Restaurants face tough times ahead…
An accountancy firm has warned that thousands of restaurants could close down because of the fall in the pound since the Brexit vote has sharply raised the cost of imported food and wine.
A huge 5,570 restaurant businesses have at least a 30 per cent chance of insolvency in the next three years, say Moore Stephens. This is due to inflationary pressures and stagnating disposable incomes.
The UK imports 48 per cent of its food, many restaurants heavily import food and wine. The government raised its National Living Wage from £6.70 to £7.20 back in April which has resulted in the cost of labour going up, the wage will also go up again in April next year to £7.50.
The restaurant group is already closing 33 outlets across the UK, this includes 14 Frankie & Benny’s and 11 Chiquito branches. Garfunkels restaurant situated in the Strand in London is also set to close.
Mike Finch, restructuring partner at Moore Stephens, told the Guardian: “It’s been a tough year for many restaurants in the face of rising costs and fierce competition. It is unrealistic to expect UK restaurant groups to avoid the impact of the fall in the pound by substituting for UK produce – they are going to face a big hit. Restaurants have to make tough decisions as to how much they try to pass on to consumers; too much and they risk losing business, too little and they lose margin.”