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More than 1,400 UK restaurants collapse in a year

Edmund Heaphy
Finance and news reporter
Jamie Oliver's restaurant empire collapsed in May. Photo: PA

More than 1,400 restaurants have closed in the UK in the past 12 months, as the crisis faced by the casual dining sector continues to grow.

Between June 2018 and June 2019, there were 1,412 insolvencies in the restaurant sector, according to a new report by accountancy firm UHY Hacker Young.

The number of insolvencies, which jumped 25% compared with last year, is the highest since 2014.

The report points to over-saturation in the casual dining market, a decline in consumer spending, and the increase in costs associated with running a restaurant.

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In May, Jamie Oliver’s restaurant empire collapsed into administration, in one of the most high-profile crash-outs from the sector in recent times.

But even smaller restaurants are struggling, UHY Hacker Young warned.

“The crisis in the restaurant sector has been presented as a problem only for the chains that had lost touch with their customers,” said Peter Kubik, of UHY Hacker Young.

“That's overlooking the hundreds of small independent restaurants that have become insolvent.”

The mid-market casual dining sector has grown significantly since the 2008 financial crisis, but faces mounting pressures as a result of higher labour costs, increased rates, and a jump in food costs.

While the boom for the sector had been seen as one of the UK economy’s success stories, 2018 saw the first decline in the number of casual dining restaurants for almost a decade.

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“Good restaurants and bad have all struggled from overcapacity, weak consumer spending and surging costs,” said Kubik.

“Having a loyal following is great but if that loyal following stops going out then you have a problem. The number of restaurants whose sales are at or near capacity is pretty small — they’re the exception.”

UK consumer spending fell to a new low in July, even in spite of the hot weather. Experts pointed to continued Brexit uncertainty and slow real wage growth.

In August, it was announced that all 20 of the Jamie Oliver restaurants put up for sale by administrators KPMG had been sold.

Trouble had been brewing for Oliver’s empire for some time — the chef had previously pointed to a “perfect storm” of high rents, rates, high street difficulties, and Brexit for the firm’s woes.