Subscriber login Close [x]
remember me
You are not logged in.

UK chains enjoy profit increase

Published:  07 August, 2023

According to research from UHY Hacker Young, the UK’s Top 100 restaurant groups have recorded a twelvefold increase in their profits in the last six months, rising from £19.9m in September 2022 to £241.8m in March 2023.

This amounts to a 3% average profit margin for the UK’s biggest restaurant groups – a marked increase from the 0.5% average profit margin recorded in September of last year.

The new figures provide some much-needed optimism according to Peter Kubik, partner at UHY Hacker Young.

“These latest profits are a very encouraging sign. The health of the hospitality sector has been a concern since long before the pandemic and these figures show the recovery is well underway,” Kubik said.

 “That restaurant groups have done as well as they have underscores the value of the restructuring many of them have undertaken in recent years,” he added.

The UK’s Top 100 restaurant companies returned to profitability in September last year having been lossmaking since 2018. However, recent rises in interest rates put that rebound in profitability at obvious risk, even for the wealthy UK chains.

Following private equity-funded overexpansion during the 2010s the sector went through a rash of restructuring and insolvencies. This was followed by further stress from Covid-enforced closures and, more recently, the cost-of-living crisis.

Gourmet Burger Kitchen (GBK) is one such example of a chain that had to go through several rounds of reorganising before it returned to profitability as part of the Boparan Restaurant Group. GBK closed 26 restaurants as part of a pre-pack deal in late 2020. This followed the closure of 17 loss-making sites in 2018 – GBK now has 35 operational outlets in 2023.

The increased profit margins for the chains is somewhat caveated by the continued struggles of the independents. As reported by Harpers, Britain has lost around one in 18 of its licensed premises in the last 12 months – a total of 5,736 pubs, hotels, restaurants, bars and cafes.

Since March 2020, close to 15,000 outlets have been forced to close, equating to 5% of the market annually, according to CGA.

In a recent survey by Peckwater Brands (PWB), Two in five decision-makers within hospitality businesses (40%) would welcome an extension of energy bill relief, while 36% would like to see the return of ‘Eat Out to Help Out’ or a similar initiative.

To cut costs, 48% have renegotiated with or changed their supplier in the past year, with a further 44% planning on doing so in the next 12 months. 

Many are also reevaluating their business strategy: 26% have switched to a takeaway-only model, with 32% planning to do so, while 39% are planning a complete rebrand of the business.

Whilst the chains continue to outperform expectations in the face of the cost-of-living crisis, more needs to be done to ensure the indies can begin to thrive once more.