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Restaurant Insolvencies Spike as More Financial Pressure Looms

They rose by 20 percent in the last quarter of 2021, with rent protections ending on 25 March

The soon to be iconic tree at Kym’s in the Bloomberg Arcade restaurant development, London - the follow-up to Michelin-starred dim sum restaurant A. Wong in Victoria
The interior at Kym’s, which closed owing to COVID-19.
Samuel Ashton

Restaurant insolvencies rose by 20 percent in the last quarter of 2021, as the full impact of COVID-19 continues to be delayed by rent protections. Insolvencies rose to 354 from 296, according to City AM, as the financial pain caused by the coronavirus pandemic outlasts the restrictions it put in place.

The government’s Commercial Rent (Coronavirus) Bill will come in from 25 March, the same date which the current moratorium on rent arrears expires. While any debts accrued in the “protected period” — which for England is 20 March 2020 to 21 June 2021 — are ring-fenced and must be referred by to an arbitrator by both landlord and tenant, landlords will no longer be barred from taking action on unpaid rent from outside of that period. This will necessarily lead to increased financial pressure on many restaurants.

Meanwhile, energy prices are rising to unprecedented levels; a combination of inflation and Brexit bureaucracy is putting pressure on fresh ingredient prices from Europe; and Russia’s invasion of Ukraine is expected to see wheat and other food prices rise too. Restaurants can only bear the brunt of this for so long: either diners will see prices rise, or they will have to shut up shop.

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