Insolvencies among the UK’s restaurants increased 7% in the three months up to the end of 2013, according to new research from Wilkins Kennedy.
The figures showed 170 restaurants become insolvent in Q3 2013, jumping to 182 in Q4, up from 167 insolvencies during the same period in 2012.
The increase in restaurant insolvencies contrasted the economic recovery, which saw GDP grow rapidly in the last quarter of the year, rising 2.8% on the same period in 2012.
Insufficient bookings, which led to banks withdrawing funding from those whose reservation books looked sparse, as well as extreme weather conditions throughout the period have contributed to the rise in insolvencies according to Wilkins Kennedy.
Anthony Cork, partner at Wilkins Kennedy, said: “The Christmas period should be a big earner for most restaurants, and a healthy restaurant should have plenty of advance bookings for office Christmas dos and family celebrations.
“An empty reservation book in this crucial period is likely to be a sign of a wider failure to draw in the crowds.”
Many restaurants may not have been able to benefit from the seasonal increase in foot traffic over the Christmas shopping period due to the harsh weather conditions.
Cork continued: “The recent flooding will only have exacerbated the problem. Trading in many rural restaurants will have been decimated.”
Wilkins Kennedy makes the point that the rise in restaurant closures illustrates that the economic recovery has not fully fed through to significant wage growth, hindering discretionary spending on restaurants outside of London.
High-profile restaurants have not managed to escape closures, as celebrities Jamie Oliver, Gregg Wallace and Dermot O’Leary have recently had to close down some of their restaurants due to poor performance.
Cork added: “With the economy just returning to form, individuals may not yet be enjoying the benefits of growth. It may take a while before improved consumer confidence is firmly established and spending in restaurants increases.”