News that 1,412 restaurant businesses went bust in the 12-months to June 2019 is further evidence of the problems facing the industry. UHY Hacker Young’s recent press statement (15 September 2019) showed the 2018-19 figures were a massive 25% increase on the previous year.
Customers have increasingly turned their backs on companies like Byron, Strada, Gourmet Burger Kitchen and Jamie Oliver, where high prices did not necessarily translate into good food and a good experience.
But this is only part of the problem. Consumers have become more careful about their spending, including eating out and the numbers eating in restaurants are down compared to three years ago. This has had a deleterious effect on many good-quality independent restaurants, which survive reasonably well in more prosperous times, but price-competition and a fall in clientele numbers has made them loss-making – unable to survive for very long.
Starting around 2014 the larger restaurant chains spent a lot of money on opening new outlets, particularly in prestigious (=high rent) locations. They grew rapidly, but many new outlets never made a profit, and most had to cut back from 2017.
New competition has also come from pub-bistros or gastro-pubs and hotels, many of which have upped their game producing good-quality food at a lower price.
The prospects for restaurants do not look good until about 2022.