The number of job vacancies in the UK’s restaurant sector* has dropped 11% over the last six months, to 32,900 in April 2018, from 36,900 in November 2017, says Moore Stephens, the Top 10 Accountancy firm.
Moore Stephens says that as the restaurant sector’s profits have tumbled in the last year, many chains are being forced to close their unprofitable sites and reduce staff numbers across other branches.
Insolvencies of restaurant businesses jumped 20% to 984 in the last year, up from 825 in 2015/16*.
Moore Stephens says that although the sector is suffering from over capacity after rapid expansion of many restaurant chains in the last decade, many of the problems faced by the sector are not of their own making. The sector has been hit hard by minimum wage increases, pushing some to cut down on staff. The minimum wage is currently £7.83 for those over 25, rising from £7.50 last year. There is a target to reach a minimum wage of £9 for over 25s by 2025.
Employers in the sector have also been hit by a number of other payroll-related costs over the last few years, such as pensions’ costs through auto-enrolment and the apprenticeship levy.
Simon Fowles, Director at Moore Stephens, says:
“Heaping more and more labour costs on to employers can only work for so long – sooner or later the economy sputters and employers have to look at their employment costs.
“Many restaurants simply cannot afford to remain open at the current level of staffing costs and with consumer confidence so weak there doesn’t seem to be much relief in sight.
“Five years ago, it was usual for around a quarter of revenue at most restaurants to go on wages for its staff. Now, if a restaurant spends 30% on staff pay, it is considered to be doing exceptionally well.
“Many restaurants are doing their best to avoid redundancies by freezing recruitment or reducing shift numbers by closing on quieter days, such as Mondays, but even that is a painful process.
“Struggling restaurants would really like the Government to start looking at whether payroll costs could be kept under control in areas like National Insurance.”
*Data taken from analysis of UK-wide job vacancies in the restaurant sector
**Previous research from Moore Stephens, 2016/17