Is the London restaurant bubble going to burst?
According to accountancy firm Moore Stephens, in 2017/18 there were 1,219 restaurant insolvencies, up 24% on the year before and nearly double the rate seen in 2010/11.
Brexit concerns, business rates and over expansion are among the top reasons given for this.
Jeremy Willmont, head of restructuring and insolvency at Moore Stephens, says closures in the restaurant sector are at “epidemic” levels.
“The impact is visible on almost every high street of a major town or city,” he said.
He says an influx of private equity investment into restaurant chains has led to some opening too many sites which fail to break even.
The massive explosion in the number of restaurants in London has always struck me as unsustainable. Many high streets have just too many places.
My corner of south-east London is a good example. If you walk along Lordship Lane in East Dulwich on a weekday afternoon, you will see hardly anyone sitting in its forty or so eateries.
Elsewhere, a new trendy café is about to open in Forest Hill, an area that already has enough such places. If you go to Peckham, once a backwater when it came to decent food, it seems there’s a sourdough pizza restaurant around every corner. And over the last year in Crystal Palace, where you are spoilt for choice when it comes to restaurants and pubs, several more places have opened, all no doubt thinking they can cash in on the craze for eating out.
This situation can be seen in many parts of London.
The fact is that London has too many restaurants, and it has too many restaurants that are unable to offer good service and good food and at a reasonable price. Fourteen quid for fish and chips in a gastro pub is way too high.
The problem is, the huge increase in restaurants in the capital has outstripped the number of suitably qualified or experienced staff to work in them. Many restaurants are so desperate for someone to work in the kitchen or front of house that they will take virtually anyone.
What’s more, most restaurants in London rely on staff from overseas. If people start heading back to Poland, Bulgaria, Spain, or wherever, then many restaurants will have to close their doors.
So will the restaurant bubble burst? Quite possibly. And that might be a good thing, because then perhaps will see restaurants providing higher quality food and service, and better value for money.