BREXIT puts more than 5000 Restaurants at risk
Following the Brexit vote earlier this year restaurants have been put under pressure as costs have increased due to the fall in the pound.
It is estimated that a total of 5,570 restaurant companies have at least a 30% chance of going insolvent within the next three years, said Moore Stephens, the top ten accountancy firm. Higher costs and stagnating incomes have put a strain on businesses, and the sharp fall in sterling since the Brexit vote has added to the pressure.
The UK imports 48% of its food and the fall in sterling has put pressure on the sector by increasing the cost of imports for restaurants. This has added to an already difficult trading time with restaurant companies having to contend with the cost of labour increasing. The government raised the National Minimum Wage to £7.20 from £6.70 earlier this year which has put added strain on restaurants already struggling to remain profitable. The government has announced that it intends to raise the National Minimum Wage to £7.50 in April next year.
Mike Finch, restructuring Partner at Moore Stephens said “Restaurants have to make tough decisions as to how much they try to pass on to consumers. All this comes at a time when many consumers are likely to be very price conscious. The high number of potential insolvencies over the next year shows just how fragile finances can be in this sector. There may be further challenges to come as the UK’s trading agreements with Europe remain uncertain.”
If your or your client’s business is at risk from these issues please talk to us. Advice early on may help to secure the business’ future call 0808 168 7540.