​Turnover Up, Profits Down: The Mixed Financial Picture of the UK’s Top Restaurant Groups

Profits at the UK’s largest 100 restaurant groups have fallen slightly over the past year despite a notable rise in turnover. New research from UHY Hacker Young reveals a 1% drop in overall profits, falling from £246.5 million in 2023 to £244.1 million in 2024. This decline occurred alongside a 21% increase in turnover, which reached £9.6 billion in September 2024, up from £7.9 billion the previous year.

According to UHY Hacker Young, the positive effect of higher turnover has been largely offset by inflationary pressures on food and beverage costs and rising interest rates, which have increased the debt burden on many companies. The accountancy firm notes that, given the challenging conditions faced by the sector, the results represent a “creditable performance.” The UK’s restaurant industry has battled with the long-term effects of the pandemic, including a £673 million loss in 2021, as well as the more recent pressures of the cost-of-living crisis.

Martin Jones, a partner at UHY Hacker Young, expressed optimism about the sector’s ability to sustain profitability in a difficult economic environment. He commented, “The sector’s ability to maintain profitability despite the impact of the spike in inflation and weak consumer confidence is a very encouraging sign for the hospitality sector. It highlights the resilience of restaurant groups in adapting to both volatile trading conditions and rising overheads, which have had a huge impact on the industry overall.”

One key factor contributing to the sector’s relative financial health is the extensive cost-cutting measures taken by many restaurant groups in recent years. The report notes that many companies have reduced the number of venues, shifted their focus to suburban areas with lower overheads, and renegotiated rent agreements with landlords. These measures, while painful, have helped build a more sustainable cost base for many restaurant groups, enabling them to weather the current economic storm.

Despite inflation reducing consumer spending power, many restaurant groups have maintained profitability by addressing excess capacity in the sector. “The industry has done a good job of stripping out excess capacity. That has been a really painful process for everyone concerned, but the industry is in a better place for it,” Jones said. He also noted that many operators are now far more focused on controlling costs rather than relying solely on sales growth to improve their margins.

Looking ahead, easing inflation and a stabilising cost base could allow UK restaurant groups to shift their focus back to growing revenue. “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,” Jones concluded.

While profits have dipped, the sector’s ability to adapt to economic pressures has positioned it well for future growth. The findings suggest that the UK’s top restaurant groups have built a foundation for renewed profitability in the years ahead, provided they continue to balance cost management with efforts to increase sales.