Small dip in profits at UK’s biggest restaurant groups

Profits at Britain’s 100 biggest restaurant groups have dipped, though only marginally, in the past year when cost of living pressures forced customers to cut down on spending.
According to research by the accountants UHY Hacker Young, the country’s largest restaurant operators based on turnover, which include Pizza Express, Bill’s Restaurants and Prezzo, together generated £244.1 million in profits.
The figure, which is based on analysis of company accounts filed in the year to the end of September, is slightly lower than the £246.5 million made in 2023. Though that is a significant turnaround from the £673 million loss made in 2021, the latest figures indicate margin pressures.
The 100 biggest businesses, which also include The Restaurant Group, owner of Wagamama, as well as Five Guys, Loungers café bars and Azzurri Group, which is behind the Zizzi and ASK Italian brands, delivered revenues of £9.6 billion, rising by more than a fifth from £7.9 billion a year earlier.
UHY Hacker Young said that the increased revenues had been eroded by the impact of inflation on food and drink costs and higher interest burdens on debt.
Martin Jones, a partner at the accountancy, said that the restaurant sector’s ability to maintain profitability despite the tough macroeconomic backdrop “is a very encouraging sign for the hospitality sector” and highlights the resilience of these companies that are adapting in the face of volatile trading and rising overheads.
Measures these businesses have taken to increase profitability, Jones said, included renegotiating lower rents with landlords and shifting more sites to the suburbs, reducing their reliance on labour by investing in technology, using loyalty programmes and negotiating short-term contracts with suppliers to benefit from falling inflation.
“Over the last few years, many operators in the sector have become much more focused on their cost base rather than just hoping that a growth in sales would eventually repair their margins,” Jones said.
“With overheads beginning to ease and softening inflation, UK restaurant groups can now focus on growing their revenue, which understandably is what restaurateurs have much more passion for.”