In the News
Restaurants face closure as costs rise and demand dips
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5th December 2016
Restaurants open, restaurants close - that is a fact of life in the food retail industry. But the commercial future for thousands of restaurants in the UK is under threat according to a new report from accountancy firm Moore Stephens reported here in the Guardian. A perfect storm of rising operation costs and flat-lining or declining demand is threatening to push many outlets below their shut-down point.
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From a business economics perspective, the article provides some excellent synoptic content:
- The depreciation of sterling is increasing the costs of imported food and wine - Britain imports 48% of the food we consume
- The rise in the national minimum wage / living wage is contributing to higher labour costs
- Commercial rents in many cities and especially London continue to rise - a significant overhead cost for many restaurants
- The squeeze on real disposable income is hitting demand with more people choosing to stay home rather than book a table, or eat out less frequently
- The restaurant market in major cities resembles monopolistic competition. The arrival of new restaurant concepts threatens to squeeze demand for existing brands and turn narrow profitability into operating losses
![](https://tutor2u-net.imgix.net/subjects/economics/statistic_id586234_leading-restaurant-chains-in-the-united-kingdom-uk-2015-by-number-of-users.png?auto=compress%2Cformat&fit=clip&q=80&w=800)
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