London restaurants: Outlook ‘bleak’ as insolvencies mount across the industry
London restaurateurs have described the outlook for the sector as ‘bleak’ after research has revealed that the number of hospitality businesses going bust has jumped by 65 per cent in the last year.
The figures, which were released by accountancy firm Price Bailey, show that 1,880 British restaurant businesses became insolvent in 2022, compared to the previous 12 months when 1,139 restaurant businesses went into insolvency.
According to the firm, an average 5.2 restaurant businesses are facing closure per day, up from 3.1 in 2021. Price Bailey said that many of these businesses “consist of multiple restaurants”.
Philip Inzani, founder of Polo 24 Hour Bar, a restaurant and pub located on Liverpool Street, told City PM that the figures were “not surprising”.
He explained: “The outlook is bleak and we can expect insolvency figures to rise as peoples’ disposable incomes are becoming sparser. Restaurants are facing food inflation and it isn’t showing any signs of abating, energy costs are spiralling, and these are just a couple of the external factors.”
Inzani added that the sector is also facing internal struggles, such as recruitment and supply issues. “It’s a perfect recipe for guaranteeing future insolvencies within the industry as margins have always been tight, we are now at breaking point,” he said.
Judy Joo, founder of Seoul Bird, a Korean restaurant, with sites in West London and Canary Wharf told City PM that the chain is yet to have a “normal” day of trade post pandemic. “Unless small business have access to capital you will definitely see more insolvencies,” she said.
It comes as hospitality bodies have been calling for government support ahead of the Spring Budget on 15 March.
“Hospitality businesses continue to face an ever-growing list of challenges, most notably the looming end to significant energy support from 1 April,” Kate Nicholls, chief executive at UKHospitality, told City PM.
She said: “At the Spring Budget, we need to see the Chancellor step in to support the sector and provide the investment it needs. With the right measures, the sector can survive its current challenges and also thrive well into the future; delivering much-needed growth and job opportunities. And, unless small business have access to capital you will definitely see more insolvencies.”