
RCM Advisory
July 2023Business & Insolvency news | Cost of living Crisis - Restaurants closing in record numbers
Business Diary.

Business & Insolvency news | Restaurants closing in record numbers
21/jul/2023The casual dining sector has been one of the biggest casualties of the cost-of-living crisis to date as 40 Restaurants were declared insolvent every week in the 1st quarter of 2023. Recent statistics released by the insolvency service for 2023 Q1 quarter show a total of 3,347 establishments have been unable to make end meet in the past 2 years to March.
Adding to recent inflationary pressures of the past 12-18 months, interest rates are now starting to bite businesses as the average borrowing rate has doubled in the past year, rising from an average effective rate of 3.4% to 6.9%. UK Interest rates have been rising since December 2021 as part of the Bank of England's effort to reduce inflation and the base rate now stand at 5%
According to a recent Bank of England report, businesses facing interest payments of more than 40% of their annual revenue are much more likely to experience repayment difficulties. 70% of businesses are expected go beyond that percentage by the end of the year. The Bank of England stated "Insolvencies are likely to rise further, as pressures caused by higher interest rates and the relatively subdued economic outlook continue to feed through"