The number of restaurants and retailers in the North West continues to rise rapidly despite a string of high-profile failures in both sectors, according to research by insolvency and restructuring trade body R3.
The figures show that the so-called ‘crisis in casual dining’ and the troubles in the retail sector have failed to deter new entrants coming into the market. The number of restaurant businesses has risen by 7% since January to over 8,900 in July, while the number of retail businesses is up by 6% at over 22,700.
The figures show that both sectors also have a smaller proportion of companies at elevated risk of insolvency than some other sectors. Amongst North West retailers, 37% are considered at higher than usual risk, while the figure for restaurants is 31%.
This is well below the riskiest sectors – professional services and IT and technology – where almost one in two businesses (48%) are considered at risk and where business numbers are growing more slowly.
Paul Barber, North West Chair of R3 and a partner at Begbies Traynor, says:
“Despite some high-profile failures in recent months, these figures show that the restaurant and retail sectors in the North West remain in good health. Both have always been popular choices for start-ups as many people harbor ambitions to run their own shop or café. However, competition is tough and it needs to be exactly the right offering in the right location – even a concept that is successful in one place can flop in another.
“It is great to see that entrepreneurs are still willing to take the risk. Having a regular flow of new entrants coming into the market can only be a good thing in helping to liven up the local food scene and give towns and city centers a fresh appeal.”
The figures show the overall number of businesses in the North West continued to rise in June and July after a surprise drop in May when numbers fell for only the second time in recent history. There are now over 370,000 active businesses in the North West, 2% more than in January.
Paul Barber adds: “People have become much more entrepreneurial but new ventures always entail risk, and in the current climate of uncertainty, all businesses need to keep a close eye on profitability. Our advice is to seek expert help if financial problems arise and the sooner the better.”
The figures are from R3’s latest insolvency risk tracker compiled using Bureau van Dijk’s ‘Fame’ database. It is based on the number of active businesses and measures companies’ balances sheets, director track records and other information to work out their likelihood of survival over the next 12 months.