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Catering business bankrupt proliferate in the UK

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a week ago we woke to the news that the Jamie Oliver empire crumbled and restaurants went into bankruptcy. And it is to manage a catering business is no simple matter, but it is much less when the socioeconomic and political circumstances in your country are extremely volatile. A) Yes, although there is always a small percentage of insolvent restaurants, in the UK the situation is unsustainable: every day four facilities belonging to the sector close.

The situation has nothing to do with a few years ago. In 2010, local casting the closure were not even half of those who do today. Just in the last year the number of bankrupt businesses has increased 40 percent.

What are the factors that cause this destruction of spaces restoration?. Several factors have come together in what is a perfect storm. Let's do a brief analysis.

1.- Increase in the price of rental property

The vast majority of restaurateurs do not own property they use for their economic activity. Leasing offers advantages that are difficult to overlook, including Low initial investment necessary, key point at the time of opening the restaurant.

Nevertheless the rents have climbed rapidly in recent years. In big cities the price of land It is inasumible. The problem is not endemic to London, Birmingham, Leeds o Glasgow. In New York this same issue has led to associations of hoteliers and restaurateurs to send local open to the city council letters demanding support and control, and to pressure the local government to take action on the matter.

This price rise in low and other commercial premises corresponds to the proliferation of accommodations tourist. With the emergence of platforms such as Airbnb, some owners have used to circumvent the strict regulations regarding hospitality creating hostels and rooms for rent beyond the legal framework that regulates the sector. The most important cities are those who suffer most established of these businesses, and that It affects all properties in the catchment areas, effectively making the price keeps rising.

2.- The Brexit and the future of cheap labor in the country

Negotiations Brexi They are fierce, but things are not looking good for UK. How does this affect restaurants? First we must consider the interesting juncture where these businesses are found: he 57% Workers in these premises are foreigners.

Foreign workers provide an opportunity to take better economic performance to the activity of the establishment. On the one hand are well trained to perform the tasks attributed to them, Spanish and Eastern European countries are highly regarded professionals. On the other hand, these workers receive lower wages to a British.

A hard Brexit, or an unfavorable agreement for the government of the islands, put all these people in a deplorable situation. Among the consequences they are shuffled it's a mass exodus of foreigners, that would leave UK to return to their country of origin or resettle in another member state of the European Union.

Far from being the matter there, Just as people leave jobs, no new workers arrive. In this way, business is expected to restore UK are forced to hire foreign workers with much higher rates, which negatively affect their business competitiveness.

In fact, it's already happening. Given the atmosphere of instability and insecurity that permeates, some of these foreign workers are already traveling back to their homes. And every action has its reaction: restaurants have already begun to suffer the effects of runaways on their monthly bills.

Although this fact alone does not have capacity (or should not) to sink a catering business and take it to bankruptcy, the truth is causing insecurity in the workplace that inherently leads to the closure of the establishment as some additional difficulty is added.

3.- Great hospitality businesses saturation in the market

An uncomfortable reality is that there are more restaurants than are necessary. When a burger as Byron, an Argentinean grill as Gaucho or Italian food chains like Price, Carluccio’s Y Jaimie’s Italian They are forced to close or reorganize local business structure through voluntary agreements (CAV), something is wrong.

And what is wrong is that all restaurateurs want a slice of the pie, but there is no pie for everyone.

Staying competitive in a sector is overly saturated excessively complicated because soon expenditures exceed income received from sales. And it's even worse when we consider the next point.

4.- Changes in consumer behavior diners

Tastes and preferences of consumers in what touches to food and meals away from home are increasingly multifarious and unstable.

Fads come and go in the blink of an eye, without the restorers have an opportunity to capitalize on them, since the process of adapting to them involves costs that hardly recover.

The existence of increasingly targeted niches implies that larger establishments might be in danger of extinction, and hence the 1442 British restaurants with bad debts during 2018. Small local have it easier to retain customers and focus their efforts on a cohort of consumers greatly reduced, which show however high satisfaction with services rendered.

According to Paul Pittman, partner agency study of insolvencies Price Bailey, "The tough market conditions to which the catering sector faces show no signs of change '. And punctuated: "Restaurant chains are especially vulnerable to fads consumer. What was an instant sensation of the moment, You can stop being in vogue quickly '

But undoubtedly the biggest change in consumer behavior of the diners and the straw that broke the camel business competitiveness in the sector is the arrival of companies home delivery food.

With a sustained pace of implementation and higher than 10%, platforms like Deliveroo, Just Eat O Uber Eats generate even more stress in the lives of restaurateurs, you now see how your local feud, dominated by the physical establishment, it is called into question: All restaurants in the city are just a few clicks away for the user.

Many restaurants have not been able to adapt to changing times, and while sharing food delivery still decided rise, there will be many others who fail to overcome the new market needs.

Although 2018 It has been the "hardest year for the sector", according Pittman, 2019 It could be even worse.

In the end, "Restaurants are businesses with strong equity requirements, Many [restaurants]advance tightrope of accounts and often only takes a few months of poor sales to fall off the cliff '.

Catering business bankrupt proliferate in the UK
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Article by the editorial team of DiegoCoquillat.com. It has professionals both in the field of hospitality, gastronomy and tourism, and new technologies and innovation.

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