This is the highest number of restaurant failures since the last recession in 2009.
The closures can mainly be attributed to the current state of the economy. With last year’s VAT hike from 17.5% to 20%, restaurant owners are unwilling to pass the increase onto the customer for fear of deterring the public further from spending their money on meals out.
In the current age of austerity, it seems people are cutting down on the amount of time and money spent on going out for the evening, regardless of comparatively stable menu pricing.
Along with thousands of failing restaurants, high-street shops have reached record closure numbers and traditional pubs are continuing to close at a rate of 16 a week.
Anthony Cork, partner at Wilkins Kennedy, said: “Under the terms of most UK restaurant leases, rents can only ever go up – even if the real rental value of that restaurant has plunged. That means that falling turnover can quickly plunge a restaurant into loss”.
Even the restaurant crowned ‘the best fish and chip shop in the country’, The Great British Eatery, has racked up so much debt in light of the difficult economic climate, that it’s sadly been forced to close its doors for the last time.
This is a sad reflection of Britain’s serious deficit and paints a picture of a bleak future for small businesses in the UK.
For business advice, please visit our Accounting Areas section.