The Top 100 restaurant companies ranked by revenue posted a combined profit £241.8m in the six months to March 2023, up from a more modest figure of £19.9m recorded in September last year.
This amounts to a 3% average profit margin for the UK’s biggest restaurant groups, according to UHY Hacker Young – a marked increase from the 0.5% average profit margin recorded in September.
Peter Kubik, partner at UHY Hacker Young, says that large-scale restructuring projects by major restaurant groups are finally bearing fruit after years of losses for the UK’s restaurant sector.
“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 says.
Kubik identifies several key measures that restaurant groups were forced to take to return to profitability including extensive closures and write-downs of loss-making outlets; staff redundancy programmes and a reduction in hours for remaining staff; and capping borrowing costs with the use of derivatives.
Gourmet Burger Kitchen (GBK) is singled out as being one such example of a chain that had to go through several rounds of reorganising before it returned to profitability.
The group, which first went through a restructuring process back in 2018, closed 26 restaurants as part of a pre-pack deal in late 2020 that saw it acquired by Slim Chickens, Giraffe and Ed’s Easy Diner owner Boparan.
GBK now operates an estate of 35 sites and in its most recent accounts filed on Companies House (for the year ended 2 January 2022) recorded a statutory profit before tax of £6.7m, up from a loss of £0.8m the year before.
Kubik says 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.”
However, he also cautions that restaurant groups should not become complacent as high inflation and high interest rates pose major challenges.