Why Businesses Fail | A Perfect Storm For UK Restaurants Is Forcing More to Close their Doors

1,406 restaurants closed in the UK during the 12 months to May 2022, a 64% increase on the previous year.

This report in The Guardian highlights new market research by insolvency experts UHY Hacker Young which highlights the challenges faced by restaurants.

Of course, the restaurant market has always had quite a high level of business failure. The barriers to entry in the market are low, as are the profit margins. Even in a good year there are lots of restaurants opening and closing, each trying to capture a profitable share of the market.

However, the external environment in the UK restaurant market is particularly challenging at present, with business owners facing:

Slowing demand - as households cut back on spending

Rising costs - such as ingredients, waiter / chef wages, and energy for the ovens, freezers and fridges

Shortages of labour - a widespread problem throughout the hospitality sector, but a significant issue which restricts the capacity of restaurants to achieve break-even output