Percentage of UK restaurant companies making a profit doubles
The percentage of UK restaurant companies which are now making a profit has more than doubled in the last year, from 35% to 78%.
The findings were based on an analysis of the 100 UK restaurant companies by accountancy firm UHY Hacker Young.
The research suggested the increase in profitability may have been partly responsible for a recovery in mergers and acquisitions in the hospitality sector in the UK.
The number of deals within the UK's hospitality sector reached a five-year high of 186 in 2022, according to CGA.
Some of the UK's largest restaurant groups, including PizzaExpress and Pizza Hut, have undergone restructuring since the start of the pandemic, which the study said could have helped many return to profit.
In addition, many restaurants have implemented measures to boost revenue, such as introducing low-cost menu options to attract consumers seeking more value for money, closing down loss-making branches, reducing opening hours to lower the cost of utility bills, and cutting the number staff members on shift.
However, UHY Hacker Young warned the recent round of interest rate rises from the Bank of England could jeopardise the sector's future profitability.
Peter Kubik, partner at UHY Hacker Young, said the majority of restaurants have done "exceptionally well" to generate a profit but warned the sector "faces a tough trading environment caused by high inflation and the rising cost of debt".
"It will be a delicate balancing act to implement cost cutting measures while also providing a service good enough to attract and retain customers," added Kubik.
"Some restaurant groups are exploring if they can offer more affordable food and drink options to attract customers affected by the cost-of-living crisis. However, this would lower profit margins."
Image: Southworks / Shutterstock
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