Total pre-tax profits at the UK's top 100 restaurant groups have fallen 64% in the past year to £125m from £345m.
This is according to research by national accountancy group UHY Hacker Young, which comes in the wake of several restaurant chains being forced to restructure or undertake large-scale closures across their portfolios.
The Casual Dining Group, which owns Café Rouge and Bella Italia, reported difficult trading in its latest results including pre-tax losses of £60m; in the meantime Prezzo's creditors have approved a CVA that will see the closure of 94 sites.
UHY Hacker Young pointed the finger at over expansion, coinciding with soaring costs for restaurants across business rates, increased supplier and staff costs, and poor footfall, to explain the fall in profitability.
Although the Chancellor has brought forward a planned cut to business rate rises by two years (to 2018), UHY Hacker Young said more could be done by the Government to help the sector, in particular smaller restaurants.
Recently a group of major restaurant bosses, including the chief executives of Bill's and the Casual Dining Group, wrote a letter to the Chancellor asking for a business rates reform.
Peter Kubik, partner at UHY Hacker Young, said: "The restaurant industry has grown ahead of demand in recent years and is now going through a necessary period of consolidation and restructuring to remove excess capacity.
"Our view is that many of these chains that are running at a loss are very sustainable businesses once those excess branches are shedâ¦ The government is moving in the right direction in reducing business rates, but more can be done. Some commentators say that rates for some businesses could rise by over £24,000 in the next five years."
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