezed. And times are tough,” he said.
“Even if they spend a little more when they do, people are eating out less often. So there are greater costs, more competition, fewer people.”