High Streets Initiative 20 September 2018

Saving the UK’s independent restaurants before it’s too late

984 restaurants fell into administration in 2017 a 20% rise on the previous year’s figures.
Writing for Business Advice, Anx Patel, CEO and founder of GoKart, lays out the challenges facing small restaurant businesses and outlines a roadmap for saving independent high street eatieries before it’s too late.

The UK has seen a wave of high-profile restaurant closures over the past few months. Well-known chains such as Byron and Jamie’s Italian have come under massive financial strain, forcing them to close their doors. Others have filed for administration Cau’s Gaucho steakhouses, for instance, was recently rescued by its lenders after initially closing down all 22 restaurants in July.

There’s no denying that restaurants across the country are struggling amidst what has been a difficult trading period. A report from the government’s insolvency service last year revealed the full extent of the issue; it discovered that 984 restaurants had fallen into administration in 2017 a 20% rise on the previous year’s figures.

Despite the media attention surrounding the downfall of recognised restaurant chains, it is actually small, independent establishments that are facing the biggest challenges. In fact, according to a recent report by GoKart two out of every five UK adults said they have seen a favourite local independent restaurant close down this year.

The pressure on smaller businesses is certainly taking its toll, yet the struggles being faced by these important, independent eateries are all too often overshadowed by the financial hardship of larger restaurant chains.

The main factors contributing to high street restaurant closures

With the UK’s food and restaurant industry facing testing conditions, it’s important to understand what has triggered the demise of so many formerly popular and well-attended establishments.

One of the key factors is the steadily rising financial costs that restaurant managers must deal with.

Escalating business rates, for example, represent a major threat to UK high streets, and have made it increasingly difficult for smaller businesses to operate. Unfortunately, business rates will continue to place a heavy burden on small businesses for the foreseeable future, with Altus estimating that restaurants will pay an extra 653m in business rates over the next five years.

Meanwhile, rents for residential and commercial properties across the UK continue to rise this is particularly true for restaurants located in prime retail areas. Add to this the introduction of the higher National Living Wage and it is easy to see how costs are mounting.

Of course, the final factor impacting on restaurants? ability to thrive at present is Brexit. The UK’s impending departure from the European Union (EU) has created a feeling of anxiousness and uncertainty amongst many business leaders.

Such ambiguity has already contributed to the fall in the value of the pound, which has two consequences. Firstly, it affects consumer spending in fact, the aforementioned GoKart research revealed that more than half of the UK public are currently deterred from eating in restaurants due to the price.

The second consequence is the price of ingredients; a weaker pound means the country’s restaurants must pay more for produce that comes from overseas. This, in turn, means they must increase their prices or sacrifice their profits.

How is the government supporting local, independent businesses?

Despite the significance of these challenges, the government has so far failed to provide the adequate support for small restaurants at this pressing time. In fact, the implementation of new regulations like increased business rates and a proposed measure to force restaurants to display calorie counts on their menus could, in fact, add to the financial pressures already being faced by local, independent eateries.


Business Advice