RESTAURANTS in Scotland are going bust at a record rate and the number of closures has almost quadrupled in the last decade, according to new research, but experts think the figures may be the “tip of the iceberg”.

The analysis, from business advisers French Duncan, showed annual restaurant failures have risen from 19 in 2007 to 73 last year, but in the first six months of this year that figure has been eclipsed by 76 closures – three more than the whole of 2017.

Eateries accounted for 8.6% of all corporate failures in Scotland last year, rising from 3% in 2007. Over the last three years French Duncan said 234 Scottish restaurants have gone bust, which equated to one entering insolvency every five days between 2015 and 2017.

Eileen Blackburn, the firm’s head of restructuring and debt advisory, said: “These figures highlight the difficulties that the restaurant sector in general, and specifically in Scotland, is experiencing. That the number of failures has almost quadrupled over the last decade is alarming but that the rate of failure is increasing is extremely worrying. “The High Street is in trouble and the dining sector is encountering unprecedented issues which are resulting in failure for a growing number of operators.

“Of more concern is that these figures are likely to be the tip of the iceberg as far as restaurant closures are concerned.

“Far more restaurants close without entering into a formal insolvency process so the numbers struggling on a day to day basis must be huge. The numbers closing voluntarily at a financial loss must be enormous and show just how competitive this market is.”

The restaurant sector across the UK has been experiencing a difficult time with many high-profile chains announcing partial or substantial closures this year, including Gaucho, Jamie’s Italian restaurants, Carluccio’s, and Prezzo. Other companies, such as the Casual Dining Group which owns Bella Italia and Cafe Rouge, saw losses increase to £60.5 million despite increased revenues of £329m. In Edinburgh, restaurateur Mark Greenaway is closing his flagship outlet after five years in the capital.

“There is an issue with over-capacity in the sector, and with rising costs resulting in many restaurants simply being unable to continue to operate,” said Blackburn. “Some Scottish operators may also be operating on a model that is now outmoded. To compensate, many restaurants have become slaves to the discount voucher market which can be a useful tool in the short term but can lead to a permanent lowering in revenue as savvy consumers shop around for the next deal rather than build long-term consumer loyalty. Vouchers can lead to a vicious circle of voucher dependence, lower income, and reduced profitability and, ultimately, closure.”

Landlords, who were keen to attract restaurants to the High Street as retailers left them with empty outlets, may be imposing expensive rents, said the company, which, when coupled with high business rates and increases in the living wage, have left many with an insurmountable financial headache.

Blackburn added: “Most restaurants used to be able to rely on weekend trade to lift their revenue into a profit but now require many more tables booked throughout the week just to keep afloat. The growth of delivery services has opened an enormous new market from food outlets that never delivered before.”