UK’s Largest Restaurant Groups Experience Slight Profit Decline

Profits among the top 100 restaurant groups in the UK have experienced a small decline over the past year, as rising living costs have led consumers to reduce their spending.

Research conducted by UHY Hacker Young highlights that the largest restaurant businesses in the country, which include well-known names such as Pizza Express, Bill’s Restaurants, and Prezzo, reported total profits of £244.1 million.

This figure represents a slight decrease from the £246.5 million reported in 2023. However, it marks a significant improvement from the £673 million loss recorded in 2021, indicating ongoing challenges in profit margins.

The top 100 restaurant operators, which include The Restaurant Group (owner of Wagamama), Five Guys, Loungers café bars, and Azzurri Group (the parent company of Zizzi and ASK Italian), reported revenues of £9.6 billion, reflecting a more than 20% increase from £7.9 billion the previous year.

According to UHY Hacker Young, although revenues have risen, the benefits have been offset by inflation-related increases in food and drink costs as well as heightened interest rates on debt.

Martin Jones, a partner at UHY Hacker Young, remarked that the restaurant industry’s capacity to maintain profitability amid challenging economic conditions is a positive indicator for the hospitality sector. This trend underscores the resilience of these companies as they adapt to fluctuating market conditions and escalating operational costs.

Jones noted that strategies employed by these businesses to enhance profitability include negotiating lower rents with landlords, relocating more sites to suburban areas, investing in technology to reduce labor dependency, implementing loyalty programs, and securing short-term contracts with suppliers to leverage declining inflation rates.

«In recent years, many operators have shifted their focus to managing costs instead of solely relying on sales growth to improve margins,» Jones explained.

He added, «As overheads begin to stabilize and inflation eases, UK restaurant groups are positioning themselves to concentrate on revenue growth, which is clearly what those in the restaurant industry are most passionate about.»