Economic recession: Bankruptcy of UK restaurants

What is the reason for the decrease in customers of UK restaurants?

What do the predictions indicate about the state of UK restaurants?

What has been the effect of high inflation on UK restaurants?

What is the reason why the British are looking to reduce essential expenses?


In today’s economic crisis, UK restaurants go bankrupt faster than during the Covid-19 epidemic. Food prices in the UK have increased between 30 and 60 percent in recent weeks. But UK restaurants, which have traditionally operated on low margins, are feeling more pressure due to their dependence on Russian imports. The bankruptcy of UK restaurants has occurred without government support.


UK restaurant customer decline

The decrease in customers has led to the bankruptcy of UK restaurants. The Guardian reported that the number of restaurants closed in 2021 increased from 985, with a 60% increase, to 1,567 in 2022. Based on this, the rising cost of energy, the lack of labour and the decrease in customers have caused UK restaurants to go bankrupt faster than during the Covid-19 epidemic. According to the research results by advisory firm Mazars, these closures reached 453 in the last quarter, which was reported as 395 in the same period the previous year.


The bankruptcy of UK restaurants at a very high speed

The bankruptcy of UK restaurants is occurring at a very high rate. Restaurant bankruptcies are happening at a much faster pace now than during the Covid-19 era. This is a very toxic combination of rising input costs and a weak demand market that is new to many service centres. According to last month’s forecasts, more than one-third of businesses in this sector may disappear in the first months of 2023.


The effect of high inflation on UK restaurants

The reason for the bankruptcy of UK restaurants is high inflation. The UK catering industry experienced a comeback this summer after a period of forced closure due to the Covid-19 lockdown. Still, now restaurants are struggling with rising inflation, which has increased the cost of energy, food and drinks and means their customers have less money to spend.


The British seek to reduce the necessary costs.

Barclaycard, a financial services company in the UK, recently reported that more than half of people in the country are looking to cut back on essential expenses, which has the country’s stores worried about a drop in revenue in the weeks leading up to Christmas. In the meantime, many businesses are facing the post-Brexit labour shortage crisis, due to which the basic salaries of employees have also increased.


Hard months for the UK welfare industry

The bankruptcy of UK restaurants has been happening for months without government support. Businesses in the UK’s welfare industry are in for a very tough few months, and more bankruptcies are sure to follow if they don’t get more support from the government, which is unlikely to happen. British people will be poorer in 2028 compared to the economic crisis of 2008. The British economy has entered a recession due to several successive problems.


Increasing visits to food banks

The findings of one of the largest British charities, Trussell Trust, show that more than 320,000 new clients have joined the ranks of food bank users in this country, and a significant number of them are from working families. According to this report, British charities distributed more than 1.3 million emergency packages to needy people in just six months, a new record.


Warning of rising poverty in the UK

Trussell Trust stated that working families turning to food banks is a severe warning about the poverty situation in the country, adding that for the first time, the level of turning has exceeded the aid provided. This charity asked the government to support food banks and charities in the budget bill. This is while the government is facing a deficit of 50 billion pounds and has resorted to increasing taxes and reducing living expenses.


A brutal winter awaits the British

Emma Revie, chief executive at the Trussell Trust, also warned about this: “These new statistics show that, even in summer months, people are struggling to afford the essentials, and we are expecting that this winter will be the hardest yet for food banks and the people they support. I’m afraid that’s not right. We know that with the right support and a stable and sufficient income, people don’t need to turn to food banks for support.”


The UK entered a long period of economic depression.

The economic conditions of the UK are in the worst conditions of the last half century due to several consecutive crises. The inflation rate reached 10.1%, the highest level in the previous 40 years. According to the Bank of England’s head, the UK has entered a prolonged economic recession, and the inflation rate is expected to exceed 15%. New UK PM Rishi Sunak has said in controversial statements that people should not expect the government to solve all their problems. He added that his government tries to be honest with the people about the country’s complex economic and financial situation.


The bankruptcy of businesses related to the tourism industry

Surveys show the bankruptcy of UK restaurants. The results of the latest survey show that more than a third of businesses related to the tourism industry in the UK will go bankrupt by the beginning of next year due to rising energy costs and inflation. Reuters wrote in a report that the results of the latest survey show that more than a third of businesses related to the tourism and hospitality industry, including coffee shops, restaurants and hotels, may go out of business due to rising energy costs, inflation and rising food prices, and declining. The client will go bankrupt early next year.


The loss of British tourism industry activists

The bankruptcy of UK restaurants is due to the high inflation of food prices. While almost all businesses say they are facing rising energy costs and food price inflation, 35 percent of respondents in a quarterly survey of tourism and hospitality industry activists said they expected to suffer losses. Or they will not be able to continue working until the end of the year. According to the joint report of three unions and the institute responsible for the British tourism sector, more than three-quarters of business owners in this sector (77%) reported a decrease in coffee shops and restaurant customers, and 85% expected the situation to get worse.


The unpleasant situation for tourism business owners

According to trade unions, the survey reveals the dark and unpleasant situation faced by business owners in this trade, as many of them are on the brink of bankruptcy due to the crisis in business expenses. The vulnerability of this sector due to the increasing energy costs, the crippling increase in the price of goods and the decrease in consumer confidence is visible in this survey. If immediate action is not taken, it seems pretty likely that UK Government will lose a significant part of the UK tourism and hospitality sector in the coming weeks and months.


UK restaurants, many of which suffered due to the months of forced closures imposed by the government during the Covid-19 outbreak, were able to quickly return to normal this summer due to people’s acceptance of the possibility of being more freely in public places. But rising food prices and labour shortages, especially for professional jobs such as chefs, which have led to severe wage inflation, have limited the recovery of these businesses. Until now, some coffee shops and hotels have closed or are planning to close in the winter season because they cannot afford to pay the high costs.

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