Chips are down as Britain's diners lose taste for eating out

Bankruptcies rise by a third across the sector as people tighten their belts and eat at home

Britain's appetite for eating out has plunged to its lowest level since the beginning of the last recession. The number of restaurant businesses going bust rose by a third in the last quarter of 2011 as diners stayed at home to save money, according to new figures today.

Consumer spending has declined, while owners have been saddled by soaring overheads. Rents have continued to increase along with food, alcohol and staff costs, with many eateries reluctant to pass on the impact of VAT and minimum wage rises for fear of deterring price-conscious customers.

Figures from the accountancy firm Wilkins Kennedy show that 194 restaurant businesses closed their doors in the last three months of last year – up from 148 in the same period in 2010.

That is the highest number of failures since the first quarter of 2009 during the last recession. In total, 684 restaurant groups became insolvent in 2011, which is an increase of 19 per cent on 2010.

The total number of eateries closing is likely to be closer to 2,000 as the figures include chains with an average of two or three outlets.

The decline mirrors the plight of retailers hit by record numbers of high-street failures as well as the continuing loss of traditional pubs – currently disappearing at the rate of 16 a week.

Anthony Cork, partner at Wilkins Kennedy, said despite the harsh conditions the rate of failure was still surprising – even in an industry with a notoriously high rate of attrition. He said cost-cutting was often not enough to save a restaurant from going bust.

"Under the terms of most UK restaurant leases, rents can only ever go up - even if the real rental value of that restaurant has plunged. That means that falling turnover can quickly plunge a restaurant into loss," he said.

Many businesses facing job cuts or cost savings chose not to hold a traditional staff party or meal, forcing many banks to pull the plug in the run up to the festive season.

From country's best fish shop to closure in one year

Birmingham's fish and chip lovers were plunged into mourning last November with the closure of the Great British Eatery. The news was broken on the upmarket diner's website by owners Conrad Brunton and Andrew Insley.

"Excessive overheads coupled with a landlord unwilling to help and the terrible state of the economy have resulted in us accumulating huge debts," they wrote.

"We cannot continue this any longer. It has been an honour and a privilege to serve our national dish to our city and for our offering to be so well received." The old schoolfriends opened their doors in an unprepropessing plaza in Edgbaston, and soon earned rave reviews for their all-British menu. In 2010 the restaurant was crowned the best fish and chip shop in the country.