Restaurant failures rising at alarming rate, say experts

Restaurant insolvencies in the UK are rising at an alarming rate and much faster than pubs or hotels, according to a new report.

Research by consultants PricewaterhouseCoopers (PwC) found that restaurant insolvencies in the first quarter of 2009 rose by a third compared with the last quarter of 2008.

Nearly 190 restaurant companies joined the insolvency register in the first three months of this year, which is much more than the total for pubs and hotels combined.

The number of business failures in the restaurant sector has risen 70% since the beginning of last year, including high profile casualties such as Antony Worrall Thompson’s AWT Restaurants and Paul Rankin.

Stephen Broome, director of hospitality and leisure at PwC, said despite high profile failures, the majority of collapsed restaurant businesses were smaller, often one-offs at the lower end of the market.

“Lower numbers of customers are spending less on dining out, and this combined with over supply in some locations means it is no surprise that more restaurants are failing,” he warned.

However, Broome added that the branded restaurant market was still doing well.

“Diners shun the risk of experimentation in favour of the safer option [chain restaurants] provide and this combined with a heavy investment in promotional activity has resulted in some recent claims of positive results from branded restaurant operators,” he said.

Restaurant sector hit hardest by UK recession >> 

A grim outlook for hospitality as insolvencies rise by 95% in two years >>

Antony Worrall Thompson forced to close restaurants >>

By Kerstin Kühn

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