A cashflow crisis brought on by Covid lockdowns has resulted in a 31% increase in UK restaurant insolvencies over the three-month period to September, compared to the previous quarter.
The rise in restaurant closures has been driven by an increase in costs, including bringing staff off furlough, restocking inventory, refurbishing premises and repaying loans, while sales have been slow to recover, said accountancy firm UHY Hacker Young.
The dire situation has been exacerbated by the ban on winding-up petitions ending at the end of September, enabling creditors to take legal action once again against companies that owe them money.
Peter Kubik, partner at UHY Hacker Young said that the end of Covid support schemes would lead to more insolvencies.
"With wages no longer being covered by the furlough scheme, this leaves restaurants with a tough decision to make – either bear those extra costs themselves or make redundancies," he said.
"The restaurant sector is still trying to get back up on its feet, whilst dealing with the huge burden of costs such as CBILS and BBLS repayments. There's a risk a wave of insolvencies is waiting to happen if they don't receive further support from the government."