Warning to restaurant trade as operator fails

The administrator of a Scottish hotel and restaurant group said its failure was “indicative of the wider financial difficulties facing the casual-dining sector”.

Eileen Blackburn of French Duncan was speaking after the shutters were brought down on Town House Restaurants Limited, the operator of the Boathouse hotel at Kilsyth.

A total of 36 jobs have been lost as a result of the administration process.

Official statistics show 76 Scottish restaurants shut their doors in the first six months of 2018, three more than in the whole of 2017.

“Far more restaurants close without entering into a formal insolvency process so the numbers struggling financially on a day-to-day basis will be much larger than the official numbers indicate,” said Ms Blackburn, who is head of restructuring and debt advisory with French Duncan.

“Operating a restaurant profitably has always been difficult but there are growing complications from rising rents and rates, increased staff costs, and higher supply costs.”

The structural issues facing the sector have hit a number of highprofile chains including Gaucho, burger group Byron, Jamie’s Italian restaurants, Carluccio’s and Strada.

“Nobody operates a business with the expectation it will fail but the restaurant sector has become an increasingly difficult environment in which to thrive,” Ms Blackburn said.

Restaurant owners need to be acutely aware of the issues involved in running a financially tight ship in this sector.

“It is all too easy to let costs over-run, overstaff your business, and not account for inevitable downturns in the market.”