By Lauren Howells

More than a third of the UK’s top 100 restaurant groups are now loss-making, according to a new study.

35 of UK’s top 100 restaurant groups are not making a profit

The research, carried out by UHY Hacker Young Chartered Accountants, discovered that 35 of the UK’s top 100 restaurant groups are not making a profit, up by 75% from only 20 last year.

An oversaturated market, minimum wage increases resulting in higher staff costs and weak consumer confidence, have all been blamed for what is being dubbed the ‘casual dining crunch’.

The Guardian also mentioned that rising food costs, made worse by the weaker pound after the EU referendum, could possibly be another factor.

Prezzo close 94 of its restaurants as part of a voluntary arrangement

It emerged last week that Prezzo is set to close around 100 of its branches as part of a company voluntary arrangement (CVA). All of its Chimichanga restaurants will also reportedly be closed. It is thought that around 1,000 jobs could be affected as a result of the closures.

Jamie’s Italian announced in January that it would be closing 12 out of its 37 branches, whilst Strada has already closed 11 of its branches, reportedly due to “disappointing trading and rising costs”.

UHY Hacker Young finds third of top restaurant groups now loss-making

Major groups pushed to breaking point

Peter Kubik, a partner in UHY Hacker Young’s London office, said:

“More than a third of the biggest companies in the restaurant sector are losing money, and there is little respite on the horizon. 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. Consumers only have a finite amount of spending power when it comes to eating out, and the oversaturation of the market means that groups that fall foul of changing trends can very easily fail”.

UHY Hacker Young says that the minimum wage rise over the past five years has added a “substantial cost burden” to large restaurant chains. Another minimum wage increase is due in April, which UHY Hacker Young says will be “tough for a lot of restaurants to absorb”.

It has also been reported that Italian chain Carluccio’s may be working with accountants KPMG to “assess its options”.