British restaurant insolvencies hit record, study shows
LONDON (Reuters) - The number of British restaurant insolvencies hit a record high in 2018 and have doubled since 2010, a study by accountants Price Bailey showed on Wednesday as the sector struggles with market saturation and competition from delivery apps.
FILE PHOTO: A cyclist delivers food for Deliveroo in London, Britain, September 15, 2016. REUTERS/Toby Melville/File Photo
There were 1,442 restaurant insolvencies in 2018, up 40 percent compared to 2017, Insolvency Service data obtained by Price Bailey showed. Four restaurant businesses a day are going bust, up from under two a day in 2010.
Paul Pittman, Partner at Price Bailey, said 2018 was "easily the toughest year for the sector."
"The challenging trading conditions facing the restaurant sector show no signs of improving," he said.
"Chain restaurants are particularly vulnerable to changing consumer fads. What was once flavor of the month can quickly go out of fashion."
In 2018, burger chain Byron, Argentinian steak restaurant Gaucho, and Italian chains Prezzo, Carluccio's and Jamie's Italian all used Company Voluntary Arrangements (CVA), an insolvency procedure to restructure their businesses and remain trading.
Price Bailey said mid-market restaurants had expanded too quickly, resulting in too many restaurants competing for customers. Apps like Just Eat and Deliveroo have also increased competition from the takeaway sector.
As well as issues with oversupply, demand from consumers is also dwindling.
Personal insolvencies have soared to their highest level since 2010, data on Tuesday showed, the latest sign of vulnerability in Britain's consumer economy.
"Restaurants are capital-intensive businesses," Pittman said. "Many are perpetually walking a balance-sheet tightrope and it often only takes a few months of poor takings to send them over the edge."
Reporting by Alistair Smout; editing by Stephen Addison