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Highlights:
- Restaurants are facing several challenges right now due to the pandemic, inflation, and Brexit.
- As a result, almost two-thirds of restaurants across UK are staring at losses.
The past two years have been highly challenging for restaurants. Coronavirus-induced lockdowns forced them to stay closed. When they reopened for business, higher inflation and the cost-of-living crisis aggravated the situation, with people reducing spending on leisure activities. As a result, the a significant number of restaurants are struggling to generate revenues.
According to the latest research, almost two-thirds of UK restaurants are now making losses, primarily due to debt repayments, rising energy bills, and the shortage of staff. Data from accountancy firm UHY Hacker Young revealed that several restaurants are looking at severe losses because of major restructuring programmes post-pandemic, as well as debt repayments.
Image source: © 2022 Kalkine Media®
The sector had expected to recover after the pandemic, but rising prices have led to a fall in consumer confidence. Notably, high inflation has made everything expensive - from groceries to energy bills. Restaurants are forced to pass on the additional costs to the customers, which they are already struggling to get amid a reduction in discretionary spending.
In the wake of the latest data, Kalkine Media® explores some restaurant stocks listed on the London Stock Exchange. Here's a look.
Whitbread Plc (LON: WTB)
The British multinational hotel and restaurant firm is a constituent of the benchmark FTSE 100 index. The firm was enjoying a market cap of £5,272.85 million, and its 12-month return currently stands at -18.39%. The year-to-date or YTD return also stands in the negative territory at -12.85%. Shares of the company were trading 0.73% higher at GBX 2,629.00 as of 8:20 am GMT+1 on 8 August.
Wetherspoon (J.D.) Plc (LON: JDW)
JD Wetherspoon, which owns and operates several pubs and hotels across the UK and the Republic of Ireland enjoyed a market cap of £737.74 million. However, the JDW's stock has depreciated by almost half over the past one year. Its YTD return is -40.37%, while the earnings per share (EPS) stands at -1.47. Shares of the FTSE 250-listed firm were trading at GBX 575.50, up 0.44%, as of 8:19 am GMT+1 on Monday.
Restaurants Group Plc (LON: RTN)
Restaurants Group Plc which has over 400 restaurants and pubs across the UK, enjoyed a market cap of £378.55 million. Over the past year, the stock value has dipped by 57.71%. The EPS currently stands at -0.05. RTN's shares were down 0.89% at GBX 49.04 as of 8:17 am GMT+1 on 8 August.
Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.
