35 of UK’s Top 100 restaurant groups now loss-making – up 75% in just a year

  • Oversaturated market, minimum wage hike put pressure on restaurants
  • Another minimum wage rise just weeks away

35 of the UK’s Top 100 restaurant groups are now loss-making, up 75% from just 20 last year, shows research by UHY Hacker Young, the national accountancy group.
UHY Hacker Young says that trading conditions have become increasingly difficult for restaurant chains dealing with oversaturation in the market as well as rising costs.
The firm adds that this research comes on the back of the high-profile struggles of several major restaurant chains in recent weeks, including:

  • Jamie’s Italian, started by Jamie Oliver, which has closed 12 branches as part of a Company Voluntary Arrangement (CVA) to restructure its £71.5m debt
  • Byron, the burger chain, which may close up to 20 of its 67 branches following a period of paying reduced rent
  • Prezzo, the Italian chain, which is expected to close some of its 300 branches as part of a restructuring
  • Strada, another Italian chain, which closed 11 branches over the festive period
  • Barbecoa, another Jamie Oliver chain, which entered administration in mid-February
  • EAT, the sandwich chain, which was rumoured in early February to be considering closing some of its 100 branches

UHY Hacker Young says that pressures of competing with numerous similar ‘fast casual’ restaurants in an overcrowded high street are a major driver of many large restaurant groups registering losses over the past year.

It adds that the National Minimum wage, which has risen by an above-inflation 19% to £7.50 per hour over the last five years, has added a substantial cost burden to large restaurant chains. From April 2018, the minimum wage will rise even further to £7.83.

Peter Kubik, Partner at UHY Hacker Young, comments: “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.”

“The Government has ratcheted up 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.”

About UHY Hacker Young:

 The UHY Hacker Young Group is one of the UK’s Top 15 accountancy networks with 110 partners and more than 620 professional staff working from 22 locations around the country. The offices within the Group provide a wide range of accounting, tax and business advisory services, with a reputation for integrity and reliability within the financial community, and particularly with London’s Stock Markets. UHY Hacker Young are also ranked 15th in the ARL Corporate Advisers Rankings Guide amongst other UK audit firms for advising London Stock Exchange listed companies.

UHY Hacker Young is a founder member of the UHY International network with offices in every major financial centre in the world. Further information can be found at www.uhy-uk.com



How restaurants are reacting to Vegetarian Month

March is vegetarian month. Recent news shows that an estimated 29% of evening meals in the UK are vegetarian or vegan. These numbers only seem to be increasing, but just how is the hospitality industry reacting? Wayne Redge reports

Reports show that sales of meat-free ready meals were up by 15% in January compared to 12 months before. Vegan numbers went up from 150,000 in 2006 to 540,000 just a decade later, with 1.2 million vegetarians in addition to this in the UK. Not only that, but there has been an uprising of ‘flexitarians’, those who reduce their meat consumption by choosing to have meat-free days. As a result, evidence shows that 25% of people in Britain have cut back on how much meat they eat. With all of these figures on the rise, the transitions to a meat-free way of living aren’t just a ‘fad’.

Signs of the hospitality industry acknowledging these statistics has come with many different reactions. Nando’s, the Afro-Portuguese chain restaurant known for its chicken, has been consistently adding to its range of vegetarian and vegan options over the past few years. The spiced chicken giant has now announced that two more vegetarian dishes will be added to its menu: golden brown halloumi sticks served with a pot of sweet chilli jam dip to start, alongside a new main of Veggie Cataplana (a South African inspired stew dish.)

A host of vegetarian restaurants are also popping up, giving people who have adopted this lifestyle a lot more options. Run by former mentee of Gordon Ramsay, Minal Patel, “Prashad” is a 2 rosette and Bib Gourmand standard Indian cuisine restaurant. The personalised and crafted menu boards created by Smart Hospitality encase an all vegetarian menu that has been the talk of popular review site, Trip Advisor, since the restaurant opened its doors. Receiving the “Most Talked About Restaurant On Trip Advisor Award” and a “Certificate of Excellence” on the site, it is proof of the popularity that a vegetarian restaurant can receive by focusing its efforts towards a collective audience.

January of this year saw a mass of high-profile restaurants trying out full vegan menus or dishes for ‘Veganuary’. Harvey Nichols brought a full vegan menu to its OXO Tower restaurant in the shape of a three course vegan meal and vegan wine list. Upon opening their menu cover, guests were welcomed by the sights of Grilled Tofu with Miso and a Poached Pear and Blackberry Dessert.


Even Michelin Star chef, Tom Aitken took part in his Tom’s Kitchen restaurant . Teaming up with vegetarian burger company, The Vurger Co, he served up a hoisin glazed mushroom patty with pak choi, red cabbage and crunchy spring onions ( pictured above). Due to the success of this vegan burger, he has adopted a vegetarian burger to his main menu since then.

The amount of vegan festivals has seen a massive increase too, with at least 75 festivals lined up for 2018 in the UK alone. The festivals are a celebration of the natural lifestyle whilst also introducing its participants to new vegan restaurants and foods that they may not have tried before. Restaurants are creating pop ups at these events to promote themselves to the vegan following and gain some new supporters.

So, with the popularity of no-meat lifestyles on the rise, it is clear that restaurants have an opportunity to increase their offerings and enable themselves to appeal to a wider clientele. If 25% of evening meals being eaten are meat free, would restaurants do well to make 25% of their offerings meat free? It might even serve as a cost effective alternative whilst not compromising on quality.

Wayne Redge is marketing assistant, Smart Hospitality Supplies

Why is the casual dining sector in trouble?

Byron is one of a number of casual dining chains that are shrinking their estates

Five years ago, the casual dining sector was booming. Private equity houses were investing large amounts of money into new chains of restaurants which quickly expanded their outlets, for example Byron, the burger chain, was bought for £100m.

Today, the sector is, to say the least, struggling. EAT is the latest brand to announce closures. Byron is going through a restructuring, Jamie’s Italian has entered into a company voluntary arrangement, and Strada is implementing a closure programme.

What has happened to bring about this sudden reversal of fortunes? Roger Gregory, partner at Pitmans Law, has the answers. Read on

Roger Gregory
Partner, Pitmans
D +44 (0)207 634 4634
M +44 (0)774 760 3864
E rgregory@pitmans.com

Pitmans Law is a Business Partner of the Institute of Hospitality.

Food additives are a cause of obesity, says Mike Duckett MBE FIH

Mike Duckett MBE FIH, centre, meets HRH The Prince of Wales

The hospitality industry has a responsibility to promote healthy eating habits, writes Mike Duckett MBE FIH, the ambassador for good hospital food and the former award-winning head of catering at The Royal Brompton Hospital, London.

“I have always worried about the amount of chemical additives added to food during manufacturing and the number of alien ingredients used to extend the colour and the shelf life of food, especially ready frozen meals. I have been very vocal in expressing my concerns which were confirmed recently when I visited the local hospital here in Surrey.

I was disturbed to hear of two eight-year-old boys who were hospitalised with severe pain from type-one diabetes. The senior nurse on duty told me that the main cause was their poor diet and lack of a variety of healthy food.

We therefore as the hospitality fraternity  have a collective responsibility to ensure that the food we serve is healthier.  We should persuade those who manufacture meals to be more aware of the steps needed to reducing high levels of obesity.

Statistics show that we are eating out more regularly and that we tend to eat more in a restaurant than in the home environment. This raises one important question. How safe is it to eat out these days? Recently we have heard that a major meat supplier was told by the FSA to stop supplying, a popular pub chain received a zero rating for hygiene,  and food factories change best before dates on food.  We also hear of customers dying from eating food that cause allergies. It makes you wonder if eating out is taking your life in their hands.

Hospitals, care homes, meals on wheels services and the general public are in the habit of purchasing  ready frozen microwave meals. These meals are high in fat, sugar and salt. Scientists have warned that emulsifiers – the chemicals widely used in processed foods including ice cream, bread and chocolate – may be a key cause of obesity. These emulsifiers are used to make smoother textures in foods such as peanut butter, sausages and mayonnaise. They are understood to be chemically active long after we digest them and they increase hunger and therefore we eat more.

If we are going to take the growing obesity epidemic seriously, we need an urgent look at what is being used in our food manufacturing and in the type of food and ready meals we serve our customers and campaign for the use of fresh local ingredients from as near the point of service as possible.”

Combustible Cladding – Advice from Pitmans Law

Grenfell_Tower_fire_morningIn the wake of the Grenfell Tower tragedy it is not just the landlords of high rise council tower blocks and those in the public sector who should be concerned about the presence of combustible cladding in their buildings, writes Alan Davies, partner, Pitmans Law

Landlords of hotels and indeed of all premises in the hospitality and leisure industry have a duty to ensure that their premises are safe for all persons who use them and should be proactive in the ongoing compliance with their obligations. They should check the fire safety accreditation and building regulation compliance of any panelling used in their buildings and contact their surveyors or architects for advice.

If their premises contain cladding panels which are found to contain Aluminium Composite Material (ACM) or similar materials, they may not be compliant with the requirements of current Building Regulations guidance. Samples of any such materials can be provided for verification to independent testing facilities such as The Building Research Establishment (BRE).

If the materials are non-compliant, measures would include informing the local fire and rescue service requesting they carry out an urgent inspection and checking of the most recent fire risk assessment for the buildings concerned and considering action to have the panels removed.

In addition, as a matter of good practice, full fire safety checks should be implemented including ensuring that all entrance doors, and doors that open onto escape corridors and stairways, are fire resisting and effective in self-closing. Also check all walls, plant and store rooms to ensure there are no obvious routes for fire or smoke to spread such as holes where pipes and cables pass through walls.

Smoke control systems, including associated fire detection and suppression systems (including sufficient and appropriate fire extinguishers) should be tested to make sure they are operating correctly and if there is no sprinkler system, landlords are recommended to take advice on installation.

Alan Davis

Partner, for and on behalf of Pitmans LLP
D +44 (0)118 957 0300
M +44 (0)788 182 5803
Email: alandavies@pitmans.com

Pitmans Law is a Businesss Partner of the Institute of Hospitality

Drop a dime on food crime with the FSA’s Food Crime Confidential

Do you suspect a business of dishonesty involving food, drink or animal feed? The NEW Food Crime Confidential is a reporting facility where anyone with suspicions about food crime can report them safely and in confidence, over the phone or through email.

Food Crime Confidential is overseen by the Food Standards Agency’s National Food Crime Unit (NFCU), which works with partners to protect consumers from serious criminal activity that impacts on the safety or authenticity of the food and drink they consume.

The facility is particularly targeted at those working in or around the UK food industry. Employees of the hospitality industry are well-placed to provide information which could help the NFCU identify and pursue offenders.

The National Food Crime Unit would like to hear from anyone who has suspicions:

  • that food or drink contains things which it shouldn’t
  • that methods used in your workplace for producing, processing, storing, labelling or transporting food do not seem quite right
  • that an item of food or drink says it is of a certain quality or from a specific place or region, but it doesn’t appear to be.FoodCrimeConfidential

‘Drop a dime’ on suspicious activities: call 0207 276 8787 or email foodcrime@foodstandards.gsi.gov.uk

Anti-terrorist lessons for hospitality managers

Understanding how to Run, Hide and Tell could save lives
Understanding how to Run, Hide and Tell could save lives

Terrorist attacks on ‘soft targets’ such as restaurants, hotels and resorts in Paris, Mali and the Côte d’Ivoire are a stark reminder to the hospitality industry about the need for a regularly reviewed security policy, a business continuity plan and for well-trained staff.

In a recent Institute of Hospitality Insight article, academic and risk expert Alexandros Paraskevas highlighted four key areas in which hospitality organisations and their staff can build their baseline security and anti-terrorism measures.

The key points are:

  • Counter-surveillance
  • Protective measures
  • Active shooter and hostage situation survival
  • Radicalisation (awareness of)

Members of the Institute can access the full article in the February 2016 Insight e-Newsletter in our Publications section of the website.

In the meantime, managers can refer to helpful free resources like NaCTSO’s Stay Safe firearms and weapons attack training materials, which can help managers, staff and the public in learning how to survive a weapons attack. The materials describe what to do during an event to ensure the safety of oneself and others, how and when to alert authorities and how to get to safety.

Attacks on soft targets, like hotels, resorts and concert halls, show that managers in hospitality should continue their good practice when it comes to security but they should also revise their security to mitigate an attack with counter-surveillance and measures aimed at dealing with specific patterns of assault that include active shooters and hostage situations.

Alexandros Paraskevas is professor of strategic risk management and chair in hospitality management at the University of West London