A wave of restaurant insolvencies is expected as a result of the coronavirus crisis but the sector has also been hit by worsening losses in recent years, according to a new report.

Losses at the top 100 restaurant groups increased by 94 per cent to £151m last year, research by accountancy group UHY Hacker Young suggests.

Losses have worsened in recent years and the trend is expected to continue as restaurants grapple with the difficulties of reopening whilst meeting social distancing guidelines, said the report.

The Government has announced restaurants could be allowed to reopen on 4 July, although at a reduced capacity to ensure social distancing.

The measures could reduce the attraction of going to a restaurant, while companies will incur additional costs, said UHY Hacker Young.

Its report warned a wave of insolvencies is expected later this year, while a number of restaurants are likely to look at reducing the number of sites, cut menus and make further redundancies, especially once the furlough scheme comes an end.

Peter Kubik of UHY Hacker Young said: “The restaurant sector has been put under huge pressure by this crisis and the lockdown. It really needs the Government to formulate proposals that will help the sector bounce back as quickly as possible.

“Flexibility on social distancing rules will therefore be key in both ensuring customers enjoy their experience and restaurants remain profitable.

“Restaurants face big upcoming bills to deal with the post-lockdown period. It is essential they start putting in place cash management measures as soon as possible to ensure they have enough working capital to meet them.”

AP