The hospitality sector in Yorkshire and Humber appears to be weathering the storm of falling consumer confidence in the face of Britain’s withdrawal from the EU, with the region among those seeing the lowest levels of restaurants at higher than normal risk of insolvency in November.
According to the latest research from insolvency and restructuring trade body R3, in Yorkshire and Humber, of the 11 sectors monitored, the restaurant sector was the one with the lowest levels of business at higher than normal risk. Of the nearly 6,800 trading restaurants in the region, over 2,100 were deemed to be at elevated risk, representing 31.4% of the sector. The level of restaurants in the region at increased risk is lower than the UK-wide figure of 32.9%.
In fact, restaurants across the North performed strongly this month with the North West (29.2% at higher than normal risk), the North East (30.2%) and Scotland (31.2%) all beating the national average. In contrast, the regions with the highest levels of restaurants at higher than normal risk were the South West (37%), East of England (35.2%) and South East (35.1%).
In Yorkshire and Humber, other hospitality sectors also fared relatively well with 33.2% of hotels at elevated risk and 34.5% of pubs. However, professional services (48.6% at higher than normal risk), technology (45.9%) and construction (44.1%) experienced the highest levels of risk of those sectors monitored by R3. Across all types of active businesses, the region saw 42.3% of businesses at elevated risk, close to the nationwide figure of 41.1%.
Eleanor Temple, chair of R3 in Yorkshire and barrister at Kings Chambers in Leeds, commented: “With reports of restaurant insolvencies rising by almost 25% in 2018, it’s reassuring to see that the sector appears to be stabilising. Both independent restaurants and well-known high street chains have struggled in an extremely challenging environment as they have faced market saturation, exacerbated by consumers tightening their belts amid Brexit uncertainty.
“However, the picture is perhaps not as bleak as it seems with exciting new restaurant brands emerging and certain cuisines increasing in popularity, particularly those which are able to tap into the consumer-led demand for healthy eating and vegan options.
“We are fortunate to have a diverse choice of restaurants in Yorkshire and it is good to see that they are remaining resilient and, hopefully, will be able to benefit from the ‘golden quarter’ as we head towards Christmas. However, with the New Year a notoriously tough time for the industry, we encourage directors to remain cautious and be vigilant about profit margins and cash flow. Do ask for advice from an insolvency professional if you start to experience any financial problems.”
R3 uses research compiled from Bureau van Dijk’s ‘Fame’ database of company information to track the number of businesses in key regional sectors that have a heightened risk of entering insolvency in the next year.