Last quarter of 2022 ‘worst on record for restaurant closures'

The last quarter of 2022 was the worst on record for restaurant closures, according to audit, tax and advisory firm Mazars.

In the fourth quarter of 2022, 504 restaurant companies entered insolvency, an 11% rise compared to the previous quarter. The last three quarters have all been the worst on record for UK restaurant company insolvencies, with 396, 453 and 504 insolvencies, respectively.

In December 2022, 188 restaurant companies became insolvent, 71% more than the 110 companies that failed in December 2021 and the highest monthly number of insolvencies in the sector since at least January 2019.

Restaurants across the UK have been dealing with the highest level of inflation since 1981 and a sharp slowdown in consumer spending, as well as strikes affecting pre-Christmas bookings. In addition to increasing food and energy costs, restaurants have been hit by shortages of labour, particularly for skilled roles such as chefs, which has pushed up staff costs.

Rebecca Dacre, partner at Mazars, said: "Struggling restaurant companies often count on a strong Christmas period to keep their heads above water. Weaker than usual December trading will have persuaded many that they have no alternative but to shut down.

"With many households exiting fixed-rate mortgages and having to sign up to more expensive deals, consumer spending is likely to suffer. Unfortunately, this difficult period for restaurants is set to continue for a while longer."

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