More than a third of the UK’s top 100 restaurant chains are now loss-making, says report
More than a third of the UK’s top 100 restaurant chains are now loss-making, up 75% on last year, as the casual dining crunch continues to threaten the restaurant market.
“Oversaturation” of the market, rising businesses rates, and higher staff costs were cited as some of the reasons for the slashed profit margins according to accountancy group UHY Hacker Young who compiled the data.
Jamie’s Italian, Strada, Byron and Prezzo are just some of the sector’s best-known names that have announced store closures in recent weeks and UHY Hacker Young says that there is “little respite on the horizon.”
- Peruvian restaurant chain COYA grows franchise with entry in Monaco
- Pizza Express to tackle casual dining industry blues with live music
- Wasabi gains £30mn investment to aid UK expansion drive
Jamie Oliver closed 12 of his Jamie’s Italian restaurants. Meanwhile, high-end burger chain Byron is also set to close up to 20 of its 67 branches.
Pizza chain Prezzo has also announced plans to close about a third of its outlets (around 94 restaurants) in an attempt to cut costs.
UHY's Peter Kubik said: "Pressures on the restaurant sector have been building for years, and the last year has pushed a number of major groups to breaking point. With Brexit hanging over consumers like a dark cloud, restaurants can't expect a bailout from a surge in discretionary spending."
He added that “consumers only have a finite amount of spending power when it comes to eating out” and that “oversaturation of the marker means that groups that fall foul of changing trends can easily fail.
The accountancy firm also blamed the UK Government for soaring costs “with a series of above-inflation rises in the minimum wage and we are just weeks away from another 4.4% rise in April. That will be tough for a lot of restaurants to absorb.”
On top of this, rising food costs worsened by the weak value of the pound has also been blamed for increasing pressures.
Deliveroo boss, Will Shu, goes undercover as food courier
The co-founder of Deliveroo, Will Shu, has taken a humble approach to leading the company, by delivering food to customers himself to find out what his employees deal with. On one recent trip, he noted how restaurant staff were ‘rude’ to him when he pointed out that the food he was due to deliver was cold.
Co-founder Will Shu is based in London. The University of Pennsylvania graduate hatched Deliveroo in 2012, with the target of getting local restaurant meals to hungry people quickly. The company has a revenue of £476m.
Please tell your staff to smile, says Deliveroo boss
The Deliveroo app allows users to order takeaway food, which is then delivered by independent food couriers, often cyclists in weather-proof backpackers, to a house, place of work or even a public location. The company is now active in 12 countries and has helped many through the stress of the pandemic by delivering delicious meals to the doorstep.
Shu has chosen to do several undercover rounds and he told The Diary of a CEO podcast that on one delivery in Notting Hill, he was rudley disregarded by the staff of an eatery where he collected the food.
“I did five deliveries last night in Notting Hill. I’m not like a celebrity so no one recognises me. Then I got the food and it was kind of cold, and I’m like ‘hey, you know this food’s kind of cold’ and they were like ‘just deliver it buddy.”
Shu refused to name the location but said he would tell their bosses about the incident.
“We need to figure out a way to get this to work. Please tell your staff just smile, say ‘hey, how are you doing’. It makes a big difference in people’s days.”
Deliveroo set to expand its business with new tech roles
Deliveroo has recently announced that it will create 400 high-skilled tech jobs, to support its rapid growth and to help restaurants improve efficiency.
The company is seeking to hire across a range of skill sets including software engineers, product managers, user researchers, designers, and even data scientists.