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Rate of Scottish restaurant closures almost quadruples in a decade

13 September 2018 by
Rate of Scottish restaurant closures almost quadruples in a decade

The annual rate of restaurant closures in Scotland almost quadrupled last year when compared with 2007.

The industry also makes up for a higher amount of closures compared to other sectors. Restaurants accounted for 8.6% of business failures last year, compared to 3% the decade prior.

There are also concerns for the current year, with 76 sites having closed already after just six months.

Eileen Blackburn, head of Restructuring and Debt Advisory at French Duncan LLP, said: "These figures highlight the difficulties that the restaurant sector in general, and specifically in Scotland, is experiencing.

"That the number of failures has almost quadrupled over the last decade is alarming but that the rate of failure is increasing is extremely worrying.

"The High Street is in trouble and the dining sector is encountering unprecedented issues which are resulting in failure for a growing number of operators."

The firm blamed overcapacity combined with rising costs in rents and rates, living wage increases and the use of "outmoded" trading models.

Vouchers and discounts were also said to be to blame for the decline as restaurants race to the bottom to remain competitive.

Blackburn added: "Of more concern is that these figures are likely to be the tip of the iceberg as far as restaurant closures are concerned. Far more restaurants close without entering into a formal insolvency process so the numbers struggling on a day to day basis must be huge.

"The numbers closing voluntarily at a financial loss must be enormous and show just how competitive this market is.

"Opening a restaurant has always been difficult but there are greater complications with high rents, high rates, increased staff costs, and, for those importing ingredients, higher supply costs."
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