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Highlights
- Cost of living crisis and Brexit staff shortages has caused several restaurants to become insolvent over the past year.
- According to new data from an accountancy firm, approximately 1,406 restaurants have been forced to shut shop in the past 12 months to May.
The UK cost of living and Brexit staff shortages pummelling down the industries have resulted in a sharp increase in restaurant insolvencies in the past year as customers are forced to cut back on spending.
According to data from the accountancy firm UHY Hacker Young, approximately 1,406 restaurants were forced to shut shop in the past 12 months to May. This is a drastic rise considering the number of restaurants becoming insolvent stood at 856 in 2020/2021. This is the most significant increase in insolvencies in proportional terms for the wider hospitality sector. It has witnessed a 56% rise in insolvencies over the same period last year.
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Research published in June highlighted the top 100 restaurant groups are already reeling under losses of over £800 million in the past six months due to the Covid pandemic. This has forced them to subsist on furlough payments for employees and business rates holidays.
As the number of insolvencies continues to stack up, let’s look at three FTSE-listed restaurant stocks that you may closely watch.
Whitbread Plc (LON: WTB)
The FTSE 100-listed leading hospitality firm currently holds a market cap of £5,434.41 million. The share value of the WTB has declined by around -12.17% in the past 12 months, with a YTD return of -11.05%. WTB boasted of an EPS of 0.21. The stock price was trading at GBX 2,664.00, down by 0.97% at 09:15 AM as of 25 July 2022.
Mitchells & Butlers Plc (LON: MAB)
The FTSE 250-listed is one of the largest operators of restaurants, bars and pubs in the country. MAB has over 1,748 pubs, bars and restaurants under its command and boasts a market cap of £1,042.03 million as of Monday. Mitchells & Butlers Plc's performance over the year has dipped, with its YTD and one-year returns suffering -30.74% and -33.68%, respectively. The stock price stood at GBX 1,77.20 and was up by 1.66% at 09:25 AM as of 25 July 2022.
Wetherspoon (JD.) Plc (LON: JDW)
The FTSE 250-listed Wetherspoon Plc owns and operates hotels and pubs across the UK and the Republic of Ireland. It has a market cap of £728.73 million, and its share value has depreciated by around -49.64% in the past 12 months. Its earnings per share (EPS) stood at -1.47. The stock price stood at GBX 566.00 at 09:41 AM as of 25 July 2022.
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.
Source-
https://uk.finance.yahoo.com/news/uk-restaurant-insolvencies-jump-more-230120295.html
https://uk.finance.yahoo.com/news/restaurants-closing-doors-due-crippling-230100141.html
