Why have so many restaurants closed in 2018?

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Dining out really is a special treat. For me personally, I can’t think of anything better than getting together with friends and family at the end of a long week and enjoying some great food together (without having to do the dishes, either!) But for the first time in 8 years, the number of UK restaurants has dropped according to a Market Growth Monitor report from CGA and AlixPartners. They found that on average two restaurants closed per week across Britain in 2018. Not only this, Big Hospitality says London restaurant closures are the highest they have been for 28 years.

But why has this happened? And what does this mean for the future of the dining industry? In this article, I’ll be exploring some of the likely causes and how they may affect the future of dining.

Dining-in attitudes

The first thing that springs to mind when you think of restaurant closures is an increase in dining-in. Getting a takeaway has become a popular way to mark the end of the week, not just because it’s often cheaper, but also because higher professional demands mean we are just too tired when 5pm comes around. But with our changes in attitudes towards healthy and mindful eating, the delivery scene is changing, and instead we are wanting our favourite dishes but in the comfort of our own homes.

I have already touched on this budding trend in my food and dining trends to expect in 2019 article, but in terms of how this is affecting restaurants here and now, it seems that consumers want to have their cake and eat it too (no pun intended). They want to be able to enjoy eating the food from their favourite restaurant, without actually having to be there. And the likes of Just Eat, Deliveroo and Uber Eats are responding to this trend with delivery-only ‘virtual restaurants’.

Consumers want ease and convenience, and one restaurant that offers delivery of their dishes compared to one that doesn’t is surely going to win that contest on a hungry Friday night. Admittedly, being digitally-savvy isn’t necessarily on a restaurant-owners mind, but by being too slow to jump on the digital bandwagon they run the risk of being left behind - perhaps what has happened to restaurants up and down the country.

Economic Challenges

As well as facing challenges by changing consumer attitudes, it seems restaurateurs are also facing economic challenges, particularly from Brexit. “The fall in the value of the pound has made potential take-home pay less attractive for European workers and increased the price of food and other essentials for restaurateurs,” says The Guardian. Restaurants are also struggling to cope with employment costs, including rises in minimum wage and a low availability of staff because the stemming of migrants coming into the UK.

It seems the only real way to cover this cost is to increase prices, but understandably, restaurant-owners are hesitant to do this says The Guardian. “There is a real reluctance to increase prices to the consumer for fear of damaging fragile discretionary spend,” Kate Nicholls, Chief Executive of the ALMR told the Food and Drink Federation.

“There is a risk that additional costs could hit at a time of great instability hitting eating and drinking out businesses that are crucial to the UK economy and have helped restore prosperity to our town and city centres.”

With new dining-in trends and economic challenges brought on by Brexit, it seems restaurants big and small are struggling to keep their heads above water, particularly with the increase in business rates on the high street. These climbing rates are enough to tip small operators over the edge from being highly profitable to losing money. It’s also no secret that even the big chains are trying to renegotiate rents with the landlords, particularly if they have gone into a CVA (Company Voluntary Arrangement) to stay afloat. 

There’s no telling yet what may happen to the UK’s dining industry from an economic point of view, but for now it seems that exploring new delivery options, creating new experiences and standing out from chain restaurants with your offering could be a good place to start.