Amount restaurant owners lending to own businesses rises 12%

The amount that restaurant owners have been forced to lend to their own businesses to keep them afloat has risen 12% over the past year, a new study shows.

Operators lent £424m to their companies in the last 12 months, up from £377 the previous year, according to figures from advisory firm Mazars.

Rising energy and food costs, soaring staff wages and falling restaurant sales have contributed to the spike in restaurant owners having to use their own funds to keep businesses trading.

Small businesses in particular have struggled to find alternative sources of funding amid high interest rates and eroding consumer confidence, the report said.

Some restaurant owners reported that they had even remortgaged their own homes to raise funds for their restaurants.

It comes after statistics from the Insolvency Service showed that there were 435 restaurant insolvencies in the last quarter, up by 15% from 395 recorded in the previous three months.

September figures also revealed that the number of hospitality company insolvencies has risen by 59% over the past year, with 2,156 pubs, bars and restaurants shutting down compared to 1,354 the year before.

Adam Harris, partner at Mazars, said: "Restaurant owners having to loan more and more of their own money to their businesses is a real cause for concern. To take difficult choices like this, these business owners must feel they have no other viable way forward.

"It is understandable that restaurant owners want to take a risk on their businesses, as they are often passion projects. However, loaning personal funds to your own business is not the only one option to stave off insolvency. It's really important that business owners seek out professional advice before making that kind of commitment."

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