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.”
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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.
Just Eat delivers strong first quarter growth as revenues rise 50%
Strong order growth an...
Online takeaway company Just Eat delivered a strong start to the year reporting that revenues rose 49% during its first quarter.
Strong order growth and more high-value delivery orders were credited for the upbeat results as the group posted £177mn in revenue in the first three months of the year.
The takeaway delivery operator said that UK orders rose 24% to £29.7mn during its first quarter, noting that it processed its 400 millionth British order yesterday.
UK orders were lifted by the firm’s acquisition of rival Hungryhouse in January, which added an extra 1 percentage point to UK order growth, according to the company.
The firm also reported strong growth abroad noting that international orders were up 46% to £21.9mn.
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Just Eat said that this was driven by continued triple-digit growth in Canada and strong performances in Italy and Spain which offset “softness” in Australia.
“Just Eat has had a strong start to the year,” commented Peter Plumb, CEO. “We delivered our 400 millionth order in the UK, grew well in Italy and Spain, whilst powering continued momentum in our Canadian delivery service SkipTheDishes.
“I’d like to welcome all our important new Restaurant Partners to the Just Eat family, including those from our successful recent acquisition of Hungryhouse.”
Just Eat was the top rise on the FTSE 100 index, with its shares up more than 4%.
In March, Just Eat announced that it was investing £50mn in developing its own delivery service which has helped to boost its margins.