With the looming recession and further rises in energy bills weighing on businesses, a separate report found that £700m of business rate relief remains unpaid with only half of English councils paying the support funds. A record 64% of the largest restaurant companies are now loss-making, according to accounting firm UHY Hacker Young. Several have suffered heavy losses due to major restructuring programs undertaken after the pandemic and debt repayments, particularly to landlords. The restaurant industry had expected a rebound in profits after the pandemic, but that has been jeopardized by spiraling food inflation and falling consumer confidence caused by interest rate hikes. Restaurants have also been hit by labor shortages, forcing them to cut back on servings and therefore reducing the amount of revenue they can generate, especially at peak times. Peter Kubik, partner at UHY Hacker Young, said many in the restaurant sector were concerned about a further fall in consumer spending as Britain heads into recession. The Bank of England predicts a recession lasting more than a year and inflation rising above 13%. “It may be a case of ‘out of the pan, into the fire’ for many restaurant groups in the UK,” Kubik said. “Higher consumer spending was expected and needed as we put Covid further behind us, but that spending is now likely to come down when it’s most needed.” The restaurant industry was struggling even before the pandemic. Many groups took on large amounts of debt to fuel aggressive expansion campaigns, which pushed them into losses even before the virus outbreak led to lockdowns and temporary restaurant closures. However, in the long term, many restaurant groups expect to return to profitability, according to the report. Restructuring programs reduced the size of their debts, while several large chains closed unprofitable branches and renegotiated rents through voluntary arrangements. They include The Restaurant Group, which owns the Wagamama and Frankie & Benny’s chains, and now runs 400 restaurants and pubs. Meanwhile, only around half of councils in England have started paying support payments to businesses from a £1.5bn relief package announced by the government in March 2021, according to a freedom of information request filed by the company real estate consultants Gerald Eve. It asked all 309 councils in England how much they had paid to local businesses. Of the 219 respondents, just 58% have started paying anything, despite the deadline for completing aid payments in less than two months. The support package targeted businesses such as manufacturers, warehouses and office occupiers, which had not been granted any business price support unlike retailers, leisure and hospitality. Subscribe to the Business Today daily email or follow Guardian Business on Twitter @BusinessDesk Responding councils that have started making payments account for £667m of the £1.5bn funding package, but have so far paid out just £351m. Extrapolating this trend across all 309 councils in England suggests that only up to £790 million will be paid by the deadline. Any surplus must be returned to the government, short-changing businesses by around £700m, the consultancy said. Councils that had not made payments by the date of the FOI request include Cambridge, Cornwall, Dover, Milton Keynes, Sheffield and Wigan as well as Hackney, Hammersmith and Fulham, Hounslow and Kensington and Chelsea in London .
