According to accountancy firm Price Bailey, restaurant closures hit an all-time high in Q4 2023.
Data obtained via the Freedom of Information Act revealed that 514 restaurants entered insolvency in this period, surpassing the previous record of 481 set in Q2 2023.
In total, 1,932 restaurant businesses went bust in 2023, marking a 45% increase from 2022's figure of 1,332. This equates to an average of 5.3 restaurant closures per day, up from 3.6 in 2022.
Several factors have contributed to this surge in closures, including persistently high inflation, rising interest rates, and declining consumer spending. Price Bailey highlights that the Bank of England's interest rate began 2023 at 3.5% but was incrementally raised throughout the year, reaching 5.25% by December 2023. Additionally, the government’s GBP 18bn (EUR 21bn) energy support package for businesses started to phase out at the end of Q1 2023, leading to increased costs from Q2 onwards.
Other contributing factors include the need to repay Covid-19 support loans and strike action on the railways, which left many city center restaurants struggling due to reduced foot traffic during key trading periods.
Matt Howard, head of the insolvency and recovery team at Price Bailey, commented: "Restaurant closures hit their highest-ever quarterly total in Q4, smashing the record set just six months previously. Many hospitality businesses are on life support, and with the services sector leading the way into recession, business failures in the restaurant trade are likely to continue to rise throughout 2024."
He added: "The inflation rate for restaurants crept up again in January, and hopes of an early rate cut appear to be receding. The first quarter is a much slower trading period for restaurants, which will make it very difficult for many to recover from a lackluster festive season."
Source: Harpers Wine & Spirit Magazine