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RESEARCH | Staff Reporter, UK

Profits at top 100 UK restaurant groups crashed 64% to £125m

The pre-tax profits fell to £125m from £345m in the past year, according to UHY Hacker Young Group.

In an analysis posted on its website, UHY Hacker Young Group said the profit loss comes in the wake of several recent high-profile examples of restaurants chains being forced to restructure or to undertake large scale closures across their portfolio of restaurants. The Casual Dining Group, which owns High Street chains Café Rouge and Bella Italia, is one of the most recent to report difficult trading with an 18% increase in losses to May 2017 to £60 million. Major drivers behind the fall in profitability across the sector include the effects of over expansion coinciding with soaring costs for restaurants such as: rising business rates, increased supplier and staff costs, and poor footfall.

"Our previous research revealed that 35 of the UK’s Top 100 restaurant groups are now loss-making – an increase of 75% in the past year – as trading conditions have become increasingly difficult," the analysis reads.

Peter Kubik, turnaround and recovery partner, said, “The restaurant industry has grown ahead of demand in recent years and is now going through a necessary period of consolidation and restructuring to remove excess capacity. The industry’s woes should be temporary while it deals with this process, as long as consumer confidence can be maintained. Our view is that many of these chains that are running at a loss are very sustainable businesses once those excess branches are shed.”

“Trading conditions over the past year in particular have become more difficult for restaurants, particularly with rising inflation and recent dips in high street footfall,” Kubik adds.

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